Carbon Pricing, The WTO and Canadian Federalism

1
Carbon Pricing, The WTO and Canadian Federalism

• Andrew Green
• Faculty of Law and
• School of Public Policy and Governance
• University of Toronto
• October 18, 2008

2
Carbon Pricing, The WTO and Canadian Federalism

• What instruments?
• Who is obligated?
• Who decides?

3
WTO and Climate Policies

• Significant threat of protectionism
• Reducing GHG as additive public good
• Risk of free-riding
• Trade measures can be used as
• carrot
• stick
• reducing disincentives to action

4
What Makes Climate Change So Difficult for the
WTO?

• Hard for WTO to sort out protectionist measures
• Different costs and benefits across states
• Different preferences across states
• Uncertainties especially about what will work

5
Border Tax Adjustments (BTAs)

• BTAs on Imports
• Tax or charge on imports
• WTO Equivalent to tax or charge in domestic
  market
• BTAs on Exports
• Rebate of or exemption from costs
• Illegal subsidy?
• WTO Same level as for domestic market

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What Instruments?

• Taxes v Trading
• BTAs for Taxes indirect
• BTAs for Trading internal tax or other
  charge?

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What Instruments?

• Product v Process
• BTAs on Imports
• Article XX List of exceptions
• Article XX(b) necessary to protect human,
  animal or plant life or health
• Article XX(g) relating to the conservation of
  exhaustible natural resources
• Chapeau no unjustifiable or arbitrary
  discrimination or disguised restriction on trade
• BTAs on Exports
• prior stage indirect cumulative taxes on inputs
  consumed

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Who is obligated?

• Federal, not provincial governments
• Federal state clause feds to take reasonable
  measures to ensure compliance if not,
  sanctions
• Not all governments in practice
• If breach, complaining party gets to impose
  countermeasures (raise tariffs)
• Prospective
• US?

9
Who Decides?

• Open questions about WTO rules
• Balancing efficiency and values
• WTO panels, Appellate body
• Deference to domestic governments?
• Recent moves towards greater deference