Trade Archives https://www.climatechangenews.com/tag/trade/ Climate change news, analysis, commentary, video and podcasts focused on developments in global climate politics Tue, 18 Jun 2024 15:57:57 +0000 en-GB hourly 1 https://wordpress.org/?v=6.6.1 Lessons from trade tensions targeting “overcapacity” in China’s cleantech industry https://www.climatechangenews.com/2024/06/18/lessons-from-rising-tensions-around-overcapacity-in-chinas-cleantech-industry/ Tue, 18 Jun 2024 13:54:29 +0000 https://www.climatechangenews.com/?p=51758 Clean technology is turning into the next global climate spat. The debate over China’s dominance is highly politicized, but there are ways forward

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Yao Zhe is global policy advisor for Greenpeace East Asia.

“Overcapacity”, a geeky economic term, has recently become the new buzzword for international discussion around China’s solar and electric vehicle industries. It is also becoming one of the thorniest issues in China’s relations with other major economies.

Notably, the word was mentioned five times in the G7 Leaders Communiqué released last week, with the G7 countries framing it collectively as a global challenge.

It is a debate that was initially sparked by US Treasury Secretary Janet Yellen during her April visit to Beijing. According to her, China’s cleantech industry has excess capacities that cannot be absorbed domestically, leading to exports at depressed prices. And she stressed that this should be a concern not only for the US, but also for Europe and other emerging markets.

Days after climate talks, US slaps tariffs on Chinese EVs and solar panels

China strongly disagreed with this claim, while Yellen’s concern resonated in the EU, which has long focused on China’s market dominance. In short, there is an overcapacity of “overcapacities”, with neither side finding identical terms of reference. But as this debate is a harbinger of how climate solutions and political agendas will interweave, it’s worth parsing out some lessons for each side, on their own terms.

The US’ “overcapacity” claim as presented by Yellen is a non-starter in China.

China’s clean energy industry is an important point of pride internationally and a source of legitimacy domestically for Beijing. From that perspective countering the “overcapacity” claim is both emotionally and strategically important.

Strategically, this claim is being used to justify trade measures and tariffs against China’s clean energy products. Emotionally, the cleantech industry is a modern-day success story of China’s entrepreneurship and innovation. In China’s public discourse, the US “overcapacity” claims lands as a rejection of that success.

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The result is a political debate in which – by design – no side can convince the other. And the lesson? This posturing is at odds with US-China climate diplomacy as we’ve known it to function in the past. Whatever objectives this approach serves, it does not include closer climate collaboration between the US and China, even as multilateral climate action at the UN level still requires them to take action in concert.

In China, discussion on “overcapacity” emerged from an ongoing conversation about how to manage investment hype. And the answer lies on the demand side.

For investors inside China at a time of challenging economics, few industries are as attractive as the clean energy industry. And business leaders have focused on the risks of hot money and breakneck expansion of clean energy manufacturing capacity for some time now, particularly in the solar industry.

This was probably the origin of “overcapacity”. But in China, this has been a familiar, almost perennial discussion of investment and industrial cycles. While the US argument equates exports to overcapacity, Chinese companies argue that it is demand that determines overcapacity, and they make investment and expansion decisions based on projections of both domestic and global demand.

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That said, the size of China’s domestic market means it will remain the “base” for Chinese manufacturers. In the overseas market, the “overcapacity” claim underscores the complexity and uncertainties Chinese companies face.

For Chinese policymakers, one obvious response to the new market dynamics should be taking domestic demand to new levels. That means addressing lingering questions for China’s renewable energy future – namely, how to resolve the impact of coal. China’s power market was designed for a system dependent on coal, but it needs reform to allow wind and solar to take the central role. Injecting new political momentum to accelerate the reform will be key.

The EU has long been concerned about China’s market dominance, and the “overcapacity” debate is pushing it to decide its role in this trilateral trade and climate dynamic.

Even before this debate erupted, the EU had already begun, subtly, to diversify supply chains and build its own industrial strength, reducing dependence on Chinese products. Last week, the EU announced a maximum tariff of 38% on imported Chinese-made electric vehicles, concluding that Chinese EV makers are benefiting from “unfair subsidies”.

