WTO

The 2022 Inflation Reduction Act, President Joe Biden’s landmark climate law, is now expected to prompt a trillion dollars in government spending to fight climate change and trillions more in private investment. But the law and Biden’s broader “buy American” agenda include measures that discriminate against imports. One year in, these policies, such as the law’s electric vehicle subsidies, appear to be succeeding at growing domestic clean energy industries – consider the US$100 billion in newly announced battery supply chain investments. But we believe the law also clearly violates international trade rules. The problem is not the crime but the cover-up. Today’s trade rules are ill-suited for the climate crisis. However, simply tearing them down could hinder economic growth and climate progress alike. If U.S. leaders instead take responsibility for forging an improved international trade system – rather than denying the violation...

Governments must start to distinguish between the good subsidies they need to fight the climate crisis and the bad ones that are increasing greenhouse gas emissions, the world’s trade chief has said. Subsidies and other incentives to burn fossil fuels and encourage poor agricultural practices, amounting to about $1.7tn a year, are distorting world trade and hampering the fight against climate breakdown, Ngozi Okonjo-Iweala, the director general of the World Trade Organization, told the Guardian. “Can you imagine if we said, we are going to repurpose those subsidies into other friendly subsidies, like for research and innovation?” she said. “I don’t mind that kind of subsidy.” She gave the example of clean cooking stoves in the developing world. Instead of subsidising fossil fuels, governments could subsidise clean stoves that use solar power or electricity instead of burning wood. “These kinds of sub...