economics trade
How far will Freeland go to get climate change in NAFTA?
Foreign Affairs Minister Chrystia Freeland says she wants to see environmental provisions strengthened in a re-done North American Free Trade Agreement, but it’s not clear exactly how far Canada’s top diplomat will go to get climate change into NAFTA.
How far will Freeland go to get climate change in NAFTA?
By Carl Meyer in News, Energy, Politics | August 14th 2017
#703 of 703 articles from the Special Report:
Race Against Climate Change
Canadian Foreign Affairs Minister Chrystia Freeland delivers a speech about NAFTA at the University of Ottawa on Aug. 14, 2017. Photo by The Canadian Press
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Foreign Affairs Minister Chrystia Freeland says she wants to see environmental provisions strengthened in a re-done North American Free Trade Agreement, but it’s not clear exactly how far Canada’s top diplomat will go to get climate change into NAFTA.
The Trudeau government minister said Monday that strengthening environmental provisions is “absolutely a Canadian goal going into these talks.” In three separate public appearances on the same day — one at the University of Ottawa and two on Parliament Hill — she sought to reinforce a message that environmental protections are a clear focus.
Canada wants to “ensure that the member countries can benefit from protecting the environment and investments,” said Freeland in front of the House of Commons environment committee. She said Canada would "fully support efforts to target climate change.”
But the minister has so far declined to answer definitively whether Ottawa would walk away from negotiations if the term “climate change” doesn’t wind up in the deal’s final text.
Freeland has been part of a massive, across-the-board push by the federal government, provincial and territorial governments, businesses, political parties and organizations to engage with Americans on the upcoming NAFTA talks. The talks were triggered earlier this year when U.S. President Donald Trump said he wanted to renegotiate the deal because he believed it wasn't fair to American workers and countries.
Trump nearly sent formal notice in April that the U.S. would withdraw from the trade deal. But he changed his mind after phone calls from Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto.
Freeland said the Canadian government has made 185 visits to the U.S. and met 200 members of Congress, as well as 50 governors and deputy governors.
Part of this push involves reminding the United States of the two countries' interconnectedness, she said. In a discussion about the importance of Quebec's relations with the United States, Freeland paused to mention an "example" that grabbed everyone's attention.
"The electricity in Trump Tower comes from Quebec," she said, before quickly moving on.
The province’s utility sends over 40 per cent of its exports per year to New England and has been looking to expand power sales to the U.S. Northeast.
U.S. President Donald Trump announces his desire to withdraw from the Paris climate accord during a speech at the White House on June 1. Canada has a "different view," said Foreign Affairs Minister Chrystia Freeland on Aug. 14. Screenshot from White House video
'No secret' Canada, U.S. diverge on climate views: Minister
The question of how forcefully Canada will push to see the language of climate change reflected in a new NAFTA deal matters in light of the Trump administration’s continued rejection of the global scientific consensus on climate.
U.S. President Donald Trump, who has called climate change a “Chinese hoax,” is pulling the U.S. out of the Paris climate pact, alarming environmentalists, businesses and national governments pushing for a low-carbon future. Environmental Protection Agency administrator Scott Pruitt, who also doubts climate science, has shut down greenhouse gas emissions data collection and has yanked webpages on climate change off the internet.
“It’s no secret to anyone that Canada has a different view of probably the most important step the world has taken when it comes to the fight against climate change, which is the Paris Accords,” said Freeland. Prime Minister Trudeau has expressed his disappointment at Trump’s decision to withdrawal from Paris, she noted.
“Having said that, we continue to work at all levels of government with the U.S. on the environment, not least because we have many shared environments that we have shared stewardship of,” said Freeland.
“And this U.S. administration has said both in public and in private that it continues to have a very strong interest in working with us on protecting those shared spaces.”
When National Observer asked Freeland whether climate change was a dealbreaker, the minister discussed boosting environmental provisions and how environmental standards are “much higher than they were when the agreement was first negotiated, and this is an opportunity to bring them up.”
Canada has a “shared interest with all of our North American partners” to ensure a fair deal, Freeland continued. Strong environmental standards “are one way that we can ensure that Canadian workers don’t suffer unfairly, because of the high standards that Canadian society quite rightly wishes us to have.”
The NDP’s international trade critic Tracey Ramsey on the roof of the Canadian Embassy in Washington, D.C. on June 7. Ramsey said Monday that the NDP would consider not including climate change in the deal to be a "red flag to all Canadians." Photo from Ramsey's Twitter account
Not including climate change would be 'red flag' says NDP
Inserting the language of climate change in the deal is a matter that the opposition NDP believes should be a red line for Canada.
“I believe that including that language addresses the very real reality that we face [on] the globe right now,” said the NDP’s international trade critic Tracey Ramsey, appearing in front of reporters after Freeland’s comments.
“Trying to remove or erase climate change from this agreement will be a red flag to all Canadians,” she said. The Trump administration is “starting to turn their eye away from addressing climate change,” and “it’s very important to Canadians that the environment and protections are included in trade agreements.”
Asked what she thought Canada should give up, if climate change were to be one of the country’s dealbreakers, Ramsey said it was hard to tell since negotiators haven’t revealed what’s at stake.
“This is an interesting question, because that’s what we didn’t hear today” during the committee meeting, said Ramsey.
“This is a question for the negotiators, this is a question for Minister Freeland. How important is the environment to them in NAFTA? How important is climate change?”
During the committee meeting, Ramsey had also asked the minister about including the language in the deal. But her question included another element on labour provisions which the minister tackled first, and her allotted time ran out before she could get to the second part of the question.
Tories wary carbon tax will add 'hurdles' to trade
Meanwhile, the Conservatives see it another way: that the government’s decision to march into crucial trade talks while sticking with a plan to implement a carbon tax is unnecessarily hindering the country’s negotiating position.
