CGD’s nonsensical response to the China clean-energy subsidy case

It’s not entirely surprising that the folks at the Center for Global Development are about as appalled at this WTO case on Chinese clean-energy subsidies as I am. Unfortunately, the apparent logic behind David Wheeler’s indignation doesn’t make a whole lot of sense. He starts off nicely: “…it’s clear what we have to do now: Subsidize clean power, exploiting scale and learning economies to drive it to cost parity with fossil power as quickly as possible.” And then, after contrasting the Obama approach to this proposed solution, Wheeler gets nice and outraged towards the end:

Think about it: The Obama administration, having defined climate change as a global emergency, has responded to a massive Chinese drive toward cheap clean technology by demanding that they retreat! Mr. President, by the logic of your own rhetoric this is insane, because we’re out of time.

But then he reels off this killer concluding sentence:

Anything that makes renewable energy cheaper, anywhere in the world, should be welcomed without reservation. For trade in clean power technology that means no restrictions: no tariffs, no quotas, no sanctions, no limits of any kind, from now on.

It doesn’t take a genius to sort out that the WTO case against China is probably legitimate because the sort of policies that Wheeler is agitating for – the sort of policies that China is trying to implement – are likely WTO-illegal trade-distorting subsidies. (Important aside: the solution to this should not be to change these subsidies to conform to WTO rules; the solution should be to change the WTO rules!) These days, “no restrictions” on trade sure as hell means no industrial policy. So which does Wheeler really want: the smart industrial policy to promote clean energy that he seems to push for most of his article, or the ideological purity of “free trade” that CGD so frequently advocates, implicitly and explicitly? It’s got to be one or the other – it can’t be both.

Flying Whale

Your commitment in 7 colors

The Center for Global Development releases the Commitment to Development Index annually, comparatively tracking how supportive developed countries are of developing countries.  The resulting maps and charts are entirely too fascinating for my workday productivity.

I don’t find the overall score to be very helpful (the US is towards the bottom, Scandinavian countries take the lead), but poking around gets you to some interesting findings.  For example, a surprisingly large portion of the US’s Aid points are in the private aid category.  Digging a little deeper: it’s because (this time not surprising) we’ve been penalized for our nasty habit of giving a large percentage of our total aid to “less poor and relatively undemocratic governments” and tying or partially tying our aid so that recipients can only spend it on donor goods and services.

The Migration score also caught my eye—especially since Greece and the US, unlikely partners by my reasoning, received the same score.  US points mostly come from an increase in the number of unskilled workers allowed into the country.  Greece gets points for a large foreign student population and the number of refugee and asylum applications accepted, the latter particularly worrisome in light of this story.

Poking around at the Trade score, and particularly the “trade-distorting farm subsidies,” I wasn’t expecting Norway to score so poorly.  Those are some unbelievably high subsidies!

Anyway, you get the picture.  Go play.

Jonas