At this stage, it’s still unclear if this is the end of the EU’s low-key approach to date. Cultivating an EU-based clean industry hub without compromising the global response to climate change is a challenge, especially as the EU positions itself as a climate leader.

Entering the fray of US-China tension only makes this feat more complex, especially given uncertainties on the US end in an election year. How the EU approaches this climate and trade nexus will ultimately shape the trilateral dynamic among the world’s three largest carbon emitters in the coming years.

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For China, where relations with the EU and other countries are concerned, it’s worth taking a step back and looking at the hidden messages in the “overcapacity” debate. Other countries want more than just Chinese products.

Climate leadership is not a buyer-seller relationship, but one between partners who want solutions that create local jobs, develop opportunities, and enable native development of a sustainable future.

China should see its role in the global clean transition as more than a manufacturing hub. The transition requires tools, technology, finance and know-how, and China has much to offer. It is time for China to think more creatively about how to leverage its industrial advantages to provide the solutions with which the world is currently under-supplied.

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Days after climate talks, US slaps tariffs on Chinese EVs and solar panels https://www.climatechangenews.com/2024/05/15/days-after-climate-talks-us-slaps-tariffs-on-chinese-evs-and-solar-panels/ Wed, 15 May 2024 16:21:30 +0000 https://www.climatechangenews.com/?p=51055 The measures are designed to increase the cost of Chinese goods needed for the energy transition - and could therefore slow the US shift away from fossil fuels

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Five days after seemingly cordial US-China climate talks, US President Joe Biden has announced he will increase US tariffs on Chinese solar panels, electric vehicles (EVs) and batteries to run them.

Last Wednesday and Thursday, China’s new top climate diplomat Liu Zhenmin travelled to Washington DC for two days of talks with his US counterpart John Podesta, also fresh in the job.

They discussed co-operation on climate issues, including plans for both sides to ramp up renewables, and vowed to “intensify technical and policy exchanges”.

But the day after, with Liu still in the country, the US State Department briefed journalists that Podesta had told Liu that China was producing too many solar panels and lithium-ion EV batteries.

India wants its own solar industry but has to break reliance on China first

Then on Tuesday, the White House increased tariffs on Chinese EVs, lithium-ion batteries and solar panels, accusing the Chinese government of “unfair, non-market practices” and “flooding global markets with artificially low-priced exports”.

“Clear protectionism”

In response, the state-owned China Daily newspaper in an editorial described the tariffs as “a clear act of protectionism”.

The head of the China Automobile Association Fu Bingfeng agreed, adding that “the new energy industry is jointly created by mankind and can bring common benefits to mankind”, saying the tariffs were “very unreasonable”.

Asia Society analyst Li Shuo told Climate Home that, rather than thinking of over-supply of solar panels as a problem, “it is the world’s inability to deploy these products that is the problem”.

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The tariffs reflect “the new reality global climate politics needs to deal with” – that low-carbon products will not be made in the most cost-efficient way and distributed around the world, he explained. India also has trade barriers against Chinese solar panels, designed to boost its domestic solar manufacturing.

Research from the Center for Strategic and International Studies has found that such trade barriers can, in general, delay the competitiveness of low-carbon technologies against their market rivals – like solar against gas, or EVs against internal combustion engines.

Limited effect on solar, batteries bigger

The US-imposed measures are designed to increase the cost of Chinese goods needed for the energy transition – and could therefore slow down America’s shift away from fossil fuels.

But BloombergNEF solar analyst Jenny Chase told Climate Home that the increase in the tariff on solar cells and modules from 25% to 50% would “have little effect”.

She noted that tariffs of 25% have been in place “for ages – and as a result the US imports almost no cells or modules directly from China, instead importing from Southeast Asia”.

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The Biden administration is currently weighing whether to impose tariffs on solar imports from four Southeast Asian countries over concerns that China is routing its panels through these nations.