Conservative trade critic Gerry Ritz compared it to Ottawa’s strong pushback against a proposed import tax that was canned at the end of last month.
“We made a lot of noise about the border tax that the U.S. was going to bring in, and how unfair that would be,” said Ritz.
“The same thing is going to happen with any product trying to be exported into the U.S.; it’s going to have a carbon tax price added onto it,” he said.
“Then coming in from the U.S., is it going to have to measure up to that level as well in order to come through? It adds hurdles at the border. Everybody talks about red tape...having a carbon tax in Canada that nobody else has is certainly one of those [barriers].”
Prime Minister Justin Trudeau, seen here in Ottawa in June, helped Trump change his mind on withdrawing from the NAFTA trade deal after a phone call. Canada now says it wants a "good deal, not just any deal." Photo by Alex Tétreault
'Committed to a good deal, not just any deal'
Freeland elaborated on Canada's core objectives Aug. 14, focusing on a half-dozen goals that included opening up access to government procurement rights, more professional movement, defending Canadian rights to supply management and reforming the investor-state dispute settlement process.
"In all these discussions, we will come to the table with goodwill, and Canada’s characteristic ability and willingness to seek compromise and find win-win solutions," she said at an earlier speech at the University of Ottawa.
"But we are committed to a good deal, not just any deal."
In addition to environmental protection provisions, Freeland is also calling for new "progressive" elements in NAFTA 2.0 such as stronger labour standards and chapters on gender and Indigenous rights.
On that front, Canadian negotiators plan to use Canada's recently negotiated trade agreement with the European Union as a reference, Freeland said.
"Progressive elements are also important if you want a free-trade deal that's also a fair-trade deal," Freeland said in a question-and-answer session following the speech at the University of Ottawa.
Ottawa also aims to cut down on bureaucracy, harmonize regulations to ease the flow of cross-border business, push for more mobility for professionals and free up the market for government procurement, she told her audience.
Canada's positions will also include work to maintain key elements of the 23-year-old deal, including the process to ensure anti-dumping and countervailing duties are only applied when truly warranted.
Freeland injected some personable comments throughout her committee appearance, trying to strike a light-hearted tone at some points, and pointing out different attendees in the packed committee room.
Canada received over 21k submissions on NAFTA consultations
Ottawa's negotiating team will sit down with their American and Mexican counterparts Wednesday in Washington, D.C. for the first round of talks.
Last month, U.S. Trade Representative Robert Lighthizer released the Trump administration's set of priorities for the NAFTA talks.
At committee, Freeland laid out the economic advantages of NAFTA as it stands today. Canada, the United States and Mexico account for a quarter of global GDP, she said, despite holding only seven per cent of the world’s population. Canada’s economy is 2.5 times larger than it otherwise would be
"We are seizing this opportunity to improve upon an agreement that is already good,” she said.
Canada is "America's biggest overall customer, by far,” said Freeland. "Quite a few of us have uttered that sentence in recent months.”
Canada received over 21,000 submissions in its NAFTA consultations, said Freeland, including from 16 “academics and think tanks,” 158 associations and 55 businesses.
Freeland said at the University of Ottawa that she believes Canada and its NAFTA partners can find common ground on new chapters for labour, the environment, gender and Indigenous rights.
But she also warned that Canadians should brace for some tense exchanges during the NAFTA talks, in general.
"I think we all do need to be prepared for some moments of drama," she said. "We should just see that as an expected part of any trade negotiations."
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House Science Committee chair says climate change is a good thing.
Rep. Lamar Smith is arguing that pumping the atmosphere full of carbon dioxide is “beneficial” to global trade, crop production and the lushness of the planet.
WASHINGTON — Rep. Lamar Smith (R-Texas) — who has spent his career cozying up to fossil fuel interests, dismissing the threat of climate change and harassing federal climate scientists — is now arguing that pumping the atmosphere full of carbon dioxide is “beneficial” to global trade, crop production and the lushness of the planet.
Rather than buying into “hysteria,” Americans should be celebrating the plus sides of a changing climate, Smith argues in an op-ed published Tuesday in The Daily Signal, a news website published by the conservative Heritage Foundation.
Smith — who has used his power as chairman of the House Committee on Science, Space and Technology to push his anti-science views — kicks off his op-ed by claiming Americans’ perception of the phenomenon is “too often determined by their hearing just one side of the story.”
“The benefits of a changing climate are often ignored and under-researched,” Smith said. “Our climate is too complex and the consequences of misguided policies too harsh to discount the positive effects of carbon enrichment.”
Increased carbon dioxide, Smith writes, promotes photosynthesis, resulting in a “greater volume of food production and better quality food” and “lush vegetation” that “assists in controlling water runoff, provides more habitats for many animal species, and even aids in climate stabilization, as more vegetation absorbs more carbon dioxide.” Warmer temperatures, he notes, results in longer growing seasons
Smith goes as far as to make a case for why a rapidly melting Arctic, which scientists warn could cost tens of trillions of dollars by the end of this century, is a positive thing.
“Also, as the Earth warms, we are seeing beneficial changes to the earth’s geography,” he writes. “For instance, Arctic sea ice is decreasing. This development will create new commercial shipping lanes that provide faster, more convenient, and less costly routes between ports in Asia, Europe, and eastern North America. This will increase international trade and strengthen the world economy.”
BILL CLARK/CQ ROLL CALL VIA GETTY IMAGES
Rep. Lamar Smith (R-Texas), despite being chairman of the House Committee on Science, Space, and Technology, has a long history of dismissing mainstream climate science.
The op-ed comes roughly two months after Smith led a group of lawmakers on what BuzzFeed described as a “secret tour of the melting Arctic.” The unpublicized, weeklong, multi-stop outing included meeting with climate scientists and learning about how they track the levels of carbon dioxide and other greenhouse gases, according to BuzzFeed.
