Young Economics.

Things are bleak for the Tar Sands

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The WTO has offered its first insight into how it will deal with environmental tariff measures.  From the financial times (link):

In a report to be published today, written jointly with the United Nations Environment Programme, the WTO said it was possible to implement border measures for environmental reasons under its rules.

“Rules permit, under certain conditions, the use of border tax adjustments on imported and exported products,” said the WTO. “The objective of a border tax adjustment is to level the playing field between taxed domestic industries and untaxed foreign competition by ensuring that internal taxes on products are trade neutral.”

The issue is crucial to talks on carbon policy.

Some US businesses and politicians argue that to put a price on carbon could put domestic companies at a disadvantage compared with cheaper imports from places with no – or more lax – rules. One possible way of preventing this would be to impose tariffs on imports from states without robust carbon regimes.

This is a critical issue for Canada and our tar sands.  Its been said that oil produced from the sands generates five to seven times the carbon emissions as does that produced from conventional sources.  So could we encounter five to seven times the tariff?

It depends on whether the duty is slapped on specific ‘dirty’ countries, on crude in general, or if the States is willing to catergorize oil imports by source and type.  The first two options shouldn’t pose a huge threat, but if they make a distinction, the party would be over in Alberta.


Written by jk

June 26, 2009 at 7:30 am

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