The New Green Protectionism

Export-dependent jobs in Asia are under threat by vested interests including unions and industry in developed countries advocating for trade barriers disguised as environmentalism.

Advocating trade barriers under the banner of environmentalism is nothing new.  European countries support the introduction of carbon tariffs to offset the economic damage from their self-imposed climate change policies.

In the United States, political campaigns led by industry and unions have successfully introduced the Lacey Act that imposes extra regulation on imported wood and wood products to certify their origin and make them less competitive.

And now the green protectionist disease appears to have been caught on in Australia.

For years Australian green groups have claimed mass deforestation and illegal logging are occurring in the developing world.  They've advocated for forestry products in the developing world to be certified against developed world standards of environmental management.  And if they do not meet those standards their solution is to impose restrictions on imports.

Currently the campaigns are particularly focused on illegal wood and wood products from Asia, especially China and Indonesia.  But these campaigns are based on false foundations.

A recent report commissioned by the Australian government identified the insignificance of the problems with imports from Asia representing only 0.32% of illegally logged material.

But that hasn't stopped Greenpeace co-ordinating other green groups and religious groups to campaign for trade barriers to eliminate "illegal forest products" from Asia.

Trade unions representing forestry workers have backed these green campaigns.  The Forestry Union has a history of working with green groups to push for self-interested public policy using green excuses.  It has previously supported campaigns to encourage consumers to protest against supermarket chains selling tissue products supplied by Asia Pulp and Paper on environmental grounds.

But digging deeper the union was actually pushing for consumers to buy Australian-made paper products "[so] thousands of Australian workers [are] paid properly [and] more of your money stays in Australia."

Before the last Australian election the union made donations of about 825,000 baht to political parties that committed to "greater policing and enforcement of an effective national ban on the sale of illegally logged timber imports".

Industry is not far behind.

Major tissue product manufacturers, KCA and SCA, have a history of working with green groups to improve their market position.  Both parent companies are members of the World Wide Fund for Nature's Global Forest and Trade Network.  SCA has reportedly paid $10 million to WWF to use its logo on their products.

Both have previously sought anti-dumping measures on toilet tissue from China and Indonesia on environmental grounds.  However, an Australian Customs Service inquiry concluded that extra competition from domestic companies was as much to blame for their declining market position as cheap imports.

Both companies are facing stiff competition from competitors without unionised labour.

Unhappy with the decision of Customs manufacturers are now taking the government to court to try and get green protectionism reinstated.

In taking action industry, unions and green groups are all starting to develop consistent messages.

And their motivations are entirely self interested.  Forestry unions don't like imports because they make the market more competitive which makes it harder to demand higher wages and more jobs for their workers.

Industry doesn't like competition because it means pressure on prices favours consumers and not their bottom lines.

Australian Customs concluded that the downward pressure from Indonesian and Chinese products could be between 5% and 42% of a product's price.  Such downward pressure isn't good for companies seeking fat profits.

But what is being ignored is the impact on jobs and investment in the developing world.

Australians may be able to afford high-quality, thick toilet tissue to go straight down the drain.  But if green trade barriers are erected, the same cannot be said for Asian workers and communities that lose their jobs and livelihoods from being able to export less.

For countries like Thailand the problems could become particularly acute because of the potential impact on poor agriculture exporters who are vulnerable to protectionist political winds.

And if the United States and Europe continue on their same track, the potential for green protectionism could be broadened much further risking investment and jobs in Asian developing economies.