While Smith reportedly canceled an interview with BuzzFeed to discuss the trip, Rep. Jerry McNerney (D-Calif.) told the publication that he and Smith had productive discussions about the climate.
Monday’s op-ed would suggest that, while Smith may have accepted the reality of the threat, he’s opted for the when-life-gives-you-lemons-make-lemonade approach.
Michael Mann, a climate scientist at Pennsylvania State University who sparred with Smith during a March hearing on climate science, told HuffPost via email that “it is clear” Smith is “slowly advancing through the stages of denial ... having apparently now moved from ‘it’s not happening,’ to ’ok—it’s happening, but IT WILL BE GOOD FOR US!”
“One step at a time I suppose,” Mann wrote, “but at least there is some apparent progress toward the truth (that climate change is real, human-caused, and already a problem).”
Joseph Kopser, an aerospace engineer and Army veteran from Austin, Texas, is one of several Democratic candidates vying for a chance to unseat the 16-term Republican in the 2018 midterm election. Reach Monday by phone, Kopser described Smith’s op-ed as “stunning.” And he said it is “exactly” what the late English author George Orwell warned about in his dystopian novel Nineteen Eighty-Four.
“He is acknowledging the warming planet,” Kopser said. “And he’s trying to use Orwellian speak to say that, ’No, no, no — These terrible things that scientists have talked about and proven and explained why they are terrible for our planet, are actually good things.”
What Smith is doing, Kopser said, is “equivalent to telling somebody who’s in a flood, ‘Oh no no, all this water is going to be great. Just think how much more drinking water you’re going to have available.’ Or somebody in a burning house, “No no, think, you now no longer need a furnace because you have this wonderful heat source all around your house.’”
First elected in 1986, Smith is the 14th longest-serving member of the current U.S. House. The San Antonio native has received more than $700,000 from the oil and gas industry over those years. In his five years as chairman of the science committee, he has worked to defund climate research and harassed federal climate scientists, whom he has accused of playing “fast and loose” with data. He has also sprinted to defend the fossil fuel industry ― namely Exxon Mobil Corp. ― from investigations into their own records on climate change and used his power to stack hearings with coal and chemical lobbyists and climate skeptics.
Burning fossil fuels, Smith writes in his op-ed, has “helped raise the standard of living for billions of people.”
“The use of fossil fuels and the byproducts of carbon enrichment play a large role in advancing the quality of human life by increasing food production to feed our growing population, stimulating the economy, and alleviating poverty.
Bad deals like the Paris Agreement would cost the U.S. billions of dollars, a loss of hundreds of thousands of jobs, and have no discernible impact on global temperatures. Instead of succumbing to fear tactics and exaggerated predictions, we should instead invest in research and technology that can help us better understand the effects of climate change.”
Smith is among a trio of Republicans that nonprofit political action committee 314 Action is targeting for their anti-science views. Smith’s office did not immediately respond to HuffPost’s request for comment Monday.
In a statement Monday, 314 Action founder Shaughnessy Naughton blasted Smith’s op-ed as the latest of his “industry-funded attacks on scientific consensus around the issue” of climate change.
“Rather than playing the hits to the Heritage Foundation’s mouthpiece, I challenge Mr. Smith to explain the benefits of climate change to the displaced people of Isle de Jean Charles or Tangier Island,” said Naughton, referring to two U.S. islands vanishing as ocean levels rise. “If climate scientists can’t convince him, maybe our country’s first climate refugees can.”
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Could trade dispute with China bring an end to US solar boom?
Low-cost solar cells produced in China have helped power the recent surge in the U.S. solar industry. But a case now before the federal International Trade Commission could lead to tariffs that would jeopardize U.S. solar’s rapid growth.
Cheap Chinese solar cells have powered a boom in the U.S. solar industry. They have helped drive down the cost of making electricity from sunlight by about 70 percent since 2010, leading to double-digit growth rates in rooftop and utility-scale installations, according to the industry. Last year, for the first time, solar added more generating capacity to the electricity grid than any other fuel, including natural gas. That’s welcome news to those who worry about climate change.
Now, though, the solar boom may be in jeopardy. The U.S. International Trade Commission, an independent federal agency, has begun an investigation that could lead to sweeping trade protections against the imports that would raise the costs of solar power and could bring a halt to solar’s rapid U.S. growth.
If the trade commission finds that imports caused serious harm to U.S. solar manufacturers, it will recommend trade remedies, which could potentially include tariffs on all imported solar products. President Donald Trump, a champion of U.S. manufacturing, would get the final word on any action — a prospect that has the solar industry in a tizzy.
The prospect of global tariffs “poses an existential threat to the broad solar industry and its 260,000 American jobs,” says Abigail Ross Hopper, the chief executive of the Solar Electric Industries Association, the industry’s largest trade organization. Most solar jobs in the United States are in sales and installation, not manufacturing, but tariffs could drive up the cost of solar and make it less competitive.
The trade investigation began in response to a petition filed by Suniva, a bankrupt manufacturer of solar cells and panels based in suburban Atlanta, with factories in Georgia and Michigan. Suniva, the second largest U.S. solar panel maker by volume, has been joined in the case by SolarWorld Americas, the largest U.S. solar panel manufacturer, which has a factory in Oregon.
U.S. solar manufacturers “simply cannot survive” in a market where foreign imports “have unexpectedly exploded and prices have collapsed,” Suniva said in its petition. SolarWorld Americas said it decided to join with Suniva because “massive overproduction” of Chinese solar cells and panels has “led to the near-destruction of remaining solar producers in America.”
The domestic solar firms have asked the Trump administration to impose steep tariffs on all imported solar cells, which are the devices inside solar panels that convert sunlight into electricity, and to set a floor price on solar panels containing imports. Those measures would roughly double the cost of imported panels, analysts say.
