CEOs disappointed with US withdrawal from Paris Agreement
PRESIDENT Donald Trump positions himself as a dealmaker extraordinaire. Deals are my art form, he once tweeted. Based on that, he presumably knows a bad deal when he sees one.
In fact, his presidential campaign was partly built on his promise to rescue the United States from what he paints as poorly negotiated pacts.
In January, he issued a presidential memorandum directing the US Trade Representative to formally pull the country out of the Trans-Pacific Partnership, which Trump has labelled as a disaster.
On Thursday, he announced that the US was withdrawing from an accord that sets out the global response to the threat of climate change.
He had nothing nice to say about the Paris Agreement and showed no qualms about joining Syria and Nicaragua as the only nations that aren’t part of the pact.
His chief argument was that the agreement is “very unfair, at the highest level, to the United States”.
He said it imposed “draconian financial and economic burdens” the country. “The agreement is a massive redistribution of United States wealth to other countries,” he added.
He also claimed that the agreement was less about the climate and more about other countries gaining a financial advantage over the US.
“The Paris Accord would undermine our economy, hamstring our workers, weaken our sovereignty, impose unacceptable legal risks, and put us at a permanent disadvantage to the other countries of the world,” he said.
On the costs of complying with the agreement, he relied on figures from a March 2017 study by National Economic Research Associates, a Washington DC-based economic consulting firm. The numbers relate to the cuts in jobs and production, and they are worrying.
Titled ‘Impacts of Greenhouse Gas Regulations On the Industrial Sector’, the report makes this argument: “Energy costs make up a large share of the total cost of production of manufacturing goods. A restriction in carbon emissions means that the total cost of fossil fuel increases leading to higher costs of production.
“This cost increase leads to the closing of facilities that cannot compete on a cost basis. The increasing stringency of the greenhouse gas policy leads to more closure of manufacturing sectors over time leading to fewer manufacturing jobs.”
In his statement on Thursday, Trump draws from the report to warn that compliance with the terms of the Paris Agreement and the onerous energy restrictions it has placed on the US could cost America as much as 2.7 million lost jobs by 2025.
The thing is, the study isn’t meant to give the full picture on what can happen if the agreement is implemented well.
The firm says the impacts covered in the report ignore potential benefits from climate change.
“The study results only reflect the least-cost approach to meet emission reduction targets. It does not take into account potential benefits from avoided emissions. The study results are not a benefit-cost analysis of climate change,” it explains.
It was reported that Trump also drew from research by the Massachusetts Institute of Technology (MIT) to back up his contention that the accord is ineffective.
“Even if the Paris Agreement were implemented in full, with total compliance from all nations, it is estimated it would only produce a two-tenths of one degree – think of that; this much – Celsius reduction in global temperature by the year 2100,” he said.
However, the co-authors of the MIT study say they don’t support the US withdrawal from the Paris Agreement and that the figure was taken out of context.
Perhaps the biggest problem with the rationale for the US exit is the fact that many top-notch business leaders don’t at all see the agreement as a bad deal.
Last December, Trump formed a business council packed with big-name CEOs to advise him on job creation. Two of them – Elon Musk of Tesla and Disney’s Robert Iger – quit the council in protest over the withdrawal from the Paris Agreement. Fittingly, they made public their decisions via Twitter.
Other corporate bosses that have expressed disappointment over the withdrawal include Microsoft president Brad Smith, General Electric CEO Jeff Immelt, Goldman Sachs CEO Lloyd Blankfein, Google CEO Sundar Pichai, Virgin’s Sir Richard Branson, Apple CEO Tim Cook, and Facebook CEO Mark Zuckerberg.
They generally lament the fact that without US participation, the agreement may falter while the window for saving the world from irreversible climate change narrows.
But maybe they don’t know what Trump knows. Should they each pick up a copy of Trump: The Art of the Deal and learn a thing or two about what constitutes a good deal?
Executive editor Errol Oh is waiting for the US to be great again, so that the world can have a chance to also be great.
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