USTR’s Peisch: Emissions-Focused Trade Tools Could Drive ‘Race to the Top’

Inside U.S. Trade
March 11, 2022
By Margaret Spiegelman

The Office of the U.S. Trade Representative believes trade tools offer significant untapped potential for reducing global emissions and plans to address such measures in collaboration with like-minded partners, USTR General Counsel Greta Peisch said on Tuesday.

In remarks delivered at an event hosted by the Climate Leadership Council’s new climate and trade policy center Peisch said trade policy has been “underutilized” as a tool to drive down global greenhouse gas emissions. Her office, she added, is actively engaging on the issue with trading partners – including, in particular, the European Union via ongoing work to develop a global arrangement to incentivize sustainable steel and aluminum production.

The fact that trade tools have been under-used to address climate change indicates “how complex” such issues are, “even just domestically, but especially in the international arena,” Peisch said. “But that doesn’t mean we shouldn’t tackle them.”

“If well-designed, these policies can incentivize a race to the top in decarbonization, penalize dirty products and processes, and facilitate stronger cooperation on decarbonization,” she added.

The U.S. and EU’s developing global sustainable steel arrangement, announced last October, is “emblematic” of USTR’s cooperative approach to confronting the dual, interrelated challenges of tackling steel and aluminum overcapacity and incentivizing decarbonization of the two industries, Peisch said. The U.S. and EU are aiming to finalize the arrangement by 2023.

Those steel negotiations come as the European Parliament prepares to vote on a carbon border adjustment mechanism proposed last year by the European Commission. The mechanism, crafted to prevent carbon leakage by placing a fee on certain carbon-intensive imports based on costs the bloc already imposes on domestic industry via its Emissions Trading System, could impact many U.S. imports. The EU Parliament is expected to vote on the measure during a plenary session in June.


Peisch acknowledged that the U.S. and the EU, in their discussions about the developing arrangement, “have different ways certainly of thinking about the problem and how to solve it.” But, she said, “we come at it with the same urgency and goals as the EU, which gives me great hope that we can break through with an outcome that has that high ambition to match the urgency of the problem.”