Some industry analysts say higher costs for solar will slow the industry’s growth. According to a report from analyst IHS Markit, demand for U.S. solar photovoltaics could be reduced by 60 percent over the next three years if the trade commission grants Suniva’s petition.
Hugh Bromley, an industry analyst with Bloomberg New Energy Finance, said in a note to clients that Suniva’s accusations are “riddled with holes and hypocrisies.” Still, he adds, “Those may not matter if the case makes its way to President Trump’s desk.”
As a candidate and as president, Trump has vowed to enforce U.S. trade laws as a way to strengthen the nation’s manufacturing base. Slapping tariffs on imported solar panels would benefit not only domestic solar manufacturers but traditional energy producers, including the coal industry, that compete with solar.
The International Trade Commission (ITC) has already made one statement about the Suniva petition — that, within the meaning of trade law, it is “extraordinarily complicated.” About that, no one disagrees. For starters, Suniva is majority-owned by Shunfeng International Clean Energy, a Chinese company that opposes Suniva’s petition, and SolarWorld Americas is a subsidiary of an insolvent German firm. Yet both are taking a stance against imports into the U.S.
How can that be? In Suniva’s case, the petition is being driven by SQN Capital Management, a New York-based asset manager that made $51 million in loans to Suniva and spent another $4 million on legal fees. In a letter to the China Chamber of Commerce for Import & Export of Machinery & Electronic Products, SQN offered to drop the petition if a buyer could be found for Suniva’s manufacturing equipment, which SQN says is worth $55 million. The Chinese declined to make a deal, and the issue became moot when SolarWorld Americas entered the case and the ITC decided to investigate.
This isn’t the first time that U.S. solar manufacturers have sought trade sanctions. In 2012, the Obama administration imposed modest tariffs on Chinese imports after finding that the Chinese government provided illegal export subsidies to its manufacturers. Two years later, it extended the tariffs to Taiwan. Those moves were prompted by cases brought by SolarWorld Americas.
Nevertheless, solar imports to the U.S. continued to surge — from $5.1 billion in 2012 t0 $8.3 billion in 2016, according to Suniva — as Chinese companies built factories in Thailand, Vietnam, and Malaysia, which were unaffected by the tariffs. Last year, the U.S. imported $520 million in panels from Thailand, up from almost nothing in 2012, and another $514 million from Vietnam, up from less than $1 million in 2012, according to Suniva.
That’s why Suniva now wants tariffs imposed globally. “Without global relief, the domestic industry will be playing ‘whack-a-mole’ against [solar cells] and modules from particular countries,” says Matthew McConkey, a lawyer for Suniva, in the petition to the ITC.
Trade experts agree that China has subsidized its giant solar manufacturers. Beijing and provincial governments provided free or low-cost loans; artificially cheap raw materials, components, and land; support for research and development; and a demand that was artificially driven by domestic regulation, according to Usha C.V. Haley and George Haley, wife-and-husband authors of a 2013 book, “Subsidies to Chinese Industry: State Capitalism, Business Strategy and Trade Policy.”
“Production in China is still heavily subsidized,” says Usha Haley, a professor of management at West Virginia University. “There is little doubt in my mind that it is going to become a monopoly producer — and then, of course, they will raise prices.”
What’s more, a solar industry dominated by a handful of Chinese companies will have little incentive to innovate, argues Stephen Ezell, a vice president at the Information Technology & Innovation Foundation, a Washington think tank. The U.S. industry, which invented solar photovoltaics and still leads the world in solar patents, simply will not have the resources it needs to invest in research.
“These industries are fundamentally about generating the next-generation product,” Ezell says. “We’re getting locked into a lower level of technological development.” In the long run, that would make it more difficult for the global solar industry to dislodge its fossil-fuel competitors.
Still, U.S. firms that complain about subsidies run the risk of being called hypocrites. Suniva, for instance, enjoyed state tax incentives for its Michigan plant, and “many other U.S. solar manufacturers have received tax, grant, and loan guarantee incentives,” says analyst Hugh Bromley. SolarCity, a unit of Tesla, is building a $900 million factory in Buffalo, New York, to make solar panels, with major subsidies.
Other solar manufacturers headquartered in the U.S., including SunPower and First Solar, have located a majority of their manufacturing offshore. SunPower has joined with the Solar Electric Industries Association to oppose the tariffs, for obvious reasons. SunPower, First Solar, and SolarCity all declined to comment on the trade issue.
Some analysts believe that the industry will be able to adjust to the tariffs. Setting a floor price for panels will lead developers to choose higher-efficiency, higher-cost panels that will enable other price reductions along the supply chain, says Roberto Rodriguez Labastida, an analyst with Navigant Research. “There will be some shake-ups and adjustments,” he says, but nothing like the meltdown being forecast by some.
The ITC will decide in September whether U.S. manufacturers have been injured. Shara Aranoff, a former chair of the commission who is now a corporate lawyer, says the nonpartisan ITC commissioners will be guided by the law and the facts. “It is one of the most independent agencies in the federal government,” she said.
If the commission finds harm, the issue moves into the political arena. Already, Daniel Kildee, a Democratic congressman from Michigan, and Rob Woodall, a Republican congressman from Georgia, have called for trade remedies. The solar industry is arguing that tariffs will kill many more jobs than they will save, and that there are better ways to protect U.S. manufacturing.
In making any decision, the Trump administration would be free to take anything into account — jobs, the impact of higher solar prices on consumers, and, at least in theory, the environment. Few would expect the environment to be high on the administration’s priority list here. But what will the president do? As with so many issues in Washington these days, that’s anybody’s guess.
Marc Gunther has reported on business and sustainability for Fortune, The Guardian, and GreenBiz. He now writes about foundations, nonprofits, and global development on his blog, Nonprofit Chronicles.
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World food trade runs chokepoint gauntlet.
A group of physical chokepoints – roads, ports and waterways – could disrupt the flow of world food trade, with drastic consequences.
