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Jim Prentice, the federal Minister of the Environment, was right to warn in a speech in Washington last Wednesday against “trade protectionism in the name of environmental protection.” But trade and environmental motives may be difficult to disentangle, and Canada must be ready to defend its vital interests as an exporting nation by adopting a serious policy to reduce carbon emissions.
Mr. Prentice was specifically directing his speech at a draft bill in the U.S. House of Representatives, called the American Clean Energy and Security Act. Even more particularly, he is justifiably worried about provisions in the bill for “international reserve allowances” that could well have the effect of protective tariffs.
The draft bill in the House energy and commerce committee would charge these so-called allowances, at the border, to exporters into the United States from other countries that do not have greenhouse-gas-emissions regimes “commensurate” to the one that the U.S. would adopt under this same bill.
Though Mr. Prentice had some fun saying, “Like beauty and fairness, the definition of ‘commensurate’ will apparently lie in the eye of the American beholder,” the bill does elaborate on this word, if only in two paragraphs.
To be fair to the Americans, a country with a more stringent environmental regime does put itself at a disadvantage to exporting countries with a lax one. The proposed charges are described as “covering” the carbon used in the making of the exports.
Indeed, Canadians have had to consider this very predicament, when presented in the 2008 election by Stéphane Dion, then the Liberal leader, with a carbon-tax plan that would have placed a burden on Canadian manufacturers not faced by exporters to Canada from such countries as China.
Mr. Prentice is looking ahead to a climate-change conference at Copenhagen in December, which will attempt to replace the Kyoto Protocol with a new international agreement. The best resolution of this U.S.-Canada question would certainly be under such an international treaty. If that does not work out, then Canada and the U.S. may need to negotiate bilaterally – perhaps under NAFTA, if Mexico also comes in -or multilaterally with other long-developed countries.
With the present U.S. administration and Congress, Canada now has a pragmatic, short-term incentive to deal with the long-term challenge of climate change. Fortunately, Mr. Prentice takes this whole set of issues more seriously than some of his predecessors.
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