US solar panel manufacturers are lobbying the government in favour of those tariffs, while US solar panel installers are lobbying against them. A decision is needed by June 6, two years on from a pause on tariffs affecting the Southeast Asian nations.

Similarly, the US already imports relatively few electric vehicles from China, as it already has Trump-era tariffs on them. The US’s adoption of electric vehicles is far slower than in Europe or China.

But US car-makers do import lots of lithium-ion EV batteries for their vehicles despite existing 7.5% tariffs. China produces about three-quarters of all the world’s EV batteries, with the US producing less than a tenth.

(Reporting by Joe Lo; editing by Megan Rowling)

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UK sued over plan to import more polluting Australian beef https://www.climatechangenews.com/2023/05/24/uk-sued-over-plan-to-import-more-polluting-australian-beef/ Wed, 24 May 2023 16:01:00 +0000 https://climatechangenews.com/?p=48597 Campaigners are challenging the UK government over its assessment of environmental impacts of a trade deal with Australia

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Campaigners have challenged the UK government over its assessment of an imminent free trade agreement with Australia, which critics say ignored the full climate impact of meat farming and consumption.

NGO Feedback has launched a formal legal challenge against the UK government, arguing that it risked flouting its international climate obligations by not properly assessing the environmental impacts of the deal.

The UK-Australia Free Trade Agreement, which enters into force at the end of the month, gives Australian producers better access to the UK market to sell beef, lamb and dairy.

Then UK prime minister Boris Johnson, trade secretary Liz Truss and Australian prime minister Scott Morrison celebrate the trade deal in London in 2021 (Photo credit: Number 10/Flickr)

Agreeing the deal in 2021, the UK government said Australia shared domestic “beliefs in high standards in areas such as animal welfare and the environment” and maintained that the deal would uphold these.

Brexit dash for deals

But critics believe it was passed in haste and risks undercutting UK producers with food that does more damage to the environment.

Carina Millstone, executive director of Feedback, said the UK government had recklessly sacrificed both British farmers and the climate in a rush for positive headlines after the UK left the European Union and faced accusations that it was now globally isolated.

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“At a time of crisis in food and farming,” she said “the government must ensure all trade deals work towards our emissions reduction targets rather than towards further catastrophic heating.”

A government impact assessment of the free trade agreement suggested there would be an increase in transport-related greenhouse gas emissions as more goods are moved between Australia and the UK.

They estimated that increase would be 0.1-0.3 MtCo2 a year, about the annual emissions of Liechenstein.

Claims of uncertainty

But it said data uncertainties on the emissions impact of farming, particularly of beef, made drawing conclusions on these emissions difficult.

Campaigners instead point to a 2021 independent review of the UK’s national food strategy. It used a 2020 study in Global Environmental Change to conclude that carbon emissions from UK beef was 30kg Co2/kg compared to 45kg Co2e/kg from Australian beef.

The authors of that study found that these differences between different countries were “largely attributable to deforestation for grazing lands and higher methane emissions from…belching”.

Campaigners said the food strategy clearly shows that the free trade agreement will have a material impact on the UK’s legally binding climate targets.

Cheap meat

They also say the impact assessment fails to quantify the carbon impact of any changes to overall domestic UK meat and dairy consumption. 

Cheaper Australian goods were touted as one of the key benefits of the agreement for the UK. Australia’s biggest cattle farmer suggested that the trade deal could result in Australian beef exports to the UK rising tenfold

However, Feedback says the greater availability of cheap meat on UK supermarket shelves and in the food service industry will increase the amount that gets eaten.

This would go against recommendations from both national food strategy review and those of the UK’s advisory Climate Change Committee that substantial reductions in meat and dairy are essential to tackle climate change. 

G7 calls on all countries to reach net zero by 2050

Feedback sent a letter to environment secretary Thérèse Coffey last year, warning that it was prepared to take legal action, and said the response it received was unsatisfactory. 

Rowan Smith, a solicitor for law firm Leigh Day which is representing Feedback in the case, said they would be arguing that the legislation implementing the new tariff rules was based on an impact assessment that completely ignored the science.