The crowded Suez Cana is a likely checkpoint for the world food trade.
Image: By https://www.panoramio.com/user/2433337?with_photo_id=64163879, via Wikimedia Commons
A group of physical chokepoints – roads, ports and waterways – could disrupt the flow of world food trade, with drastic consequences.
LONDON, 27 June, 2017 – The sheer size of the world food trade is hard to digest. The amount of food transported around the world to fill empty stomachs is prodigious.
Every year a global fleet of ships, trains and trucks moves enough of four staple crops – maize, wheat, rice and soya – internationally to feed about 2.8 billion people (more than one in three of us alive today).
But this world food trade, which also includes agricultural fertilisers, is highly vulnerable, a new report says. The report, from the UK-based independent policy institute Chatham House, says there are a small number of key physical chokepoints where things could go wrong, with the risk of price rises, food shortages, and, as it puts it, “consequences that could reach beyond food markets”.
Security-critical
The report, Chokepoints and Vulnerabilities in Global Food Trade, identifies fourteen chokepoints as critical to global food security. Eight are maritime waterways, including the Panama and Suez canals and the Turkish Straits, which link the Black Sea to the Aegean and Mediterranean.
There are three inland chokepoints, including the US inland waterways and Brazil’s road network, and three coastal ones, including the Black Sea ports and those on the US Gulf Coast.
The report draws on data included in a new interactive online database, available to those researching the global resource trade.
Laura Wellesley, co-author of the report, says: “The risks are growing as we all trade more with each other and as climate change takes hold. The oil industry has been mapping this sort of risk for years but it has been woefully overlooked in discussions of food security.
“Past events, including floods in Brazil and the southern US, and the export bans on wheat from the Black Sea countries that contributed in part to the Arab Spring, give us a flavour of the sort of disruptions that can occur when chokepoints are closed.”
Chinese mitigation
The authors say the increasingly interrelated nature of the world food trade means that disruption to one trade route could have knock-on effects for others. The potential risk is both poorly understood and poorly managed, except by China, which “has done the most to mitigate its exposure to chokepoint risk.”
Beijing, they say, “is acutely aware of its exposures and actively invests in overseas infrastructure to relieve pressure on existing chokepoints, diversify supply routes, and increase its operational footprint along its supply chains.”
They also say the ongoing territorial dispute over the South China Sea may add to insecurity over food in the region.
The report says more than half the global trade in soya, cereals and fertilisers passes through at least one maritime chokepoint, while 10% passes through a maritime chokepoint for which there is no viable alternative.
“Climate change is going to make things worse by increasing the frequency of extreme weather events, fuelling conflict, and damaging already-weakened infrastructure”
A fifth of global wheat exports transit the Turkish Straits each year, and four ports on Brazil’s southern coastline handle nearly a quarter of global soya exports.
The report identifies three main types of risk: political and institutional; conflict and security; and weather and climate. Laura Wellesley says: “Climate change is going to make things worse by increasing the frequency of extreme weather events, fuelling conflict, and damaging already-weakened infrastructure.”
Nearly 25% of all food for direct human consumption is traded on international markets, and the quantity is increasing. The Middle East and North Africa (MENA) is the world region most dependent on food imports, especially on wheat from the Black Sea region coming through the Turkish Straits.
Just over a third of all grain imports to MENA passes through at least one maritime chokepoint for which there is no viable alternative. The report says the risk of disruption, given the political situation in the region, is high.
Low-income net food importers in sub-Saharan Africa, including Uganda, Ethiopia, Kenya, Tanzania and Sudan, are also very exposed, as are Japan and South Korea.
Risks growing
Chatham House says the report is a “first-of-its-kind analysis”, but the wider problems of food security have attracted attention for years, and especially the probable impact of weather and climate.
Other studies have examined the viability of different approaches to feeding the world. A report late last year warned of one consequence of the growth in human pressure.
The report says the risks to the chokepoints are increasing as our dependency on them grows. Chronic under-investment in infrastructure is a significant problem, and climate change, as so often, will multiply existing threats.
The authors write: “If a hurricane comparable in ferocity to Hurricane Katrina in 2005 were to shut down US exports from the Gulf of Mexico at the same time as extreme rainfall rendered Brazil’s roads impassable (the latter happened in 2013), up to 50% of global soya exports could be affected.
“If this in turn occurred in conjunction with a Black Sea heatwave similar to the one recorded in 2010, around 64% of global soya shipments could be halted or delayed.” – Climate News Network
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Solar panel makers look to White House for help.
Solar panel manufacturers are pushing to impose trade penalties on imports to the United States, dividing their industry while potentially creating a new trade case for President Trump.
BY TIMOTHY CAMA - 06/20/17 06:00 AM EDT
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© Getty Images
Solar panel manufacturers are pushing to impose trade penalties on imports to the United States, dividing their industry while potentially creating a new trade case for President Trump.
Two companies that manufacture solar panels and related technology in the United States are asking the Trump administration to impose pricing policies, such as tariffs or price floors, on imported panel technologies.
Suniva Inc. and SolarWorld USA say a surge of cheap imports from China and elsewhere are destroying domestic manufacturing of the panels.
Suniva filed a petition with the International Trade Commission (ITC) for the trade remedies in May, shortly after filing for bankruptcy. SolarWorld, a unit of a German company, joined the case later that month after making big job cuts.
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But the Solar Energy Industries Association (SEIA), which represents much of the rest of the solar industry, including some U.S. manufacturers, is fighting the effort, which it says would decimate solar power and threaten the growth the sector has seen over the last decade by significantly raising prices.
The SEIA commissioned a study last week that said 88,000 jobs would be lost if Suniva won.
The industry’s dispute is likely to be settled by the White House.
Under Section 201 of the Trade Act, Trump has wide-ranging authority to implement protections if he believes that the domestic industry has been injured seriously.
