1. Trade and Climate Change
DFAIT seminar, Ottawa
September 14, 2009
Aaron Cosbey
Thanks
Broad issues
Narrow down
Concluding thoughts
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)
Ports infrastructure; Australia wheat
Comp & L, but also stuff like oil prices – 120 /bbl was equivalent to 9% from China to NA – eliminate Chinese advantage over steel
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