There is a strong push in Congress to eliminate any competitive advantage that national and international climate change policies give China. The best idea – short of jettisoning this ill-advised climate agenda altogether – is to reverse China’s favorable status as a “developing country” under the relevant United Nations treaties. This would be far better than trying to impose carbon taxes, which supporters say would help crack down on China by branding its goods as insufficiently climate-friendly.
It's strange but true: Despite becoming the world's second-largest economy and largest exporter, China is still classified as a developing country by the United Nations under several key environmental agreements. As a result, China is treated relatively leniently compared to the United States and other developed signatories. These include the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer (known as the Montreal Protocol for short) and the 1992 United Nations Framework Convention on Climate Change (UNFCCC). The original classification as a developing country made sense given China's economy at the time , but was never updated by the UN.
The benefits of developing country status are significant. For example, the Montreal Protocol targeted a class of refrigerants called chlorofluorocarbons (CFCs) on the grounds that they deplete the Earth's ozone layer, but China and other developing countries were given an additional 10 years to comply. Additionally, these nations were and are entitled to financial support from a multilateral UN fund financed by wealthy nations and to which the United States is the largest single contributor.
At a 2016 Montreal Protocol meeting in Kigali, Rwanda, the treaty was expanded to include many of the chemical substitutes for CFCs on the grounds that they concern greenhouse gases. Known as the Kigali Amendment to the Montreal Protocol, it gives China and other designated developing countries an additional ten years beyond the deadlines imposed on developed countries.
These newly restricted chemicals, called hydrofluorocarbons (HFCs), have many industrial applications; So Chinese manufacturers will have the advantage of being able to rely on them long after their American counterparts have had to go through a costly transition to new compounds. In addition, China remains eligible for UN funds to help developing countries comply, some of which will be paid for by American taxpayers.
During deliberations in September 2022 on the constitutionally required ratification vote on the Kigali Amendment, the ridiculousness of China's preferential treatment finally became clear to the Senate. The Senate ratified the Kigali Amendment in its entirety, but added an important and unprecedented requirement that the State Department ask the United Nations to reclassify China as a developed country.
Following the vote on the Kigali amendment, the House and Senate passed bills extending the China reclassification provisions to all treaties, and a version was included in the final National Defense Authorization Act for fiscal year 2024. Perhaps most importantly, this would also include the UNFCCC.
China's shameless treatment under the Kigali Amendment is bad enough, but the injustice under the UNFCCC is far worse. While HFCs are a class of specialty chemicals with many important applications, the UNFCCC targets the fossil fuels that provide 80 percent of the world's energy. China can thus take advantage of its status as a developing country under the UNFCCC and enjoy relatively unrestricted access to low-cost energy – particularly coal – while the US under the Biden administration is committed to an economically damaging transition to expensive alternative energy sources.
Therein lies the shortcoming of the recently passed law, which only requires that the State Department request the UN to change China's treaty status. Chinese officials have already expressed strong opposition to such a change, which is no surprise given the huge comparative advantage it will give its manufacturers and the broader economy.
What is needed now are effective measures to hamper further implementation of such treaties pending China's reclassification. For example, the Ending China's Unfair Advantage Act would eliminate funding for the Montreal Protocol and the UNFCCC until the change is made. Such measures deserve serious consideration.
Regrettably, this bill has not become another piece of legislation that takes the wrong approach to China on climate issues.
The Providing Reliable, Objective, and Verifiable Emissions Intensity and Transparency (PROVE IT) Act creates a Department of Energy program that could impose not only a carbon tax on imported goods, but also a domestic carbon tax. Under the bill, the Department of Energy would establish the administrative framework necessary to collect carbon taxes by tracking the carbon intensity of domestic and foreign goods. The bill passed the Senate Environment and Public Works Committee and could go to the full Senate.
The bill would be a dream come true for Democrats, but it has also inexplicably found a handful of Republican supporters. Proponents of the bill claim it is simply an information gathering bill that will not result in a carbon tax. But at the same time, they claim the bill will help hold other countries, including China, accountable for their greenhouse gas emissions.
But providing information alone cannot hold any country accountable; This is therefore a tacit admission by proponents that the legislation would amount to a carbon tax. Finally, China and other countries would be held accountable through taxes on the carbon intensity of their goods.
In reality, this China argument is simply an after-the-fact justification that supporters believe will help build support for carbon taxes. Regardless, it is the most indirect and damaging way imaginable to address greenhouse gas emissions concerns with China. If lawmakers are concerned about China's carbon dioxide emissions, then there is no need to crush the American economy by imposing massive taxes, raising prices, punishing energy use and lowering our living standards.
This brings us back to a real and helpful solution: ensuring that China is no longer considered a developing country under environmental agreements. Unlike the PROVE It Act, there is no self-inflicted economic disadvantage in requiring China to abide by the same rules as the United States when it comes to climate agreements. Now is the time for Congress to insist.
Ben Lieberman is a senior fellow at the Competitive Enterprise Institute in Washington, DC and author of “Forcing the UN's Hand on China.”
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