The ITC is due to make a recommendation to Trump after its investigation ends later this year.
It’s not yet known which side Trump might favor, but he campaigned on protecting American manufacturing and has long been skeptical of imports to the United States.
“There’s a very good chance that if the ITC says that there is injury, chances are that Donald Trump would give them protection,” Michael Moore, a trade economist at George Washington University, told The Hill.
The controversy specifically centers on photovoltaic cells and modules, the pieces in solar panels that take the sun’s radiation and turn it into electricity.
Only about 13 percent of the solar panels installed last year in the United States were produced domestically.
“It’s really a fight between a few of the remaining domestic manufacturers against almost everyone else in the solar industry. Those who sell and install it, but also asset management companies, the software companies, the engineering and procurement companies,” said Shayle Kann, head of GTM Research, the clean-energy research unit of Greentech Media.
To Suniva and SolarWorld, the huge growth in the solar sector has left behind U.S. producers.
“While this action is not undertaken lightly, the fact is the American [crystalline silicon photovoltaic] cells and modules industry is disintegrating,” Suniva wrote to the ITC.
“This industry simply cannot survive in a market where foreign CSPV cell and module imports into the United States have unexpectedly exploded and prices have collapsed.”
Christian Hudson, an attorney at Mayer Brown who represents Suniva, said that a Section 201 petition is the best option so that Suniva and its peers can get back on their feet.
“Once U.S. solar manufacturing jobs and the industry as a whole are gone, they are not likely to come back because the investment in the industry will dry up, leaving behind only fluctuating project-to-project and part-time construction jobs for solar panel installation,” he said.
“The solution is to create breathing space for the U.S. industry to rebuild.”
SolarWorld struck a similar tone.
“Unfortunately, the U.S. solar manufacturing industry has no other choice, because it’s almost been driven into extinction by these trade practices,” said Timothy Brightbill, a Wiley Rein attorney representing the firm.
On the campaign trail and since taking office, Trump has frequently criticized countries that import to the U.S. and cited the trade deficit as an indicator that other countries, like China, are taking advantage of the U.S.
The president has also expressed a willingness to use the power of his office to boost domestic manufacturing.
“We have a strong case that U.S. solar manufacturing has been injured, and we think that strongly aligns with the administration’s interest in promoting U.S. jobs and U.S. manufacturing,” Brightbill said.
Abigail Ross Hopper, president of the SEIA, said her group supports domestic panel manufacturers. But trade penalties are not the best way to boost manufacturing, she said.
“The impact of it would be devastating to demand, it would be devastating to jobs and it would be devastating to customers who want this competitively priced energy,” Hopper said.
“If you want to have an honest conversation about how to bolster cell and module manufacturing in the United States, then we should have that conversation,” she said. “We shouldn’t employ these blunt instruments and bash our industry over the head with those legal proceedings.”
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A torrent of water and concrete imperil Chennai’s IT boom.
Almost a decade ago, when the first of Chennai’s IT office buildings replaced coconut groves along the Bay of Bengal, leaders hailed the potential for a new wave of clean jobs. Nine years later, it is clear that planners did not fully anticipate the consequences.
CHENNAI, India – Almost a decade ago, when the first of Chennai’s bleach-white IT office buildings replaced coconut groves along the Bay of Bengal south of the city center, leaders hailed the potential for a new wave of clean jobs. Nine years later, it is clear that planners did not fully anticipate the consequences.
Information technology proved so popular in Chennai that it is now India’s second largest IT center behind Bengaluru. But in bringing down protective coconut palms and constructing the dense strip of offices and contemporary residences atop water-absorbing coastal wetlands, planners put the city’s fastest growing business sector at the mercy of Tamil Nadu’s suddenly dangerous meteorology.
In the last 18 months, the IT corridor has been bullied by fierce flooding, a dangerous cyclone, and severe drought. New home buyers are starting to settle in other neighborhoods in north and west Chennai. Nervous IT office managers are weighing relocation.
“Ecological distress has always been a factor but it’s surely moved up the value chain because of the last few years,” said Preetam Mehra, the head of Chennai operations for the American commercial real estate services firm, CBRE. “Chennai didn’t have a history of any major ecological events and hence that was not on top of people’s minds. Now, everyone is more diligent about where they invest, taking further precautions about how and when they want to invest.”
Seasons of Trouble
Chennai’s location along a dynamic coastline of warm, storm-fueling water has periodically put it in the path of extreme weather throughout its 400-year history. But the now 10-million strong metropolitan area has never been hit so hard as it has over the last two years.
In November and December 2015, Chennai recorded never-before-seen amounts of rainfall, leading to flooding and complete inundation of low-lying areas inside the city as well as in suburban areas. The city received more than 1,700 millimeters (67 inches) of rain in a span of three weeks; 272 mm (11 inches) of rain fell in 12 hours on December 1. Typically, the entire month of December receives 191 mm (7.5 inches).
While even the most robust city infrastructure would face inundation under such conditions, Chennai’s inadequate water storage and drainage infrastructure contributed to the flooding, which killed 470 people in the metropolitan region, according to state government figures. At one point, the Chembarambakkam reservoir, one of Chennai’s major water reservoirs, threatened to burst. City engineers responded by releasing a torrent of water into the Adyar River. All of the settlements along the 42-kilometer (26 miles) stretch of the river that runs through the heart of the city were completely inundated. The raging river rushed into already flooded lakes and ponds and drowned the IT corridor. Water rose to the second floor of some buildings. Chennai and its high tech business district were out of commission for two weeks.
Office managers had barely finished repainting and replacing water-logged furniture when Cyclone Vardah stormed in from the Bay of Bengal in early December 2016. The cyclone uprooted Chennai’s urban forest, downing more than 100,000 of the city’s 450,000 trees; power lines snapped across the city; and an undersea cable that supported the corridor’s online networks was severed. Again, it took weeks for normalcy to return.
