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US bid to derail IMO net zero agreement could be backed by tariff reprisals

  • Leaked documents appear to confirm that US trade agreements are being tied to votes against the IMO net zero plan in October
  • US threats of reprisals against IMO member states remain unspecific, but political leverage is being applied
  • Campaign aims for a full rejection of the framework rather than negotiation

As part of any trade deal with the US, countries are being pushed to vote against the IMO’s net zero framework in October; a deal the US State department argues is a global carbon tax on Americans levied by an unaccountable UN organisation

THE US is expected to use bilateral trade negotiations to force key maritime states to vote against the adoption of the Net-Zero Framework, a global deal to reduce shipping’s global greenhouse gas emissions, at the International Maritime Organization in October.

According to a draft “action memo” leaked to the Washington Post, influential maritime states including Singapore are being directly told that their vote against the net zero agreement in October will be considered part of any live trade negotiations.

The documents reported by the Washington Post state that US Secretary of State Marco Rubio was told that department officials had sought “to inject this issue into the ongoing bilateral trade negotiations” with maritime nations.

According to the documents, the IMO vote is just one of many examples of tariffs and trade policy being used by the US administration as leverage with countries on unrelated issues.

US lobbyists opposing the IMO agreement have told Lloyd’s List that the US objective is now to ensure a full rejection of the net zero agreement in October, rather than seeking any last minute negotiated compromise text.

A joint statement issued on Tuesday by Rubio, Commerce Secretary Howard Lutnick, Energy Secretary Chris Wright and Transportation Secretary Sean Duffy made clear the US would be pushing governments to derail the October vote, but gave no specific details.

“IMO members should be on notice that we will look for their support against this action and not hesitate to retaliate or explore remedies for our citizens should this endeavor fail,” said the joint statement.

The origins of that statement appear to have stemmed from McCoy Pitt, the senior official in the State Department’s international organisation affairs bureau, who is responsible for implementing US policy across UN agencies, including the IMO.

Pitt’s memo to Rubio, titled: “Protecting US Shipping Interests by Defeating the International Maritime Organization’s ‘Net-Zero Framework’ ” said that as part of any trade deal with the US, countries “are instructed” or “would be expected” to vote against the IMO proposal.

That memo title appears to have largely been copied for the join State, Commerce and Energy statement issued Tuesday which was titled: “Protecting American Consumers and Shipping Industries by Defeating the International Maritime Organization’s “Net-Zero Framework” aka Global Carbon Tax”.

 

 

 

US Trade Representative Jamieson Greer has been repeatedly lobbied by a group of US companies who argue applying the framework globally rather than regionally could create market distortions, including shifts from efficient US shortsea maritime transport to land-based modes that are not subject to carbon taxation.

Much of the language used in those submissions is now reflected in the US State Department policy.

A June 26 dated letter submitted to Greer by Congressman Vern Buchanan, vice-chairman of the House Ways and Means Committee and member of the Trade Subcommittee, called on the US Trade Representative to ensure all future trade negotiations take into account each country’s vote on the IMO carbon pricing framework. It also urged the USTR to apply restricted market access or reciprocal tariffs to any country supporting it.

The leaked internal documents cited by the Washington Post suggest that retaliatory measures under consideration include tariffs consistent with Buchanan’s recommendations.

The US State Department would not confirm the authenticity of the leaked documents, but in a statement to Lloyd’s List, a State Department spokesperson said: “We are actively exploring and preparing to act on remedies including tariffs, visa restrictions, or port levies should this effort succeed in the October IMO extraordinary session vote. We will fight hard to protect the American people and their economic interests.”

The threat of US reprisals against IMO member states who do not support the US bid to derail the net zero framework are not wholly new. In April a US statement issued to all London embassies of IMO member states threatened unspecified “reciprocal measures”.

Since then, the US has been engaged in a quiet campaign behind the scenes trying to force IMO member states to reverse their support ahead of the pivotal October vote. However, no details have yet emerged from those meetings to confirm the nature of the trade measures being threatened.

Member states of the IMO agreed on the net zero framework in April following a vote that required a simple majority, 63 member states including China, Brazil and EU countries voted in favour, while just 16 states voted against.

In October, a vote would require a two-thirds majority of 108 member states that ratified the key legislation aiming to reduce shipping pollution. IMO only resorts to voting if there is no agreement on a regulation among member states.

While the US campaign to scupper any vote is unlikely to be able to dissuade a high volume of countries to change their vote, a targeted effort directed at key maritime states remains an outside possibility if the threat of political leverage is effective.

Any amendment to the International Convention for the Prevention of Pollution from Ships, cannot be ratified if countries representing 50% of the world’s tonnage object. The number of countries needed to reach that threshold is relatively small given the high concentration of vessels flagged to the top five flag states: Liberia, Panama, Marshall Islands, Hong Kong and Singapore.

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