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
Carbon Pricing, The WTO and
Canadian Federalism
• What instruments?
• Who is obligated?
• Who decides?
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
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
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
What Instruments?
• Taxes v Trading
• BTAs for Taxes – indirect
• BTAs for Trading – “internal tax or other charge”?
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
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?
Who Decides?
•
•
•
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Open questions about WTO rules
Balancing efficiency and values
WTO – panels, Appellate body
Deference to domestic governments?
• Recent moves towards greater deference