U.S. business warns Congress of "green trade war"

WASHINGTON (Reuters) - Leading U.S. business groups warned Congress Wednesday it could start a “green trade war” by passing a climate change bill that threatens other countries with tariffs on energy-intensive goods.

A labourer works inside a steel factory in the northern Indian city of Kanpur July 20, 2009. REUTERS/Pawan Kumar

“We urge the Senate to refrain from including provisions that could negatively impact U.S. relations with key trading partners and disrupt the global trading systems,” the U.S. Chamber of Commerce, the National Foreign Trade Council and two other groups said in a letter to Senate leaders.

“Climate change is a global problem that calls for international cooperation, not unilateral ultimatums.”

Last month, the House of Representatives passed a bill aimed at reducing U.S. carbon dioxide and other greenhouse gas emissions blamed for global warming by 17 percent by 2020 and 83 percent by 2050.

The bill includes a “border adjustment” program that, beginning in 2020, would allow additional tariffs on carbon-intensive goods such as steel, cement, paper and glass from countries the United States believes are not doing enough to reduce the heat-trapping emissions.

Developing countries such as China and India have objected strongly to the provision, saying that the United States and other developed countries are responsible for most of the greenhouse gases already in the air.

However, China has recently passed the United States as the world’s top emitter of carbon dioxide.

The business groups said they were concerned that what they called the “highly inflexible” House measures could violate U.S. trade obligations and invite retaliation.

“In fact, these provisions are already stirring consternation among some of our key trading partners and could trigger a green trade war,” the groups said.

The leading Senate committee responsible for climate change legislation has delayed work on its version of the bill until later this year.

Democratic Senator John Kerry has said he believes the White House should have more discretion in setting border measures than the House bill allows.

However, Senators Sherrod Brown and Debbie Stabenow, who hail from the industrial Midwest, have said the House language is the minimum they can accept.

Climate change is expected to be high on the agenda next week when the United States hosts Chinese Vice Premier Wang Qishan and other Chinese official for talks.

Together, the United States and China account for about 40 percent of annual global greenhouse gas emissions.

Editing by Eric Walsh