As President Donald Trump looks to finalize a trade agreement with China — he tweeted on Feb. 25 that a deal was in “advanced stages” — one thing he should be sure to gain concessions on is the cost advantage Beijing possesses because of the excessive regulatory environment in Washington, D.C.
U.S. standards for power generation, manufacturing, fuel economy and emissions are above and beyond anything China puts upon itself.
For example, in the Paris climate accords, one of the reasons the U.S. withdrew was because it required next to nothing out of China, which emits 9 billion metric tons of carbon dioxide every year and growing, compared with 5 billion by the U.S. And China has only promised to reach peak emissions by 2030, and in the meantime the U.S. was supposed to keep its new and existing power plan regulations in place, increasing the cost of doing business here and hampering growth.
The difference in regulatory structures is already a tremendous reason for the outsourcing of manufacturing to China, as the 2018 trade in goods deficit is set to reach its highest level on record.
And the Green New Deal now under consideration — with its impossible goal of zero net carbon emissions by the U.S. by 2030 — would almost certainly exacerbate that reality, sending more production to China.
One source of pollution by China comes from its shipping, which utilizes heavy bunker oil to send goods to the U.S. While International Maritime Organization regulations currently under consideration would address sulfur content in that fuel, the fact remains that if the U.S. continues to push for manufacturing to China to export its emissions via the Green New Deal, it will become more reliant on shipping from overseas, not less.
That is why President Trump should use the imminent trade deal with China to, as much as possible, take the Green New Deal off the table by pushing Beijing to meet up with U.S. environmental regulations, eliminating China’s regulatory cost advantage and defining it as a non-tariff barrier to trade under the new agreement.
This, taken in conjunction with other measures, would set in motion a process of insourcing, to bring more manufacturing back to the U.S., which would mean more jobs here.
It’s better than the alternative, which is to make production practically impossible here in the U.S. via the Green New Deal, incentivizing factories and growth elsewhere including China and making Americans even more dependent on imports.
President Trump is doing what was once thought impossible by closing in on a deal with China on trade and for now, he has postponed increasing tariffs while the final terms of the agreement are hammered out. To be successful, however, the agreement must address all of China’s cost advantages, including currency, labor costs, China’s import controls, intellectual property theft and yes, regulations.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.