Hard Choices

by Hillary Rodham Clinton

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  Despite a strong call to action from President Obama in his second inaugural address, a serious, comprehensive response to climate change remains stymied by entrenched political opposition at home. The recession may have helped cut our total emissions, but it also made it harder to mobilize the political will to drive more meaningful change. When the economy is hurting and people are looking for jobs, many other concerns fade into the background. And the old false choice between promoting the economy and protecting the environment surfaces once again. One exception has been the rapid transformation from coal to natural gas in the generation of electricity. Burning natural gas emits only about half the greenhouse gases that coal does, so long as methane is prevented from leaking from the gas wells, although its production carries other environmental risks. To take full advantage of our large resource of natural gas, states and the federal government will need to provide better regulations, more transparency, and rigorous enforcement.

  I wish we had achieved more to combat climate change during the first four years of the Obama Administration. Losing the Congress set us back a lot because the Republican majority, unlike conservative parties in other countries, has made denying climate change and opposing even economically beneficial responses to it a central part of its platform. But we can’t get discouraged by the size of the problem or the stubbornness of the opposition. We have to keep taking practical steps that actually work. In our meeting in Copenhagen, the Prime Minister of Ethiopia told me that the world was looking to the United States to lead the way on climate change. I believe this is both a responsibility we should accept and an opportunity we should seize. After all, we’re still the largest economy and the second-largest emitter of carbon dioxide. The more serious the effects of climate change, the more important it will be for us to lead. The crucial innovations that will help meet this challenge, whether new clean energy technologies, carbon sequestration techniques, or ways to increase our energy efficiency, are most likely to come from our scientists and laboratories. And changing the way we produce and conserve energy can make a large contribution to our economy.

  Despite their hard-line stance in international settings, China’s leaders are taking important steps at home to invest in clean energy and begin addressing their environmental problems. Over the years we’ve seen growing grassroots pressure from the Chinese people on issues of pollution, air quality, and clean water. In January 2013, in Beijing and more than two dozen other cities in China the air quality from pollution grew so bad—twenty-five times greater in Beijing than any U.S. city would consider a safe level—that people referred to it as an “airpocalypse.” Our embassy in Beijing played an essential role in publicly providing information about pollution, including hourly updates via Twitter. The situation grew so dire that the Chinese leadership recognized pollution as a threat to the country’s stability and started to monitor it and publicly release their own numbers on air quality.

  In June 2013, President Obama and President Xi signed an agreement to work together on eliminating some “super pollutants,” the hydrofluorocarbons that come largely from air conditioning units. This was the first agreement between the United States and China to do something specific on climate change. If these steps succeed, it may help to convince China that concerted global action on climate change is in its long-term interest. An understanding between the United States and China will be essential for a global agreement.

  The next big international milestone will come in Paris in 2015, when the process that began in Copenhagen will hopefully culminate in a new legal agreement on emissions and mitigation that is applicable to every country in the world. Reaching that goal won’t be easy, as we’ve learned, but it does represent a real opportunity for progress.

  America’s ability to lead in this setting hinges on what we ourselves are willing to do at home. No country will fall in line just because we tell them to. They want to see us taking significant steps of our own—and we should want the same thing. The failure to pass a comprehensive climate bill through the Senate in 2009 made our negotiating job at Copenhagen much harder. To succeed in Paris, we need to be able to show real results at home. President Obama’s June 2013 Climate Action Plan is an important step in the right direction, and despite Congressional gridlock, the President is moving forward with strong executive actions. Since 2008, we’ve nearly doubled production of clean renewable energy from wind, solar, and geothermal sources; improved fuel efficiency for vehicles; and for the first time begun measuring greenhouse gas emissions from our largest sources. In 2012, U.S. carbon emissions fell to the lowest level in twenty years. But there’s a lot more to do. Building a broad national consensus on the urgency of the climate threat and the imperative of a bold and comprehensive response will not be easy, but it is essential.

  The most important voices to be heard on this issue are those of the many people whose lives and livelihoods are most at risk from climate change: tribal elders in Alaska watching their fishing holes dry up and the land below their villages erode away; the leaders of island nations trying to raise the alarm before their homes are submerged forever; military planners and intelligence analysts preparing for future conflicts and crises caused by climate change; and all those families, businesses, and communities who have been assaulted by extreme weather. At the conference in Copenhagen in 2009 the most compelling pleas for action came from the leaders of the small island nations, confronting the loss of their land to rising ocean levels. “If things go business as usual,” one said, “we will not live, we will die. Our country will not exist.”

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  Jobs and Energy: A Level Playing Field

  Algeria is one of those complicated countries that forces the United States to balance our interests and values. It has been an important ally in the fight against al Qaeda and was a potential stabilizing force in North Africa as Libya and Mali descended into chaos. But it also has a poor human rights record and a relatively closed economy.

