2020s >> 2021 >> no-1408-december-2021

Editorial – the trade talks in Glasgow

‘A COP26 deal was always going to be a messy business, if world trade talks are anything to go by’ commented Larry Elliot, the Guardian’s economics editor (15 November). It was a shrewd observation as trade was the elephant in the conference room. No one referred to it directly but it was at the back of the delegates’ minds.

Global warming has been overwhelmingly caused by the burning of fossil fuels, for transport, heating and generating electricity. The price of electricity is a key cost in manufacturing industry; its price affects all industries in a country, whether producing for the internal market or for export, and so affects its competitiveness. Being uncompetitive is not a situation any state wants to be in as this makes exports more difficult and imports cheaper.

Different countries are in a different position, due to their geography and geology, regarding the cheapest way of generating electricity. None can rely solely on renewable sources. Some have built nuclear power stations. The most used way, however, is still burning a fossil fuel, either coal or natural gas.

Countries which have an internal supply of coal that can be extracted relatively cheaply use that. Such as China and India. Their objection to ‘phasing out’ burning coal was motivated by economic considerations; they didn’t want the competitiveness of their industries to be undermined by having to switch to some more expensive method of generating electricity.

Europe and the US burn natural gas as they have easy access to it, and so have no problem with ‘phasing out’ coal, especially as this puts China and India at a competitive disadvantage. Throw in the economic interest of countries exporting coal, oil and natural gas and COP meetings are indeed indirect trade talks.

Discussions on the liberalisation of world trade have been going on under the auspices of the WTO for over twenty years now, but have not got anywhere. One reason is that it is not a question of agreeing a text, but of making a commitment under international law with sanctions if you break it. COP deals are unenforceable and India and China could have signed up to ‘phasing out’ coal and then not done it. Nobody could have compelled them to comply. The fact that COP meetings are just discussing non-binding commitments is the only reason why a unanimously agreed text called a ‘deal’ can be reached.

Since there is now a general recognition even amongst those running capitalist states that global overwarming is a problem and is due to burning fossil fuels, something will be done to try to mitigate it, otherwise it will cost states more in the longer term. However, because capitalism is divided into states, each defending the economic interest of their enterprises whether private or state, there will never be an agreement on the world plan that is required to effectively deal with the problem. That will only be possible after the end of capitalism, the aim to which the energies of climate activists would be more usefully directed than putting pressure on ‘world leaders’ to do something that capitalism doesn’t let them do.

Leave a Reply