The Global Arrangement on Sustainable Steel and Aluminum (GASSA) is a highly ambitious trade initiative pursued by the Biden administration, aiming to transcend the traditional neoliberal approach to free trade. Until recently, there has been limited exploration of how GASSA or an expanded GASSA-like arrangement involving more trading partners would function.
A recent report from the Center for American Progress delves into how new trade rules could provide preferential market access for low-carbon steel and aluminum while establishing a common strategy to address nonmarket overcapacity. This approach could bolster both the economic and national security of the United States and its partners, as well as contribute significantly to global efforts to combat climate change.
Ryan Mulholland, senior fellow for International Economic Policy at CAP and co-author of the report, stated, “The Biden administration has moved the United States from a climate laggard to a climate leader. An important next step is ensuring that global trade rules reflect the urgent need to decarbonize heavy industry and address overcapacity from China, which itself is a source of significant emissions. GASSA can achieve both objectives, delivering a win for workers and the environment.”
The report proposes several recommendations to ensure that GASSA achieves maximum impact for workers and the environment. These include preconditions that members should commit to before joining such as respect for high-standard labor rights, a coordinated strategy to address overcapacity, and commitment to broad industrial decarbonization. The report also suggests implementing a tariff structure favoring low-carbon steel and aluminum imported from like-minded partners while discouraging dirty exports from nonmarket economies like China.
Furthermore, it recommends using benchmarks to assess what qualifies as “lower carbon” with increasing ambition over time. It also suggests reforms in the U.S. customs system so that officials can distinguish between low- and high-carbon goods at the border.
Trevor Sutton, senior fellow for Energy and Environment at CAP and co-author of the report, said, “The neoliberal model of globalization, in which lowering trade barriers takes precedence over environmental and social concerns, has proved inadequate in addressing climate change, inequality, and the rise of nonmarket economies. Countries will need to think creatively to develop new trade rules and structures that make sense for the 21st century. GASSA presents an important step in this direction.”
The full report titled “Designing a New Paradigm in Global Trade” by Ryan Mulholland, Trevor Sutton, and Timothy Meyer is available for further reading.
