JOSE Manuel Barroso, the president of the European Council and former prime minister of Portugal, dropped a policy bomb last week. He threatened climate trade war. Europe plans to cut emissions of greenhouse gases by a further 20 per cent by 2020. It would restrict imports from countries that did not do the same thing, specifically the US and China. He called the trade problem the nuclear bomb of the climate change debate.
So, what is Barroso up to?
Bali demonstrated there is no taste for a global agreement to set global caps. China and India know the caps are a poison pill to their strategies to use growth to eliminate poverty. And you can be certain they would block measures authorising overrides of WTO rules.
The Europeans hope a Hillary Clinton or John McCain administration will see it their way. That is unlikely. Congress will choke on proposals that reduce the competitiveness of US industry. Even if it did not, China, India and other developing countries will not accept global caps in the foreseeable future.
