Senate Bill Challenges China’s Status as a Developing Nation in New Treaty

Most United Nations environmental treaties are a bad deal for the United States, and some are made even worse because they give China a competitive advantage by classifying it as a developing nation and treating it more leniently. In response, a group of senators have introduced the Ending China’s Unfair Advantage Act of 2022 (S. 5037), which would take the long-overdue step to rescinding China’s status as a developing nation.

Unfortunately, it took the ratification of yet another bad environmental treaty to spark this bill. On September 21 the Senate ratified the Kigali Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer. The Kigali Amendment is a climate change treaty targeting hydrofluorocarbons (HFCs), a widely-used class of refrigerants. This treaty, supported by every Senate Democrat and enough Republicans to get it over the top, will cost consumers dearly. HFCs are the refrigerants needed to run most air conditioning and refrigeration equipment currently in use, and limiting their supply will raise prices for them and send repair costs soaring while raising the cost of new systems.

Opportunistic companies, led by Honeywell, which has patented a suite of pricey replacements for HFCs, joined forces with climate activists in a years-long lobbying effort to get the Kigali Amendment ratified, as well as for enacting similar domestic restrictions on HFCs.

Beyond the consumer impact, HFCs are relied upon by many manufacturers. This includes their use in industrial process refrigeration systems that create the cold conditions necessary for numerous chemical processes. HFCs are also needed to make semiconductors. For many domestic manufacturers, higher HFC prices under Kigali will be an added expense, and a future point may be reached where some HFCs become difficult to obtain at any price. Furthermore, switching to systems designed to use one of the replacements for HFCs entails very costly facility changes.

Since the United Nations currently classifies China as a developing nation under the Kigali Amendment and subjects it to far less stringent requirements, Chinese-based manufacturers will have access to cheap and plentiful HFCs long after supplies in the U.S. get tight. Adding insult to injury, the U.S. is also the largest contributor to a United Nations fund that helps the listed developing nations, including China, comply with Kigali.

Senators Dan Sullivan (R-AK) and Mike Lee (R-UT) offered an amendment that made ratification contingent on the United Nations reclassifying China as a developed nation. Surprisingly, the Sullivan-Lee Amendment passed unanimously, 96-0. The overall treaty passed 69-27.

Sullivan and Lee were among the senators who voted no on ratification, arguing correctly that China’s favored status was only one of several problems with the Kigali Amendment. Nonetheless, it is a better treaty now that China’s unfair advantage is apparently coming to an end.

The Ending China’s Unfair Advantage Act makes explicit that, unless the United Nations follows through on reclassifying China, the U.S. will no longer provide its share of the funding to implement the Kigali Amendment as well as the rest of the underlying Montreal Protocol.

This bill is important in itself, but it should also lead to the reconsideration of other environmental treaties that give favorable treatment to China. China also enjoys developing nation status in the 1992 United Nations Framework Convention on Climate Change.

The fact that the United Nations still treats China as a developing nation is both indefensible and harmful to American interests. Ending this disparity won’t fix the other problems plaguing most environmental treaties, but it is an important step.