“It is argued that this irrationality renders the statutory instrument unlawful, and our client is asking the court to quash it,” he said.

The government would not comment on ongoing legal proceedings.

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European exodus from Energy Charter Treaty raises climate questions https://www.climatechangenews.com/2022/10/25/european-exodus-from-energy-charter-treaty-raises-climate-questions/ Tue, 25 Oct 2022 16:28:48 +0000 https://www.climatechangenews.com/?p=47382 France, Germany and Spain plan to leave the controversial investment pact, putting a whole system of dirty energy protections into play

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Six European countries have indicated they will leave the controversial Energy Charter Treaty (ECT) despite green reforms, shaking up international investor protections.

Belgium on Monday joined France, Germany, the Netherlands, Spain and Poland in heading for the exit. They argued that modernisation of the investment pact has not gone far enough to align with the Paris Agreement.

ECT boss Guy Lentz made the extraordinary admission to Politico that it would “definitely” be better for the climate if the treaty did not exist – then backpedaled. His account lashed out at critics on Twitter last week, calling them “clowns” and “the green army”, in since-deleted messages.

The move calls into question a whole international system of investor protections. There are hundreds of bilateral investment treaties (BITs) between European and other – mostly developing – countries that protect fossil fuel interests in the same way: enabling energy companies to sue governments over climate policies that devalue their assets.

The European Commission’s chief ECT negotiator Carlo Pettinato and Swiss ECT negotiator Jean-Christophe Fueeg highlighted these bilateral treaties in defence of the ECT.

Pettinato, defending European Parliament to back the modernised ECT on Monday: “We know very well that all the bilateral investment treaties do not exclude fossil fuel protection. And there are many of the BITs with members of the Energy Charter Treaty.”

Fueeg, who opposes both reform of and withdrawal from the treaty, told Climate Home: “One important factor often ignored by ECT-criticism is the widespread practice in the oil industry to enshrine [investor-state dispute settlements] in individual contracts, which are sanctioned by national parliaments or presidents.”

Kyla Tienhaara studies trade and the environment at Queen's University in Canada and has frequently criticised the ECT. She told Climate Home: "These BITs are substantively the same as the ECT - so if these countries have concluded that the ECT is incompatible with the Paris Agreement then they have to acknowledge that their BITs are also incompatible."

Tienhaara said that BITs between European countries and developing countries "do not pose the same threat to climate policy within Europe that the ECT does" but "global issues require us to think beyond our borders".

She added that countries like France "should absolutely be reaching out to their BIT partners and proposing mutual termination in a manner that neutralises any sunset clause". Sunset clauses are when a treaty's rules apply even after it's been ended.

Climate Action Network Europe's trade campaigner Cornelia Maarfield said that the European Parliament had called for fossil fuel investment protection to be discussed at Cop27 in Egypt. "If not discussed at Cop, it would be sensible to use other international fora to take this agenda forward such as the G7 or G20," she said.

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Nations set up the ECT to protect foreign investments in energy in the former Soviet Union after the Cold War ended. Its membership spans Europe, Turkey, Central Asia and Japan. Italy and Russia have left but are still subject to the treaty's 20-year sunset clause.

After a series of European fossil fuel companies sued or threatened to sue European governments over their climate policies, in June 2022 the European Commission persuaded other ECT members to allow them to phase out protections for fossil fuels.

As a bloc, the EU decided to phase out protection for new fossil fuel investments a year after the ECT modernisation is ratified, likely in November 2022. Most existing fossil fuel investments will be protected for ten years after that date.

The member states preparing to leave the treaty are expected to ratify the modernisation first, so they can serve the 20-year sunset clause under greener terms.

Fear of farmer protests hampers methane-cutting ambition

The UK will phase out fossil fuel protections in the same way as the EU and has not indicated it will leave the treaty.

All other ECT members, including Switzerland, Turkey, Japan and Central Asian countries are not planning to phase out fossil fuel protections or leave. Several countries like Nigeria are interested in joining.

