The US Chamber of Commerce, which represents over 3 million businesses of all sizes in the US, has come under criticism from many quarters lately for opposing cap and trade legislation. More specifically, the Chamber has opposed the EPA’s interpretation of existing law as providing it the right to regulate greenhouse gases without legislation from Congress. This position has caused several companies, most notably Exelon, PG&E, Apple, and Nike, to leave the organization and a few other companies, including GE, to distance themselves from the Chamber’s position on climate change legislation. Additionally, the Chamber’s position is widely misinterpreted as outright opposition to any climate change legislation, a position which the Chamber has clearly stated is not true, most recently in its support of proposals by Senators Kerry and Graham.
The Chamber is right to stand against haphazard regulation of greenhouse gas emissions that does not go through the legislative process. It has responsibility to all of its members, but especially to the smaller businesses who, like consumers, would suffer the most from burdens imposed by poorly designed regulations. Such businesses may face high price elasticity of demand (whereby they would see a significant drop in revenue if they had to pass along increased energy costs) or competition from countries who have not adopted such regulations. These companies also lack the clout and resources to lobby Congress directly, and need a strong Chamber to represent their interests. While some businesses, like GE, may benefit from opportunities to sell alternative energy systems or other products that gain from such regulations, there would be far more losers than winners from burdensome regulations. And I question whether GE, which still owns several legacy businesses such as their Consumer and Industrial business, has gotten the calculus right on their net gains from climate change regulations.
It is also insincere and shortsighted of Apple and Nike to leave the Chamber over this issue, as this editorial points out. With most of their production in China, Vietnam, and other countries with low environmental regulations, of course Apple and Nike have little to lose from climate change legislation. However, there is a wide array of other topics of importance to business where the Chamber is an important voice. With so many other regulations and taxes that make it difficult for businesses in the US (as the CEO of Emerson points out in this interview), even large corporations need a powerful ally like the Chamber.
Cap and trade legislation should be designed in an open and bipartisan manner through Congress, not through the edict of lifetime bureaucrats who do not face the voters and are self-interested in building a burdensome system to ensure their own employment and importance. The Chamber should continue in their efforts to make this true and to make sure that the needs of business are considered in the design of such legislation.
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Why the US Chamber of Commerce should Stand Firm on their Cap and Trade Position
The Chamber is right to stand against haphazard regulation of greenhouse gas emissions that does not go through the legislative process. It has responsibility to all of its members, but especially to the smaller businesses who, like consumers, would suffer the most from burdens imposed by poorly designed regulations. Such businesses may face high price elasticity of demand (whereby they would see a significant drop in revenue if they had to pass along increased energy costs) or competition from countries who have not adopted such regulations. These companies also lack the clout and resources to lobby Congress directly, and need a strong Chamber to represent their interests. While some businesses, like GE, may benefit from opportunities to sell alternative energy systems or other products that gain from such regulations, there would be far more losers than winners from burdensome regulations. And I question whether GE, which still owns several legacy businesses such as their Consumer and Industrial business, has gotten the calculus right on their net gains from climate change regulations.
It is also insincere and shortsighted of Apple and Nike to leave the Chamber over this issue, as this editorial points out. With most of their production in China, Vietnam, and other countries with low environmental regulations, of course Apple and Nike have little to lose from climate change legislation. However, there is a wide array of other topics of importance to business where the Chamber is an important voice. With so many other regulations and taxes that make it difficult for businesses in the US (as the CEO of Emerson points out in this interview), even large corporations need a powerful ally like the Chamber.
Cap and trade legislation should be designed in an open and bipartisan manner through Congress, not through the edict of lifetime bureaucrats who do not face the voters and are self-interested in building a burdensome system to ensure their own employment and importance. The Chamber should continue in their efforts to make this true and to make sure that the needs of business are considered in the design of such legislation.
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