A tariff on carbon
Toronto Star, Mar 29, 2008

Canadians and the citizens of other Western industrialized countries are growing increasingly worried about the losses of high-paying manufacturing jobs to low-wage developing countries, particularly China and India. Yet, as these jobs go up in smoke in the West, the jobs replacing them in Asia are themselves creating a lot of real smoke with all its attendant pollutants and carbon emissions.

As CIBC economist Jeff Rubin put it this week: "It becomes absurdly quixotic to ban coal plants in North America while at the same time China's got 570 coal plants slated to go into production between now and 2012, 30 plants between now and the Olympics."

With the growing realization in the West that the economy and the environment are but two sides of the same coin, a consensus is emerging that the only sure way to halt climate change is to put a realistic price on carbon that captures the environmental damage it is doing. This view, however, is being fiercely resisted on the other side of the planet, where carbon emissions are surpassing those of the West.

But putting a carbon price on goods produced in the West, through either a carbon tax or a cap-and-trade system, will raise the price of those goods and thus lead to the export of even more jobs to countries that refuse to impose a price on the carbon that goes into the goods they produce. The net effect would be an economic loss in the West without any gain on the global climate change front.

When the link between trade and climate change are viewed from that perspective, the solutions become obvious. If developing countries are not willing to incorporate the price of carbon into the prices of the goods they produce, the industrialized world will have no choice but to impose a carbon tariff on imports from those countries.

By levelling the playing field in that way, the West would not only give these other countries a real incentive to start cutting their own carbon emissions, but it could also win back some of the jobs in industries where the reduction or elimination of carbon content more than offsets the developing world's low-wage advantage.

The time has come to recognize that globalization doesn't simply mean mutual dependence in trade and investment; it has to be reinterpreted to mean interdependence on a far broader scale.

Jackie Jura
~ an independent researcher monitoring local, national and international events ~