Cyclone Vardah struck as Chennai was also in the midst of its worst drought in 140 years. Water scarcity has disrupted drinking supplies, contributed to rising food prices, and put India’s fourth largest metro area on notice that a new era of acute ecological disruption has dawned.
Not Business as Usual
According to estimates, the economic tolls of the flood and cyclone were pegged respectively at $3 billion and $1 billion citywide. Chennai’s IT industry accounted for some $60-million worth of losses from the floods. Industry losses from the cyclone have not yet been calculated, though authorities project they will be consistent with the value of the flood damage because electricity and internet access were hit so hard.
“Luckily we make it a point not to have any offices in the ground or any of the lower floors, so that saved us from a lot of damage,” said Narasimha NK, director of finance at Ajuba Net, a leading business processes outsourcing firm. “The bigger problem for us was that the net connectivity was affected. We are heavily dependent on voice links. That was a big setback. The local government needs to concentrate on drainage, roads, and better public infrastructure, especially in the IT corridor. Having said that, extreme weather is a reality in many of the big cities across the world now.”
Information technology is a $150 billion-a-year industry in India. Chennai’s IT corridor hosts offices for some of the most recognizable multinational brands in software, outsourcing, computer design, engineering, and telecommunications, including Accenture, Amazon, eBay, Microsoft, IBM, Ford, TCS, Infosys, and Verizon. The city offers much to recommend for employers including a well-educated and skilled pool of workers, clean beaches, warm weather, and a sunny cultural disposition. Market research firms reported in 2016 that Chennai’s IT sector accounted for 15 percent of the $110 billion Indian software export market.
Formally launched in 2008, the IT corridor project was intended to amplify those recruiting assets. More than 200,000 people are now employed in 1.3 million square feet of office space. The corridor’s construction was divided into two phases. The first involved building roads and related infrastructure for offices and residences along a 20-kilometer (12 miles) boulevard. The second phase, not yet finished, extends the development 26 kilometers (16 miles) further.
Whether it gets that far is now in doubt. While the corridor’s linear design runs as straight as an arrow, its land use and infrastructure planning are scattershot. Local panchayat (rural development) bodies, mostly falling under neighboring Kanchipuram and Thiruvallur districts, were allowed to make decisions on land sales and construction. Development goals supplanted all other priorities, especially safeguarding the area’s assortment of lakes and wetlands. Big buildings and expanses of pavement replaced water-absorbing marshes. In particular, new residential construction and IT office space have steadily encroached on the 230-square-kilometer (90 square miles) Pallikaranai freshwater marsh over the last decade.
“People need to understand that lakes, ponds, and other water bodies have great enviro-economic value to them,” said Arun Krishnamoorthy of the Environmental Foundation of India, which specialises in cleaning up and restoring water bodies. The IT corridor has some of the largest water bodies in and around Chennai which are now greatly encroached upon. “For me, the IT corridor is a model of how not to develop,” he said. “There’s no long-term vision for the area and we are now paying the price for this.”
Informal Water Networks
Local governing boards also left it up to developers whether to build a unified water transport and waste disposal system. Most chose to forget about it. Water is instead supplied to office buildings and residential communities by over 850 tanker trucks a day, each containing 12,000 liters (3,200 gallons).
To deal with sewage, buildings use individual septic systems. A few IT offices have taken a zero waste policy where all wastewater is recycled on site. Most, however, rely on sewage tankers to haul the wastewater to a nearby treatment plant.
The lack of basic necessities is proving to be a new deterrent for business in the aftermath of the floods and the advent of the drought.
The precariousness of the informal water transport network was first exposed in October 2014 when a strike by truck drivers almost brought business along the corridor to a complete halt. While the tanker owners called off the strike within two days, the Federation of Indian Chambers of Commerce and Industry estimated that another day of strike would have led to $16 million in daily losses.
“I have always thought of Chennai as a city of corridors,” said A. Srivathsan, a professor at the Center for Environment Planning and Technology in Ahmedabad. “The city planners never thought of building a silicon city or an enclave. They wanted to stretch development to a larger region. But they didn’t think of developing integrated transport nor facilitating for basic infrastructure and services.”
“The promise was that once big-ticket investments came in, it would create linkages and generate jobs,” said Vijaya Bhaskar, a professor at the Madras Institute of Development Studies. “But basic public services are, for some reason, not considered important or critical, and that has been the biggest problem with the IT corridor.”
“The promise that the IT corridor was built with is only halfway there,” Bhaskar said. “But in many aspects it is already crumbling – the corridor as well as the promise. These companies usually tend to carry on until local resources are exhausted and then move on elsewhere. In Chennai, if these issues are not addressed proactively, the chance of resources getting exhausted, as well as IT majors shifting out soon, taking their business with them, is a serious possibility.”
Dealing With Disaster
The triple whammy of flood, cyclone, and drought revealed how vulnerable the IT corridor is to disruption. Companies are now busy writing contingency plans for environmental disasters. “Ecology is a serious economic factor in people’s minds,” said Preetam Mehra of CBRE.
Just how serious is a matter of dispute among IT office executives and city authorities. Many executives assert that Chennai’s business climate is stable and the city’s ecological torment is consistent with conditions in other competitor metro areas. They also said in interviews that the extreme weather events of the last two years are aberrations.
“As of now, it’s not a big issue,” said Narasimha NK of Ajuba Net. “Despite all the problems, Chennai, especially the IT corridor, is a better place to do business than other locations. We believe the risk of a flood sort of situation repeating again is not very high and hope the worst is behind us.”
“The lack of infrastructure is a relative factor,” said Aubrey Daniels of the American Chamber of Commerce in India. “The fact is that Chennai is a cheaper city to work compared to other cities. It also has a large, well-educated talent pool available, which is not the case elsewhere. I doubt there’s a serious risk of losing business. The ability to bounce back from catastrophe is high here. In case of disasters, if there is no power, companies are happy to run generators because they know that the city authorities will step up and restore electricity as soon as they can.”
