Carbon protectionism


Here’s another unforced error in the Liberal plan:

We will build carbon pricing into our strategy for international trade, endeavouring where possible to ensure that goods from countries that are not pricing carbon will face a tariff reflective of carbon content. Since the next president of the United States, be he a Republican or Democrat, has already committed to pricing carbon, this will likely not impact our largest trading partner.

A “carbon tariff”? Soot-Hawley? This is unnecessary, first of all – it makes no more sense to “level the playing field” with a carbon tariff, on the grounds that other countries do not charge a carbon tax, than it does to impose an “income tariff” because other countries have lower income tax rates. It is also a dangerous precedent, an invitation to retaliation, and a possible violation of WTO rules.

Granted, it would be better if every country did its part to reduce greenhouse gas emissions. And granted, Canada alone can have little impact if they do not: the argument for a carbon tax is simply that we should do our part. But there is no point punishing our consumers for other countries’ sins, nor would it help the planet if we all descended into carbon trade wars.


Carbon protectionism

  1. For the love of all that’s holy, thank you for making this point.

  2. I agree with James .. I am especially interested in the unintended consequences of the Liberal so called revenue neutral plan (flatly impossible)as indeed what about a carbon war this where we could get in serious international trouble here without thinking this item through. Thank you Andrew!

  3. The point is not to punish non-carbon-taxers. The point is to ensure that you don’t shift production to non-environmentally friendly jurisdictions and thereby accomplish nothing but injuring your own economy.

  4. “than it does to impose an “income tariff” because other countries have lower income tax rates.”

    Or tax Ireland for having lower corporate income tax rates.

    If international location decisions are *that* sensitive to tax rates, doesn’t it make a whole lot of sense to have the lowest corporate income taxes in the world.. and make up the revenue through high emission tax rates? Do we really want our comparative advantage to be from being a pollution haven?

    Sure we’ll lose some high pollution industries (through the high emission tax rates) but we’d gain a lot of industries (financial services, IT, etc.) through the very low corporate income tax rates… plus get the side benefit of having higher quality air to breathe!

  5. “The point is not to punish non-carbon-taxers. The point is to ensure that you don’t shift production to non-environmentally friendly jurisdictions and thereby accomplish nothing but injuring your own economy.”

    You lost this debate back in 1988. It’s blatant protectionism, nothing more.

  6. Andrew, surely you understand that carbon emissions are a collective action problem. How do we prevent polluting countries from free-riding on our reductions without some kind of carbon-trade-zone scheme? Unlike with traditional environmental problems, where the costs are borne locally, if other countries were to continue with high emissions, Canada would be just as screwed as if it had never bothered with the tax in the first place.

    How else to address this but through tariffs? Surely you wouldn’t say an international, unanimous carbon scheme is on the horizon. Also, note that the WTO does give some deference to other international law, although this is definitely ambiguous.

  7. Perhaps Harper’s confronting foreign leaders at the bathroom door will get some action. What’s the progress report on Harper and Baird’s “No, you first” action plan on global environmental problems?

  8. Who’s going to be included in this carbon tariff structure? They go to great lengths to imply that the Americans will have a carbon pricing structure and will not be affected so who’s left? Afterall, the first period of the Kyoto Protocol explicitly exempts developing countries like China from having to make any reductions. Or are we now to assume that the Liberals are officially abandoning the Kyoto Protocol?

  9. Spot on, Mr. Coyne, on that observation. It’s what’s been keeping conservatives like me concerned about the international trade implications regarding a carbon tax. The issue first raised red flags back when BC decided to implement its own carbon tax. I remember asking at the time, won’t many manufacturers and export industries move their operations out of the province and into Alberta or other jurisdictions?

    We need a comprehensive strategy on carbon taxes, that include the U.S. firstly, then the EU and BRIC.

    Otherwise we’d by falling under a protectionist mantra for the sake of fighting climate change, while short-changing our own companies, whether they’d be in manufacturing, export, mining, or oil and gas.

    By the way, the Tories can use the “manufacturing industries suffer under a carbon tax” card against the Liberals in the next election as the Liberals claim to be champions of the industry in their only political base of Ontario.

  10. By this logic we would have to evaluate the level of carbon emitted in the production of the item, the carbon value of the item, the carbon production of the country, and then price it out of range of the average Canadian. Problem solved.

    This might actually curtail Canada’s dependence on China as a source of cheap, plastic trinkets. In retrospect then, Dion will be an unwitting hero for Canadian manufacturers. If those manufacturers aren’t put under by the domestic carbon tax that is. [There’s always a catch]

  11. The carbon tariff is an inevitable concomitant of any serious attempt to rapidly reduce carbon dioxide emissions. Otherwise, production will simply move offshore, and global emissions will probably increase, once transport emissions are included. The fact that a carbon tariff would be disastrous for the economy overall is merely coincidental.

    Of course, a focus on emissions intensity, rather than total emissions would eliminate this problem.

  12. Carbon Dioxide is not a problem, so it should not be taxed at all. There is virtually zero impact on climate because of it. So stop wasting your efforts on it – this is the biggest fraud perpetuated by the environmentalists since the “silent spring” book that killed millions (and still does) by stopping the use of DDT.

  13. In typical Liberal fashion we are being offered a revenue neutral tax from a group that spent over 3 billion on trying to register just 22 million long guns.

    Notice how they refuse to tell us how much it’s going to cost to administer this and the impact on your city’s expenses, for example, as the cost for social housing rises and for maintaining core city services rise.

    The cost for this boondoggle is going to be huge. The potential for monies being spent on consultants and other usual Liberal ventures is there. Is this how they fund their elections?

    To top all this is that it’s based on a premise that is daily being shot down – i.e. global warming is a real threat.

    This is NEP2 so wait till the monies are shifted from the oil producers (BC, Alberta, Newfoundland et al) and sent to Quebec. This is really going to hurt this country and set things back 30 years.

  14. as if the idea hasn’t already made it into prominent corners of the international stage.

    Doha’s dead. Waiting for the business class to call it is just plain silly and its next incarnation goes nowhere without something besides repackaged Bretton Woods with a fresh set of glossies. Time to check its pockets for spare change. Its a brave new world. Hell’s bells even the IMF is learning new tricks.

    I’ll be blunt. Get with the times.

  15. Repeat after me – carbon dioxide does not cause smog. Carbon dioxide is not a pollutant. Nitrogen oxides and other organics – yes. Carbon dioxide is a molecule that is mandatory in plant and animal respiration. You cannot redefine a biological necessity to suit political aims. David Suzuki is an idiot.

    This is redistribution for a poverty-reduction agenda, itself an artifact of the disgraceful misrepresentation of data perpetrated by the dishonest middle- to far-left. I almost cannot believe that this is being seriously discussed. Those derided for believing that radical environmentalism is merely a supplemental ideology for democratic socialism – not collectivist enough – have in bald bold terms a mainstream plan to hobble economy and expropriate individual property to uphold a minority egalitarian view. Language is important, words are important, premises are important.

    Will carbon taxation end economic growth in the West? No. But it will have a negative material impact to solve a non-problem easily eclipsed by actual problems. What it will do is: reduce capital available for developing country investment, reduce capital for foreign aid, reduce international trade and therefore the size of the growing middle classes in developing and emerging economies, reduce investment in Canada, appreciably reduce jobs in Canada, and reduce productivity. What % decline will we see in any one area? Who knows. What % decline will we see in C02? Who knows, and it doesn’t matter anyways. There’s no sense arguing with the irrationalist-statists anyways.

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