Jockeying to avoid being put at a competitive disadvantage

In a interview with the Times (13 March) just before the summit of EU leaders in Brussels over the weekend, José Manuel Barroso, the (ex-maoist) President of the Europe Commission, revealed, perhaps inadvertently, one of the built-in obstacles under capitalism standing in the way of international agreement about what to do about the threat of climate change brought about by global warming.

Barroso told the Times that:

“the EU could take protective measures sector by sector to safeguard European production of cement or steel. We do not want to put our energy-intensive industries in a situation of disadvantage in competitive terms, so that is why we will have measures that we are ready to take if there is not a global [climate] agreement”.

What the EU wants to avoid, the report stated, was “big companies relocating from Europe to countries that refuse to join a post-2012 climate change agreement in order to avoid the EU’s tough CO₂ targets” and so “gain a competitive advantage by continuing to allow cheap, high-pollution production”.

Who’s going to get a competitive advantage? That’s the bottom line in the negotiations between capitalist states about what to do about global warming. America refused to sign up to Kyoto because its government reckoned that to do so would place it at a competitive disadvantage vis-à-vis China (which was not required to sign) and Europe (which burns proportionately less fossil fuels for energy than the US). They were probably right that this would have been the case. As an alternative way to reduce CO₂ emissions than cutting back on burning fossil fuels, the US, which has easy access to coal and oil within its borders, proposes to continue burning them but to develop a way of extracting the CO₂ before it is released into the atmosphere.

The EU seems to have decided that this time China, which has access to huge reserves of coal, has to be included along with other big developing capitalist countries. In fact the Times report, headlined “EU threatens to punish climate deal rebels”, made it clear that China as well as America was in their sights. “America and China”, it began, “face trade protection measures from Europe if they fail to join a global climate deal to replace the Kyoto Protocol”.

Kyoto expires in 2012 but the EU has already committed itself to reducing CO₂ emissions after that date. But it is beginning to be concerned that this commitment may put its energy-intensive industries - particularly cement and steel, as mentioned by Barroso - at a competitive disadvantage if some countries refuse to sign up to a new Kyoto. Clearly influenced by intense lobbying by the European capitalist corporations with money invested in steel producing and cement making, Barroso was clear enough:

“We want a binding decision now that we will take measures to protect these industries in 2012 in case there is not agreement. It would be completely foolish for the European Union to export the pollution and the jobs because globally the effects on climate change will be just the same, only we lose the jobs and our industry”.

True, if steel production and cement making were transferred from Europe to some country with no or lesser restrictions on CO₂ pollution this would leave overall world CO₂ pollution the same. This is known as “carbon leakage” and the EU leaders, in a statement issued after their summit, backed Barroso’s threat, declaring that they “recognize[d] that in a global context of competitive markets, the risk of carbon leakage is a concern in certain sectors such as energy intensive industries particularly exposed to international competition that needs to be analysed and addressed . . . so that if international negotiations fail, appropriate measures can be taken”.

So, watch out then for tough negotiations at the conference in Copenhagen in 2009 when a replacement to the Kyoto Protocol is supposed to be negotiated, when each capitalist state will be trying to ensure that it is not put at a competitive disadvantage by what is agreed. Will an agreement be reached? Perhaps. Will it go as far as scientists say it should? That must be open to serious doubt.

ALB