|
Welcome to The Corner. In this issue, we take a closer look at whether Trump tariff policies are the only reason Europe might moderate a key carbon pricing mechanism, which lies at the heart of its climate change policy.
The Open Markets Institute filed an amicus brief in the Supreme Court case Trump v Slaughter, defending Congress’s authority under the Constitution to restrict the President’s ability to remove officials at executive agencies and departments. The brief, written by OMI’s policy counsel Tara Pincock, argues that Congress, under the Necessary and Proper Clause of Article I, has broad powers to structure the federal government and ensure that the execution of the law remains independent from direct presidential control. The lawsuit was filed after President Trump illegally fired Democratic Federal Trade Commissioners Rebecca Slaughter and Alvaro Bedoya in March. Read the brief here.
Open Markets Files Brief Defending Ohio’s Right to Designate Google as a Common Carrier The Open Markets Institute filed an amicus brief in State of Ohio v. Google, urging the Fifth District Court of Appeals of Ohio to recognize the state’s authority to designate Google Search as a common carrier — just as courts and legislatures have long done for railroads, telegraphs, telephones, and other corporations that hold themselves out to serve the public. The brief traces more than three centuries of the common carriage doctrine, which establishes that when a company dedicates its services to public use, courts and legislatures can require it to operate in the public interest and without discrimination. “Google is the modern equivalent of the railroad or telegraph monopolist,” said Open Markets policy counsel Tara Pincock, who wrote the brief. Read the brief here.
With the new year, the European Union is poised to implement its Carbon Border Adjustment Mechanism (CBAM). A cornerstone policy of Europe’s Green Deal, the policy introduces a price on the carbon content of certain imports, thereby pushing companies from around the world to reduce their emissions. Beyond its importance to the global fight against climate change, many Europeans have embraced CBAM and the other Green Deal policies as a strategic foil to the Trump administration’s zero-sum, climate-denialist vision for the global economy — a big carrot to his stick. However, following Trump’s tariff threats and other U.S. attacks on the foundations of European democratic governance, European Commission leaders have recently appeared poised to dramatically cut back elements of the Green Deal and of their broader defense of a rules-based international order. The European Green Deal consists of numerous policy mechanisms designed to make the EU carbon neutral by 2050. Beyond reducing the climate impact of activities taking place inside European borders, many of these policies make increased sustainability a precondition for companies that want to trade with European consumers. The Corporate Sustainability Due Diligence Directive (CSDDD), for example, requires large companies operating in or exporting to the EU to disclose the environmental impacts of their global supply chains, and to adopt a climate change mitigation strategy. CBAM, meanwhile, extends the EU’s domestic cap-and-trade mechanism to foreign producers by taxing carbon-intensive products like steel when they cross the EU border. Although EU leaders argue the Green Deal consists of climate rather than trade policies, mechanisms like CSDDD and CBAM represent innovative means of wielding the EUs economic power to influence global industrial practices. First, by requiring that foreign producers meet the same climate standards and frameworks as firms operating in Europe, these policies remove industries’ economic incentives to offshore production to countries with lower environmental standards. Second, these policies directly incentivize companies and countries to raise their sustainability standards to facilitate their access to the European market. Several countries are adopting their own carbon trading systems in response to CBAM, effectively extending the impact of this policy to products that will never enter the European market. Nevertheless, precisely because of their international impact, Europe’s climate policies have also caused disputes with its trade partners — especially the U.S., which lacks climate policy equivalents to those enacted in Europe. Even during the Biden administration, negotiations to support Euro-American production of low-carbon steel and aluminum foundered in large part over disagreements on whether or not domestic U.S. producers should, like EU producers, face higher sustainability standards. Now, the Green Deal has run headlong into the Trump administration’s “America First” vision for the global economy. Not only does Trump oppose the basic objective of climate change mitigation, he more broadly sees other countries’ regulation of U.S. companies as “unfair” attempts to restrict their global market share. Republican leaders argue that policies like CSDDD violate American sovereignty by forcing U.S. companies to meet higher European regulatory standards. They also warn that companies cannot comply with EU disclosure requirements without violating state anti-ESG laws that restrict companies’ right to consider climate in their business decision-making. The resulting U.S. trade policy is just as globally ambitious as Europe’s, but aims in the opposite direction. Whereas EU policies create positive incentives for others governments to raise regulatory standards, Trump has used the threat of exorbitant tariffs and other retaliations to force governments to remove or reform domestic regulations, as well to dismantle multilateral agreements, to fit with present U.S. goals. So far, in the fight between these two global visions, Trump’s strategies have appeared more powerful, at least on the surface. This summer, EU negotiators exited negotiations with the Trump administration having agreed, among other concessions, to “reduce the administrative burden” of policies like CBAM and CSDDD. The idea that Europe is simply caving to Trump is not entirely accurate, however. Trump’s demands for climate policy has many supporters in Europe. Indeed, European business lobbyists, especially from sectors like agriculture, have been among the loudest voices calling for a rollback of EU climate policies. If anything, the real danger to European sovereignty and democracy may come from EC President Ursula von der Leyen’s willingness to depict the policy rollback as a gift to Trump. The seeming capitulation risks emboldening the U.S. administration to continue to use tariffs as a blunt tool to get its way in other policy areas, like tech. Perhaps even more dangerous, von der Leyen had to ally herself with far-right parties in the European Parliament to win enough votes to weaken the climate regime. Not only did the move violate decades-old pro-democracy norms against centrist parties voting with the far right on any issue, it reinforced the alliance between the Trump administration and Europe’s far right movements. 📝 WHAT WE'VE BEEN UP TO:
🔊 ANTI-MONOPOLY WINS:
We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter. 📈 VITAL STAT:$7 billionThe amount Novo Nordisk has offered to buy biotech startup Metsera in a deal competitor Pfizer says is anticompetitive. Pfizer has filed a lawsuit alleging that Novo Nordisk is attempting to “capture and kill” Metsera in a bid to dominate the surging obesity drug market. (Washington Post) 📚 WHAT WE'RE READING:The Philosopher in the Valley: Alex Karp, Palantir, and the Rise of the Surveillance State - New York Times Magazine writer Michael Steinberger pulls back the curtain on Palantir’s powerful and secretive surveillance empire, tracing the rise of the controversial data corporation from its early startup days in 2003 to its current state as an arbiter for the most sensitive data of America’s surveillance state and its largest corporations, with special attention paid to the eccentric beliefs and cutthroat behavior of its cofounder and CEO Alex Karp.
Pre- Order Chief Economist Brian Callaci's new book: Open Markets Institute’s chief economist Brian Callaci will publish his first book Chains of Command: The Rise and Cruel Reign of the Franchise Economy on April 20 through University of Chicago Press. The book offers a sharp critique of the franchise model used by many fast food chains, which has shaped labor markets, corporate power, and inequality in the U.S. In Chains of Command, Callaci shows how franchisors have altered the legal treatment of corporations in their favor through a decades-long crusade of lobbying and litigation, and argues for greater cooperation between workers and small franchise owners. Pre-order the book here. 🔎 TIPS? COMMENTS? SUGGESTIONS? We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue. |