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Trade and Climate Change

Trade and Climate Change. DFAIT seminar, Ottawa September 14, 2009 Aaron Cosbey. Bali to Copenhagen A two-year programme of research and consensus-seeking on trade and climate change. Context: three types of linkage.

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Trade and Climate Change

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  1. Trade and Climate Change DFAIT seminar, Ottawa September 14, 2009 Aaron Cosbey Bali to Copenhagen A two-year programme of research and consensus-seeking on trade and climate change

  2. Context: three types of linkage • Climate change’s physical impacts on trade infrastructure, flows (infrastructure, changes in comparative advantage) • Climate change policies with trade impacts (competitiveness and leakage impacts) • Trade laws and policies that can obstruct or support climate change actions (EGS, subsidy law)

  3. Key areas of linkage • Competitiveness and leakage policies • Subsidy law and domestic policies • Subsidy reform for climate change • Standards • IPRs and tech transfer • Low-carbon goods liberalization

  4. A focus on competitiveness issues • Issue 1: impacts on Canadians of measures taken by others to address competitiveness and leakage • Issue 2: competitiveness impacts for Canada arising from the interplay of domestic and foreign climate regimes

  5. Issue 1: Impacts of foreign C&L measures • State of play in the US and EU • Will Canada be targeted? • Are these measures WTO/NAFTA-legal? • Are they effective? • What sectors might be hit? • What are our options?

  6. Issue 2: Regime differentials • Will Canada need to employ C&L policies? • What sectors are vulnerable? • What policies are available? • Why even discuss this at this point?

  7. Issue 2: Regime differentials • US regime on offsets • Will Canadian regime link to international? Continental? • US regime will find significant low-cost offsets internationally. • Canada may be put at a competitive disadvantage

  8. Issue 2: Regime differentials • Pressure for a harmonized regime with US? • Problem: Canadian economic structure is quite different • Impacts may be severe in some sectors if a harmonized regime is adopted • But then how to achieve ambitious targets?

  9. Concluding thoughts • SWOT analysis re the US: where do we stand? • Need to engage the US on elaboration of its regime: standards, methodologies • What Canadian measures to address competitiveness and leakage? • Work on broader positive potential – EGS, clean energy exports

  10. Aaron Cosbey acosbey@iisd.ca www.iisd.org/trade/crosscutting

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