Other authorities insist that the risk of serious environmental disruption is grave and likely to grow worse without evasive action. “It is a big risk already,” said Arun Krishnamoorthy. “Many IT firms get damaged massively every time there’s an extreme weather event. More importantly, they lose working days, which means a tremendous loss of business for them.”
“A lot of companies are looking at their business continuity plans in a big way,” said Mehra, including relocating. During the floods many companies arranged for their employees to travel to Bengaluru and Hyderabad where they were accommodated for a few weeks before returning back to Chennai.
“This is definitely a cause for concern,” said Krishnamoorthy. “The fact that Chennai’s natural environment is taking such a hit, not only because of extreme weather but also because of rampant development, will definitely affect business in the long run. The city, which has a reputation of being great for business, will lose its sheen if things continue as is.”
The conflicting demand for water, food, and energy is one of the defining challenges of the 21st century. Global Choke Point, a collaboration between Circle of Blue and the Wilson Center, explores the peril and promise of this nexus with frontline reporting, data, and policy expertise. “Choke Point: Tamil Nadu” is supported by the U.S. Consulate General in Chennai. Jayshree Vencatesan of Care Earth Trust, Nityanand Jayaraman, and Amirtharaj Stephen provided expertise and invaluable guidance.
Sibi Arasu is an independent journalist based in Chennai. Follow him on Twitter @sibi123.
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In tougher climate, Chinese automaker cuts jobs, shifts to green cars.
Chinese automaker Qoros, founded 10 years ago, has cut jobs and is shifting its focus to faster-growth electric cars in response to increased competition in the world's largest car market.
BEIJING, Feb 24 Chinese automaker Qoros, founded 10 years ago, has cut jobs and is shifting its focus to faster-growth electric cars in response to increased competition in the world's largest car market.
In previously unreported cuts, Qoros, which is backed by nearly $1 billion each from Chery Automobile and Israeli-funded Kenon Holdings, has shed more than a fifth of its workforce - down to 1,910 from 2,450 two years ago, a spokesman said.
Four former Qoros employees said the cuts included the recent loss of around 80 engineering contractors and workers, mostly more expensive non-Chinese hires and senior staff.
Qoros has won quality plaudits for its petrol cars, including its Qoros 5 sport-utility vehicle launched last year, but it now highlights some of the risks that auto start-ups face as competition intensifies and a slowing Chinese economy weighs on car sales.
"You tend to drink your own Kool-Aid and believe whatever forecast you had. Then you grow and grow and grow, and before you know it, you have a monster," Dan Cohen, vice chairman, said in an interview. "I see this happening now in some other (start-up) companies."
There's tougher competition all around.
Established Chinese automakers such as Geely Automobile Holdings and Great Wall Motor are catching up with global rivals in quality; those global automakers are increasingly competing with cheaper models; and dozens of local electric car start-ups crowd a 'new energy' market aggressively promoted by the government.
Shanghai-based Qoros has lost around 9.5 billion yuan ($1.4 billion) since it was founded, and has missed sales targets by some margin.
It has recently held talks with Chery on how to reduce costs, said one recently laid-off employee, who didn't want to be named as he seeks new employment.
Qoros is leveraging Chery's larger scale to seek better deals in buying parts, and the two companies are considering launching "additional platforms" that can rapidly be put into mass production, Cohen said.
Chery shares resources with all its partners, which include a joint venture with Jaguar Land Rover, in research, production, manufacturing and personnel related to parts, a spokeswoman told Reuters, adding: "Both shareholders of Qoros will continue as before to support its development."
Cohen said Qoros must more aggressively pursue advances in battery electric and plug-in hybrid cars as well as autonomous driving to stay competitive.
"Qoros eventually will be an NEV (new energy vehicle) company, that's 100 percent sure," he said.
FUNDING ADVANTAGE
Electric vehicles are simpler to build - a manufacturer can easily order a battery and electric motor from a third-party and put it in a standard car frame. But if it's that simple, rivals can do the same, increasing the competitive pressure, said Yale Zhang, managing director of consultancy Automotive Foresight.
China's government is pushing battery and plug-in hybrid cars to reduce pollution and boost local automotive technology. Sales in this segment have grown more than sixfold since 2014.
In terms of survival, Qoros may have a funding advantage over other electric car start-ups, which are mainly backed by venture capitalists who will be quicker to pull the plug if sales targets are missed, Zhang said.
"The Qoros investors are different. The Israeli investor looks very generous and the local investor is a state-owned enterprise," he noted.
Idan Ofer, an Israeli businessman who is the principal shareholder of Kenon, inherited half of his father's business empire and has shown an appetite for risk - investing in an electric car charging station venture called Better Place that went bankrupt in 2013, and specialist deep-water driller Pacific Drilling SA, whose U.S. market value has slumped with the price of oil.
Ofer's net worth has more than halved since 2013 to $3 billion, according to Forbes.
A third-party representative for Kenon declined to comment.
Cohen, who worked for Ofer prior to joining Qoros, said Kenon remains committed to the automaker despite stock exchange filings that say Kenon is looking to reduce its exposure to Qoros.
For now, Cohen says Qoros will continue to upgrade its petrol vehicles, and expects sales to increase by more than 50 percent this year to at least 37,000 vehicles, but future products will mostly be NEVs. It has previously said it had hoped to be selling 150,000 cars a year by 2015 or 2016.
Qoros hopes to almost double its dealerships this year, to 200, the spokesman said, with Cohen acknowledging its current network has been too small and often in the wrong locations.
Cohen said he expects Qoros to be profitable by 2018.
($1 = 6.8791 Chinese yuan renminbi) (Reporting by Jake Spring; Editing by Ian Geoghegan)
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