Switzerland's Fueeg told Climate Home: "The ECT will undoubtedly suffer from this exodus, both in reputation and resources" but "Switzerland’s position has not changed."

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US solar installers ‘breathe sigh of relief’ as Biden eases protectionism https://www.climatechangenews.com/2022/06/09/us-solar-installers-breathe-sigh-of-relief-as-biden-eases-protectionism/ Thu, 09 Jun 2022 16:43:08 +0000 https://www.climatechangenews.com/?p=46588 Joe Biden has suspended import tariffs on solar panels produced in four southeast Asian nations for two years to reboot stalled solar installations

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Environmentalists and most of the US solar industry have breathed a “sigh of relief” after president Joe Biden announced he would ease tariffs on solar panel imports from four south-east Asian nations on Monday.

An investigation into solar panel imports from Thailand, Vietnam, Malaysia and Cambodia had effectively frozen the roll-out of solar power in the US, pushing up American electricity prices and the country’s greenhouse gas emissions.

Biden signed an executive order freezing these import restrictions for two years. “That sound you hear is the sigh of relief from thousands of American solar workers and businesses,” responded the head of the Solar Energy Industries Association Abby Hopper. The Coalition for a Prosperous America, a conservative lobbying group, called it a big win for the “climate lobby and Chinese solar exporters”.

Following the decision, Bloomberg New Energy Finance (BNEF) revised their projections for US solar capacity upward by 2GW. The impact is limited by a shortage of solar panels everywhere in the world as supply has not kept pace with soaring global demand, BNEF researcher Jenny Chase told Climate Home News.

For Greenpeace East Asia adviser Li Shuo, the move does not go far enough as it still restricts solar imports from China. Li told Climate Home: "For solar [panels], I can tell you no one is going to be more cost efficient than Chinese products. So if the US wants to build domestic manufacturing capacity, that’s fine, but they will just pay a higher price, which one can argue is a bad thing for climate action."

The decision is the latest move in a decade-long saga in which the US government has balanced its climate plans and the interests of solar installers against its desire to protect US manufacturers from cheap, largely Chinese, imports.

In 2011, a Californian solar panel manufacturer called Solyndra filed for bankruptcy despite receiving a $535m loan from the green package of president Barack Obama's stimulus bill. An anti-climate lobbying group called Americans for Prosperity spent $8m running attack adverts denouncing the loan as fiscally irresponsible.

To neutralise these attacks, Obama introduced tariffs on Chinese solar panels. He argued that China was illegally subsiding its industry and dumping products on the market at below cost price. China challenged these tariffs in the World Trade Organisation but lost the case. The tariffs stayed and were renewed and extended by presidents Donald Trump and Biden.

But a US solar panel manufacturing industry did not take the place of Chinese imports. Instead, US solar installers bought their panels from Cambodia, Malaysia, Thailand and Vietnam. In 2021, 85% of solar panel imports were from these four countries.

Outcompeted by cheap imports, a tiny Californian solar panel manufacturer called Auxin Solar made a complaint to the Department of Commerce and hired Washington lobbyists and public relation spinners to make its case.

They argued that Chinese exporters were getting around tariffs by exporting their solar panels through these southeast Asian countries. The complaint referenced data from BNEF and Chase. But she told Climate Home: "We don't sanction their interpretation of it particularly". The SEIA has rebuked Auxin's arguments.

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But US commerce secretary Gina Raimondo decided she was legally obliged to open an investigation, which could result in retroactive tariffs on imports. Solar installers stopped importing. Rystad analysts estimated this could have cost the US 17.5GW of uninstalled solar power capacity in 2022.

The SEIA, whose members include the US subsidiaries of Chinese solar panel manufacturers, lobbied against the investigation in Washington DC. They won vocal support from politicians like Senator Jacky Rosen, a Democrat from the solar-reliant, south-western state of Nevada and eventually convinced the Biden administration to act.

The freeze is only due to last two years, during which Biden is hoping to build up a US solar manufacturing industry. His executive order authorises the use of the Defense Production Act, a law designed to help the US win wars, to speed up production of solar panel parts. The federal government will further prioritise US-made solar panels in procurement and has called on state and local governments to do the same.

