The Climate Problem Is a Corporate Problem

“We need to modify WTO rules that would currently block us from taking the actions we need on global warming,” Tucker said. What’s needed, he says, are border adjustment agreements to encourage trade based on a level playing field of production techniques designed to minimize harm to the atmosphere.

The WTO’s present rules, aimed at blocking the imposition of virtually any restrictions on corporate conduct, would prevent border adjustment agreements from being applied.

The need for altering the WTO’s rules has united two leading voices on trade who are usually fiercely opposed: Lori Wallach of Global Trade Watch, which has consistently opposed free-trade agreements, and C. Fred Bergsten of the ​“free-trade” Peterson Institute for International Economics.

They joined together for an unusual op-ed calling for ensuring that proposed emission rules not be used as a pretext to relocate jobs to nations such as China and India:

We agree that it is politically unrealistic – and unwise – to try to enact a cap-and-trade system that puts manufacturers in the United States at a competitive disadvantage with those operating overseas that do not produce under comparable requirements. It makes no sense to impose a cost on those producing steel, autos and other goods, only to have them shift jobs and pollution to China or India – which are wary of binding international obligations on emission reductions. 

But the most prudent and politically feasible measures face likely roadblocks from the WTO, Wallach and Bergsten state:

The two means of ​“leveling the carbon playing field” in bills before Congress – imposing additional ​“border charges” on carbon-intensive imports and subsidizing domestic producers – are being criticized by many U.S. trading partners as potential World Trade Organization violations.

These criticisms could lead to WTO challenges that might undermine climate and trade agreements or to retaliation that could escalate to trade wars, choking the global economy. Yet without some kind of border adjustment mechanisms, even if imposed after a fixed period, U.S. climate legislation is unlikely to pass

Meanwhile, the debate over global warming seems to have intensified the spotlight on the practices of the maritime industry, usually unchallenged in the U.S. media. Overseas shipping has gained an ever-increasing importance in the new global economy.

As recently as the late 1970’s, American manufacturers were focused primarily on making their products in the U.S. and shipped their products around the nation by train and truck, only shipping a small amount of goods to foreign markets. 

But no more. With America being increasingly de-industrialized and industrial jobs relocated to low-wage, high-repression nations like China, the goods sold in America must now be shipped back via ocean freighters. Moreover, many specialized components or raw materials must be shipped to China on the front-end of production. (Pathetically, the top U.S. export to China is waste paper and cardboard.) 

But it turns out that ocean freighters, a central link in the global supply chain, are a major source of carbon dioxide, as reported in the Britiain’s Guardian newspaper:

Aviation carbon dioxide emissions, estimated to be about 2% of the global total, have been at the forefront of the climate change debate because of the sharp increase in cheap flights, whereas shipping emissions have risen nearly as fast in the past 20 years but have been ignored by governments and environmental groups. Shipping is responsible for transporting 90% of world trade which has doubled in 25 years.

Along with spewing out carbon dioxide, freighters are increasingly sites of ruthless exploitation of seamen as ship-owners uses flags of convenience to avoid having to comply with labor rights, safety standards, or environmental rules. Ship-owners, under pressure from the corporations whose cargo they carry, are increasingly operating under ​“flags of convenience” from nations whose enforcement of labor rights, safety regulations, and pollution controls is minimal, such as Panama, Liberia, the Ukraine and many others.

By operating under an ​“FOC,” the shipping lines avoid compliance with the most basic standards, according to the International Federation of Transport workers, a global labor formation:

Once a ship is registered under an FOC many ship-owners then recruit the cheapest labour they can find, pay minimal wages and cut costs by lowering standards of living and working conditions for the crew.

Globalisation has helped to fuel this rush to the bottom. In an increasingly fierce competitive shipping market, each new FOC is forced to promote itself by offering the lowest possible fees and the minimum of regulation. In the same way, ship owners are forced to look for the cheapest and least regulated ways of running their vessels in order to compete, and FOCs provide the solution. 

Perhaps the global warming debate will finally force a closer look at the entire notion of the global supply chain.

It starts with U.S.-owned sweatshops and brutal treatment of workers in nations like China or Indonesia, moves to freighters flying under flags of convenience to avoid standards of decency, moves to intermodal centers using temporary workers at the minimum wage (see my article ​“The Shipping Point,” in the new January issue of In These Times), and ends up at big-box stores among low-wage, non-union retail workers at places like Walmar.

In Aretha Franklin’s classic song ​“Chain of Fools,” she promises, ​“One day the chain is gonna break.” It can’t happen too soon.