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Climate change , trade and competitiveness – A European perspective

Climate change , trade and competitiveness – A European perspective. Geneva Annual China Dialogue November, 27-28, 2008 Fredrik Erixon European Centre for Int’l Political Economy (ECIPE). Proposition 1.

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Climate change , trade and competitiveness – A European perspective

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  1. Climatechange, trade and competitiveness – A European perspective GenevaAnnual China Dialogue November, 27-28, 2008 Fredrik Erixon European Centre for Int’lPoliticalEconomy (ECIPE)

  2. Proposition 1 Europe wants to lead on carbon-emission reduction, but is making slow progress at home.

  3. Import intensity and energy intensity (2006)

  4. Energy prices for industry

  5. Proposition 2 Falling prices for raw materials helps ambitions to lower carbon emissions as sectors buying emission allowances are raw-matieral intensive. But the effect is temporary.

  6. Aluminium price, 15-months buyer. London Metal Exchange

  7. Copper (grade A), 15-months buyer, London Metal Exchange

  8. Tin price, 15-months buyer, London Metal Exchange

  9. Proposition 3 There will be strong pushes for carbon-based trade measures, but some of the costs will ”temper passions”.

  10. A. Access to raw materials

  11. World steel consumption and production • China’scrudesteelconsumptiondoubled in the last fiveyears and represents 34 percent of world consumption. • US and EU steelconsumption on gradualbut slow growthpath. • China represented 2/3 of increasing in global steelproduction 2001-1006 – from 18 to 36 % of world steel output. • US, EU and Japan increase output, but at slow rate

  12. EU-27 apparentsteeluse and import from ChinaSource: Eurostat and IISI

  13. EU policy on raw materials • Zero tariffs on raw materials • Increase in production and consumption in Asia – esp. China and India • EU wantsbetter market access to raw materials from Asia and emerging markets • Complainsabout export taxes on raw materials, e.g. in China • Raw material vsmanufacture of input goodsmade of raw material

  14. B. Unlikely to affect others choices • Tariffs have the potential to affect the outputin the rest of the world only in a market for a good in which the imports of a country are a substantial fraction of outout in the rest of the world. • WTO legality, ”like products”, if adjusted to firm-level behaviour?

  15. Share of EU-15 in sectoral exports

  16. Chinese exp as share of productionSource: Houser et al (2008)

  17. Demand growth by country grouping 1991-2005 (%)Source: House et al (2008)

  18. C. Costly (aluminium)

  19. Costs and benefits • Production methodology/power • Raw material a targted sector but EU wants to have better and cheaper access to raw materials • Demands from uncompetitive sectors – finished goods • Transport • Input import industry/fragmented supply chains • Who would benefit?

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