Canada, trade and the U.S. climate bills

Will climate legislation strain U.S.-Canada ties? Several provisions in the big U.S. climate bills might be felt by industries north of the border, according to a study by two scholars with the Washington, D.C.-based Peterson Institute for International Economics.

“Mechanisms envisaged in U.S. climate legislation – notably, subsidies, border adjustments, and renewable energy standards – would adversely affect some energy-intensive Canadian industries, both at home and in the U.S. market, unless these mechanisms are modified before a final bill is passed,” it states.

The paper, released today by The Conference Board of Canada, looks especially at whether imports from Canada could be subject to so-called carbon tariffs.

The big climate bill approved by the House allows these tariffs, starting in 2020, to be levied on certain goods from countries that don't also require major emissions cuts. They’re among the provisions to protect U.S. jobs and prevent carbon “leakage.” Inclusion of similar measures in the Senate bill is a top priority for labor and Rust Belt lawmakers.

The new paper states that while the border measures are mostly aimed at emerging economies like Brazil, China and India, “Canada could be hard hit if its national GHG control system is seen to be less demanding than the U.S. program.” Canadian industries that could be affected include paper, petrochemicals, and iron and steel, it states.

A copy of the paper can be found at The Conference Board of Canada site, but a free registration is required.