The Global Arrangement: A Chance to Get Globalization Right

NEW from @JosephEStiglitz @isabel_estevez_ and me @ForeignAffairs:
Fighting Climate Change Through Trade

Despite Many Setbacks, Biden Can Still Make Progress

A look at the Global Arrangement on Sustainable Steel and Aluminum. (foreignaffairs.com/united-states/…)

Extreme heat exposure is on the rise, causing thousands of premature deaths annually in the United States. Recent heat waves in India and Pakistan saw temperatures in excess of 120 degrees Fahrenheit, putting over a billion lives at risk. (pnas.org/doi/10.1073/pn…)

With Congress stalling, the GASSA offers a chance for the executive branch to move forward impactfully, targeting two industries that account for a tenth of all emissions globally, or roughly that of the entire country of India with its population of over 1.3 billion people.

Picking these industries as pilots is also smart politics at a time of inflation: a shift to green steel will only increase the cost of an automobile or an offshore wind turbine by less than a percentage point, but reduce emissions 10–44 percent. (energy-transitions.org/publications/s…) And since Trump already imposed trade restrictions on steel and aluminum, the GASSA offers an opportunity to green the rationale for those restrictions without further disrupting near-term trade flows and while lowering the (diplomatic) temperature. (lawfareblog.com/trumps-trade-s…)

GASSA offers an opportunity in another sense: it’s a chance to reorient trade policy away from a deregulatory bias and towards the centering of equitable outcomes and sustainability. (rooseveltinstitute.org/publications/a…) It also offers climate economics an off-ramp from a monotheistic focus on the means of carbon taxes and towards the broader ends of a just economic transition. (ft.com/content/fa0815…) Which is not to say carbon pricing has no role. It can play a complementary and supplementary role to economic transitioning, and can inform policy trade-offs, as @lordstern1 @JosephEStiglitz @karlsson_kris @cataylor__ write here. And by focusing on energy abundance and job creation with policies like GASSA, policymakers can get out of the doom loop of transition-as-austerity and build greater political support. (ft.com/content/0becfe…)

Policymakers have given themselves until 2023 to finalize GASSA’s terms. A final deal should make sure to include rules on supply chains, labor standards, and environmental justice, while also bringing developing countries into the fold.

If done right, GASSA could provide a template for a new form of economic integration for other industries. Cement, chemicals, fertilizers, and forestry products are high-emitting industries that would make excellent candidates for a second phase. (brookings.edu/research/the-c…) At a broader level, the agreement signals the recognition of policymakers in Washington and Brussels that certain matters cannot be left to the market any longer. The state has got to act. With calls for “deglobalization” advancing, the arrangement could encourage a new, more sustainable model of globalization, one that doesn’t sacrifice the common good on the altar of the market. (project-syndicate.org/commentary/deg…)

(Adapted from this thread.)