  Both because we need to continue our security cooperation and because it’s the right thing to do, the United States sought to encourage improvements in human rights and a more open economy in Algeria. When the government decided to solicit foreign bids to build power plants and modernize its energy sector, I saw an opportunity for advancing prosperity in Algeria and seizing an opportunity for American business. General Electric was competing for the more than $2.5 billion contract. Too often I had seen risk-averse U.S. corporations avoid emerging or challenging markets, while Asian and European companies scooped up contracts and profits. State-owned or -controlled enterprises were especially difficult competitors because they played by their own rules, with unlimited resources and little compunction about violating international norms on bribery and corruption. With growth at home still too slow and unemployment still too high, we couldn’t afford to leave good opportunities on the table or put up with unfair competition. So GE’s move to compete in Algeria represented a bold step by a flagship American company, with the potential to yield economic benefits back home and strategic benefits in North Africa.

  In October 2012, I went back to Algiers to urge the government to continue political reforms, expand security cooperation in Mali, and consider the GE deal. President Abdelaziz Bouteflika greeted me on a red carpet outside the Mouradia Palace, a sprawling white villa with Moorish-style arches. Behind him rows of Algerian cavalry stood at attention, in their traditional red tunics and green pants. After the seventy-five-year-old Bouteflika walked me past the honor guard into the palace, we spent three hours together, in a wide-ranging dialogue that touched on subjects ranging from the effects of climate change to threats from al Qaeda. I also asked about GE and I left Algiers optimistic that the company would be given a fair shot to win the contract.

  Less than a year later GE won the contract to help build six natural gas power plants, which are expected to increase Algeria’s electricit
y-generating capacity by about 70 percent. Over the next few years GE will build generators and giant turbines for these plants in Schenectady, New York, and Greenville, South Carolina, supporting thousands of manufacturing jobs. As a local union representative in Schenectady told the Times-Union, “It shows the world we are still No. 1 in world-class power manufacturing.” To me, it also reconfirmed an insight that guided much of our work at the State Department over the previous four years: Because energy and economics are increasingly at the heart of our strategic challenges, they must also be at the heart of American diplomacy.

  When I became Secretary in 2009, I focused on two big questions about the global economy: Could we sustain and create good jobs at home and help speed our recovery by opening new markets and boosting exports? And were we going to let China and other relatively closed markets continue to rewrite the rules of the global economy in a way that would surely disadvantage our workers and companies? The answers would go a long way toward determining whether America would continue to lead the world’s economy and whether we would restore prosperity for our own people.

  Traditionally trade, energy, and international economics have not been priorities for Secretaries of State. After all, we have a U.S. Trade Representative and Secretaries of Commerce, Energy, and the Treasury. But the global financial crisis made that division impractical. It was clearer than ever that America’s economic strength and our global leadership were a package deal. We would not have one without the other.

  I called our efforts “economic statecraft,” and urged our diplomats around the world to make it a priority. We had diplomatic posts in more than 270 cities around the world, many of them with resident economic officers. I wanted to use these resources to create new opportunities for growth and shared prosperity. Over the next four years we stood up to protectionism and mercantilism, went to bat for American companies and workers, sought to attract more direct foreign investment into our country, and worked to capitalize on the energy revolution that was helping to drive our domestic recovery and reshape the global strategic landscape.

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  America had worked for decades to create a global economy of free and fair, open and transparent trade and investment, with clear rules of the road that would benefit everyone.

  The current global trading system doesn’t fully meet that standard. It is distorted not only by barriers to entry in developing and emerging economies, but by the power of special interests in developed countries, including the United States. Just as it isn’t fair for other countries to keep our products and services out of their markets, or to demand bribes or steal our intellectual property in return for access to them, it isn’t fair to use our patent laws to deny life-saving generic medicines to poor people in low-income countries. (The work of the Clinton Health Access Initiative to lower prices and increase volume for AIDS medicines proves that there are ways to save lives and protect legitimate economic interests.) To make trade fairer as well as freer, developing countries have to do a better job of improving productivity, raising labor conditions, and protecting the environment. And in the United States we have to do a better job of providing good jobs to those who are displaced by trade.

  Currently the United States is negotiating comprehensive agreements with eleven countries in Asia and in North and South America, and with the European Union. We should be focused on ending currency manipulation, environmental destruction, and miserable working conditions in developing countries, as well as harmonizing regulations with the EU. And we should avoid some of the provisions sought by business interests, including our own, like giving them or their investors the power to sue foreign governments to weaken their environmental and public health rules, as Philip Morris is already trying to do in Australia. The United States should be advocating a level and fair playing field, not special favors.

  Despite all its problems, a more open trading system has lifted more people out of poverty in the last thirty-five years than at any comparable time in history. And there is less imbalance in our trade with the countries we do have agreements with, like Canada and Mexico, than with those we don’t, like China. Making an open system work better will help more people than state capitalism, petro capitalism, currency manipulation, and corrupt deal making ever will.

  Meanwhile, I was determined to do everything I could to help American businesses and workers seize more of the legitimate opportunities already available. We faced strong headwinds from countries that wanted a different system altogether.