Proposed legislation known as the Build Back Better bill would provide new tax credits for solar wafers, cells and modules produced in the US but it is being blocked by fossil-fuel-friendly Democratic senators Joe Manchin and Kyrsten Sinema.

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Canada and EU add climate clause to trade pact https://www.climatechangenews.com/2018/09/27/canada-eu-add-climate-clause-trade-pact/ Thu, 27 Sep 2018 15:13:35 +0000 http://www.climatechangenews.com/?p=37630 In a move that underscored Donald Trump's isolation on trade and climate change, the two major economies inserted a reference to the Paris Agreement into Ceta

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Canada and the EU added a climate clause to their trade deal at a high-level meeting in Montreal on Wednesday.

As EU trade commissioner Cecilia Malmström visited Canadian minister Jim Carr, they adopted an update to the Comprehensive Economic and Trade Agreement (Ceta), which entered into force last year.

The two economies agreed to “promote the mutual supportiveness of trade and climate policies”, with reference to their commitment to the Paris Agreement.

The statement fleshed out Ceta’s provisions for environmental cooperation and underscored US president Donald Trump’s isolation on trade and climate change.

It came shortly after French president Emmanuel Macron told the UN countries rejecting the Paris pact should not benefit from economy-wide commercial deals.

Asked by Bloomberg if that ruled out a trade pact with Trump’s US, Macron said: “With America disrespecting the Paris Agreement, for sure, I could not accept…

“We are asking a lot of efforts [from] our farmers, our industrials, our citizens precisely to make such a shift [to a low carbon economy]. If you opened your market to products and goods coming from a country that decided not to accept the same rules and constraints, it would be totally crazy.”

EU-Japan trade deal first to carry Paris climate clause

Trump has declared his intention to withdraw the US from the Paris Agreement and started dismantling policies to cut greenhouse gas emissions.

At the same time, he has pursued protectionist trade policies, using his speech at the UN general assembly this week to denounce “globalism”.

Malmström has said any new trade deal must mention the Paris pact, although commission president Jean-Claude Juncker took a softer stance on a visit to Washington DC in July.

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Australia’s new PM risks climate trade-off with EU https://www.climatechangenews.com/2018/08/30/australias-new-pm-risks-climate-trade-off-eu/ Sam Morgan for Euractiv]]> Thu, 30 Aug 2018 09:55:54 +0000 http://www.climatechangenews.com/?p=37327 Scott Morrison is not expected to quit the Paris Agreement, as it could jeopardise ongoing trade talks with the EU, although he has no plan to meet climate targets

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Scott Morrison became Australia’s new prime minister on 24 August, after a brutal leadership contest saw Malcolm Turnbull ousted from his position, following a row over energy policy.

Turnbull had wanted to cement in legislation Australia’s pledge to cut emissions by 26% by 2030, based on 2005 levels, but his conservative party colleagues soured on the idea. Poor opinion polls and recent defeats had stoked concerns ahead of federal elections next year.

After Morrison got the nod, the new prime minister moved to shore up his voter base by splitting the environmental and energy portfolios, meaning emissions reduction will no longer be a concern of the latter.

The new setup means price and security of supply will now be the main tent poles of energy policymaking, meaning Australia will now struggle to meet its Paris commitments, according to climate experts, and will have to rely on passive measures.

In a tweet on Wednesday (29 August), Morrison called the new minister for energy, Angus Taylor, his “minister for lowering electricity prices”. Another MP, George Christensen, one of the rebels that helped depose Turnbull, called for more new coal-fired power stations and for “costly green treaties” to be abandoned.

Ousted Australian PM: This government cannot address climate change

Local media reported that senior sources in government are unsure how Australia will now meet its targets, which were set by Turnbull’s predecessor, Tony Abbott, in 2015.

Abbott has since claimed he was “misled” by advisers when signing up to the Paris deal and has backed calls for Australia to follow the United States in withdrawing from the agreement.

But sources also insisted that the new government will try to resist internal pressures to walk away from the 2015 climate accord, which aims to keep global warming well below 2C.

