“NFTC welcomes the effort by House leaders to place domestic legislation firmly in the context of international negotiations. Given the potential for free emission allowances and border measures to violate global trade rules, and the reality that halting climate change will require a global effort, this kind of international approach is absolutely essential.
“This legislation would commit the United States to attempt to reach an agreement to reduce global emissions and address with the international community the competitive imbalances that may result from, and trade-related measures that may be employed through, national reduction strategies.
“Effectively managing climate change while keeping markets open will require the type of international coordination among economic and environmental policymakers that this legislation seeks to encourage.
“Congress should also be commended for acknowledging the importance of intellectual property protection for promoting innovation and delivering clean technologies to developing countries. NFTC agrees with Congress that Intellectual property rights are a key driver of investment and research and development in, and the global deployment of, clean technologies.’
“At the same time, we are disappointed that, without a global deal, the legislation would all-but-require the President to impose border measures against any number of countries. The final bill departs from the flexibility that had been provided to the president in earlier drafts to determine whether or not to implement a border adjustment program.
“We are concerned that the near-mandatory imposition of border measures limits the flexibility of the President, may harm relations with U.S. trading partners, and could violate global trade rules. While the legislation improves the framing of a border adjustment mechanism as a step to reduce carbon leakage, application of the mechanism still largely rests on competitiveness criteria and is closely associated with efforts to level the playing field for U.S. producers. And while Congress has taken steps to recast the purpose of the program, application of a border measure is not linked explicitly to a finding of carbon leakage and may be seen as disguised protectionism by U.S. trading partners.
“We agree strongly with the Obama Administration that legislation must be consistent with our international obligations and an open and integrated global economic system.'”
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