This is the Cato Daily Podcast for Monday, September 21st, 2009.

I'm Caleb Brown.

Cap-and-Trade, as currently formulated, may threaten key trading relationships with India and China,

present more than a few problems at the WTO.

Sally James, trade policy analyst at the Cato Institute and author of a new paper,

A Harsh Climate for Trade, how climate change proposals threaten global commerce, comments.

In order to placate domestic industry who's worried about the competitive effects of climate change legislation.

Lawmakers have loaded the bill up with a lot of giveaways and loopholes and also trade barriers that I think will make the legislation

unworkable and definitely harmful.

Cap and Trade as an idea was meant to create an artificial restriction on carbon that industry can use,

but if you're taking funds and subsidizing industries that are dealing with the fact

that you've internalized these costs, that seems to defeat at least some of the purpose of trying to have a cap and trade program.

Definitely. The whole idea of cap and trade, which is kind of a, it's a best approximation of a tax basically but

politicians are allergic to the word tax so cap and trade is kind of the next

best in their eyes solution.

Certainly from a strict economic perspective you can set it up in a way so that it is equivalent to

attacks. That's not what's happened here, but in theory you could do so but basically the whole idea is to

increase the cost of carbon so people use less but once you increase the cost of

something people don't like that or certain industry say oh but we need a special

carve out for us because we're special. So really what they're trying to do is have it both ways.

They're trying to do is have it both ways. They're trying to cut carbon emissions,

whether you think that's a worthy goal or not, that's what they want to do.

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