Thursday, March 27, 2008

Calling John Baird

One of the Harper's government's favorite arguments, when people question their lack of commitment to binding targets on the international stage, is that it would be suicide to act "unilaterally". Any agreement must include developing nations, otherwise the economic impact is entirely onsided, Canada at a massive competitive disadvantage. That is the core defence, and supporters have rallied to that logic. Of course, most people have correctly viewed the argument as a smokescreen, a convenient talking point to shirk our responsibility to "lead".

I remember a couple of discussions, around the time of the Bali conference, where I floated the idea that Canada could take leadership on the issue, and if our commitment was sincere, this would allow us the moral high ground to implement a tax on imported goods, from countries which didn't "share" the load. In this way, you could negate the costs associated with our "unilateral" implementation.

Needless to say, I was very pleased to see this idea put forward today:
Manufacturers that have relocated to China may soon be coming home if the Western world imposes a “carbon tariff” on countries that spew greenhouse gas emissions, according to Jeff Rubin, chief strategist and economist at CIBC World Markets.

Given the increasing emissions imbalance between the developed world and countries such as China, Mr. Rubin said the “only leverage is through trade access,” specifically a “carbon tariff.” Mr. Rubin predicted such a tariff, based on $45 per tonne of carbon dioxide or equivalent, would be $55-billion annually, a 17-per cent levy on all Chinese imports to the U.S. — almost six times greater than the effective current import tariffs.

“Without such a tariff, the earnest efforts of [developed] countries to decarbonize their own economies would become absurdly quixotic in the face of the avalanche of emissions that will come from the rest of the world.”

Rubin argues that such a tariff would cause industry to "return home", but such a measure would also pressure other countries to implement a parallel fight against carbon. If, for example, the Chinese came on board and pledged to meet international standards, then you could have exceptions, there is now economic incentive to move.

If people like John Baird are really serious (cough), then they should embrace this idea and use it to achieve a binding, effective, international framework. At the very least, the opposition parties should jump all over this suggestion. What Rubin demonstrates, countries have leverage if they take measures, it isn't the doomsday nonsense, used to mask political inaction.


Kris said...

Would the tariff be contingent on the current practices of any given country, or their stated intentions? In that were China or any other country hit with this and ended up implementing changes to conform, would the tariff remain until the effects of those changes were seen? Until the implementation process begins? Just expressed desires?

Steve V said...

"Until the implementation process begins?"

If Canada were to start implementation first, then the tariff should remain until a parallel exists.

I guess this is wider point, but it's about time Canada started factoring in things such as labor standards, etc, when deciding trade policy. Putting a price on carbon is another tool to end the competitive advantage for places with sub-standard practices. Why should a Canadian business be forced to put on scrubbers, while someone else can pollute with impunity abroad, and then undercut our price point.

Kris said...

"If Canada were to start implementation first, then the tariff should remain until a parallel exists."

My concern is that a country like China, who would be affected by this proposal, especially if it were adopted by greater world powers, would retaliate if they were forced to produce the results before tariffs are removed. In that Chinese heavy industry is a behemoth. Not easy to turn around. What will their reaction be if they bring forward a 10, 20 year plan for change, but western nations say "Sorry, we know you're on track, and can't physically move faster, but the tariff remains until the process is complete"

Of course this may be a moot point as they might reject all notions of tariffs and imposed policy from the very beginning.

Steve V said...


We can't turn it around tomorrow either, so I suppose it could all be about timetables and targets, a firm commitment.

JimmE said...

Replace the bald guy with john baird:

sassy said...

jimme - haha

Steve V said...

Here's another quote from Rubin:

"What I'm suggesting is that the minute that we start putting a price on our own domestic emissions, then our tolerance of those who do not is going to fade very quickly," he said.

"What we're going to say is that if you don't play by the same carbon rules, that's an unfair trade subsidy that we're gong to countervail against."