Climate trade-off

The European Commission recently launched trade talks with both Australia and New Zealand, and a report circulated by the EU executive in early August revealed that the early negotiating rounds had progressed well.

Bilateral trade between Australia and the EU topped €70bn in 2017 and an impact assessment concluded that removing certain tariffs could boost that figure by around a third.

But earlier this year, EU trade boss Cecilia Malmström tweeted that a reference to the Paris Agreement is needed in all new commercial deals, as part of the bloc’s attempts to export climate diplomacy across the world through trade.

When asked how Australia’s new approach to climate policy might affect the ongoing talks, a Commission spokesperson told EURACTIV that “it would be difficult to imagine concluding a broad trade agreement without an ambitious chapter on trade and sustainable development”.

The recently brokered Japan agreement contains a chapter on sustainability, and ongoing talks with Mexico and Mercosur are expected to as well.

That stance by the Commission, which negotiates trade on behalf of all member states, has already cast doubt on whether talks between the EU and the US could ever be resurrected, given President Donald Trump’s current intention to withdraw his country from the pact as soon as possible.

This article was produced by Euractiv

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EU relaxes climate stance in trade sop to Trump https://www.climatechangenews.com/2018/07/26/eu-relaxes-climate-stance-trade-sop-trump/ Thu, 26 Jul 2018 15:36:32 +0000 http://www.climatechangenews.com/?p=37091 Tough words on the Paris Agreement took a back seat as Jean-Claude Juncker sought protection for Europe's car industry

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The European Commission abandoned its customary climate hard talk in a bid to defuse trade tensions with the US on Wednesday.

Following a visit by commission president Jean-Claude Juncker to Donald Trump in Washington DC, the two major economies promised to work to eliminate trade barriers.

In a joint statement, they agreed to launch “a close dialogue on standards in order to ease trade, reduce bureaucratic obstacles, and slash costs”.

There was no mention of upholding the Paris climate deal or environmental protections. Instead, it called for more trade in liquefied natural gas (LNG) from the US to the EU.

That’s a break from recent EU rhetoric. Trade commissioner Cecilia Malmström tweeted in February that reference to Paris was essential to any EU trade deal – and the pact finalised with Japan last week duly included a Paris clause.

Given Trump’s avowed intent to quit the Paris Agreement, the EU appeared to have ruled out the revival of transatlantic trade agreement talks unless he changed his mind. Last year, EU heads of state frequently lobbied the president on the Paris deal. Juncker gave a speech calling Trump’s position an “abdication from common action”.

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But on Wednesday, with Trump’s trade actions threatening EU auto-makers and farmers, Juncker adopted a more conciliatory tone.

“[Juncker’s] clear priority was to de-escalate the trade dispute with the US and to some extent that has been achieved for now,” said Jonathan Gaventa, director at European think-tank E3G.

“To do that the commission has diverged from its own line about the importance of the Paris Agreement and environmental standards in trade deals… That for us is a cause for concern.”

There is a split between two pillars of the EU over how to deal with Trump’s climate stance. France has pushed for a hard line against Paris defectors, while Germany – which sells a lot of cars to the US – has been more cautious.

The joint statement hints at the fragility of the truce. Both sides agreed to set up a working group of “our closest advisors” to take the agenda forward, with the caveat: “While we are working on this, we will not go against the spirit of this agreement, unless either party terminates the negotiations.”

Trump has been known to change his mind about a multilateral deal within hours of agreeing it – as happened at the June G7 summit.

Even before Trump’s presidency, attempts to reconcile the divergent approaches to the environment across the Atlantic were controversial, particularly in Europe.

The proposed transatlantic trade and investment partnership (TTIP) was shelved amid objections it was undemocratic and gave too much power to big business.

Fabian Flues, trade campaigner at Friends of the Earth, which is anti-TTIP, said the decision to reopen talks on standards was “very worrying”. He said: “That is potentially opening up a Pandora’s box of industry lobbying, of getting rid of a whole load of European environmental regulations.”

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