Tuesday, July 16, 2013

Can BC use the lack of a carbon tax as an unfair trade practice?

As long as countries have to agree to voluntarily put restrictions in places, the multi-national negotiations like the Copenhagen Summit of 2009 are doomed to failure.   We have to use some way within the existing multi-lateral relations between nations to force things to happen.  One of the few truly global systems we have are the trade agreements such as the World Trade Organization.

BC should take leadership in climate change and use WTO or NAFTA as a way to claim that not having a carbon tax is an unfair trade practice.  It would not have to only be BC but other jurisdictions with carbon taxes that could go and make the same claim, but someone has to start.  

Allowing the unlimited dumping of CO2 into the atmosphere reduces the costs for industry which gives them an unfair advantage over industry elsewhere.   Climate change is a global problem but suffers from the tragedy of the the commons - countries benefit in the short term by not acting.   The economies of countries that do act now are slowed by the actions.   It seems to me there is a clear case for a claim of unfair trade practices.

A successful case in relation to carbon pricing would force countries to either enact some form of pricing or face serious countervailing duties.  Either way the problem of tragedy of the commons is lessened and it becomes possible for more action on climate change.

So if this approach were not to work or would take too long, there is no reason BC could not apply a carbon tax on all products coming into BC based on the fuel they would have used to produce the product.  It would mean products from China would be more marginally more expensive but this should help BC based producers of goods a small improvement.

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