A Carbon Tariff is Eminently Sensible
I am really glad Stephane Dion supplemented his Green Shift proposal with a call for a carbon tariff.Â This is utterly consistent with demands the left has been making for years, namely that the rules of globalization have to be broadened to effectively address the role of environmental, labour, and social standards in determining competitiveness and hence global trade and investment flows.
The line-up of free-trade experts denouncing the idea (including Michael Hart, who brought us NAFTA) was utterly predictable.
But the idea is not ridiculous at all.Â The concept of curtailing market access on the basis of unacceptable practices which distort pricing and competitiveness (whether that’s direct subsidies, non-tariff barriers, or the outright oppression of people) has a long and valid history in trade law.Â Canada’s existing countervail rules (protected by our NAFTA and WTO commitments) provide plenty of legitimate, legal scope to impose something like a carbon tariff.Â It’s the only way to prevent “environmental dumping”: the incentive that hands-off liberalization provides to countries to suppress their environmental standards in order to attract investment and jobs in polluting industries.
I proposed something similar 15 years ago: a tariff to be applied against imports from U.S. right-to-work states, which benefit from the distortion of labour prices resulting from the elimination of the effective right to unionize and collectively bargain in those states.
Suppressing labour rights, or allowing greenhouse gas pollution, is clearly a subsidy to production — asÂ unacceptable and damaging as any of the other practices which are supposedly ruled out of bounds by existing free trade rules.
The only surprising thing about the debate over Dion’s carbon tariff proposal was to see the federal NDP right there, in an unholy marriage of convenience, with the Conservatives and the free trade negotiators, trying to debunk the proposal as “laughable.”Â This reveals once again the NDP’s main political focus — attack the Liberals, rather than fighting for progressive ideas.Â The labour and left communities have been calling for trade rules (including social and environmental tariffs) which reflect labour and environmental standards for decades.Â To see the NDP denouncing this valid, sensible principle in the interests of its short-term political positioning is appalling.Â Their claims that the idea is somehow “unfeasible” or “ridiculous” are not remotely valid.