  China had become the leading exponent of an economic model called “state capitalism,” in which state-owned or state-supported companies used public money to dominate markets and advance strategic interests. State capitalism, as well as a range of new forms of protectionism involving barriers behind borders—such as unfair regulations, discrimination against foreign companies, and forced technology transfers—posed a growing threat to the ability of American businesses to compete in key markets. These policies ran directly counter to the values and principles we had worked to embed in the global economy. We believed an open, free, transparent, and fair system with clear rules of the road would benefit everyone.

  Though China was the largest offender when it came to new forms of protectionism and state capitalism, it was hardly alone. By 2011, sovereign wealth investment funds, which are owned and run by governments, often with revenue from exports of oil and natural gas, had grown to control roughly 12 percent of all investment worldwide. Increasingly, state-owned and state-supported enterprises were operating not just in their home markets but around the globe, sometimes in secrecy, often lacking the transparency and accountability that shareholders and regulations ensure. We were seeing hybrid companies masquerading as commercial actors that were actually controlled by states and acting with strategic consequences, such as Russia’s Gazprom.

  As a Senator I warned that China, a member of the World Trade Organization, “needs to be convinced to play by the rules in the global marketplace,” and I was concerned that the Bush Administration’s laissez-faire philosophy led them to take a hands-off approach. In 2004, I was approached by executives at a storied New York company, Corning Glass, with a problem that highlighted the challenges we faced. Established in 1851, Corning, a glass manufacturer headquartered in Corning, New York, was famous for supplying the scratch-resistant “gorilla glass” used by more than thirty-three major brands of smartphones, tablets, and notebooks, including Apple’s iPhone. Corning also produced advanced liquid crystal displays in computer monitors and televisions, as well as optical fiber and cables for the communications industry, clean filters for diesel engines, and a wide range of other innovative products. They spent more than $700 million a year on research. Their technology and products were so good that competitors in China felt they needed an unfair advantage to compete. So they asked their friends in the Chinese government to either block Corning from entering the market altogether or slap their fiber optics with absurdly high tariffs. There were also blatant attempts to steal the company’s intellectual property.

  This wasn’t fair, and it was also a threat to the future of a company that employed thousands of New Yorkers. In April 2004, I invited the Chinese Ambassador to my Senate office and sent a pointed letter to the Chinese Minister of Trade. I also made every attempt possible to enlist the Bush Administration to back me up. After failing to get much attention from the White House, I raised the Corning matter directly with President Bush at the dedication of my husband’s Presidential library in Little Rock, Arkansas. “This is a great American company being threatened,” I told him. “Your administration needs to help me help them.” President Bush agreed to look into the problem, and he did. In December China dropped the discriminatory tariff. Allowed to compete on a level playing field, Corning’s business thrived.

  Other American companies face similar challenges. In October 2009, new Chinese postal laws came into effect requiring domestic operating permits for express deliv
ery service companies. The move was widely seen as a plan for the Chinese government to expand its own express delivery service by the state-controlled China Post. The major American delivery companies, FedEx and UPS, had been doing business in China for years. Before 2009, FedEx had permission to operate in fifty-eight locations there, and UPS in thirty. Both companies feared that the Chinese government would issue them severely restrictive licenses. Our U.S. Ambassadors in Beijing, first Jon Huntsman and then Gary Locke (as a former Commerce Secretary, Gary understood exactly how important this was), raised the issue with the Chinese government, but to no avail. Fred Smith, the CEO of FedEx, eventually called me to ask for my help.

  I brought the matter up directly with Wang Qishan, the Vice Premier responsible for the economy and someone I had come to know and respect. Secretary of Commerce John Bryson and I followed up in a joint letter. After our efforts the Chinese informed FedEx that they had finally granted licenses, but only to eight cities in China, and just five for UPS. That was a start, but nowhere near good enough. I delivered another message to Vice Premier Wang. Eventually the Chinese pledged that over the course of a three-year interim period, they would grant permits for the remaining cities. The embassy reported back that the Chinese officials were surprised by the sustained U.S. government response to the issue at such a senior level. As of this writing, both companies have been able to maintain their operating status in China. The Chinese have stood by their promise to increase licenses, but both companies remain concerned about the potential for growth in the future.

  I was prepared to keep fighting for individual American companies, but given the scope of the challenge, we needed to think bigger. In the summer of 2011, I decided to make it clear that the United States intended to stand up for a fair global economic system. I headed to Hong Kong, an island of entrepreneurial capitalism attached to China’s still evolving state-dominated economy. Hong Kong seemed like the perfect place to make the argument for a level playing field and a common set of global economic rules. I had first visited the city in the 1980s, when I accompanied Bill on a trade mission to promote Arkansas’s businesses and exports. This time I was trying to sell more than soybeans. I was selling the American model of free markets for free people. It had taken a beating in the eyes of the world during the financial crisis, and a growing number of nations were giving a fresh look to the Chinese model of state capitalism and autocracy, which continued to produce impressive economic growth at home. In a speech at the Shangri-La Hotel, in front of a large crowd of business leaders from across the region, I made my case.