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Trade and Climate Change DFAIT seminar, Ottawa September 14, 2009 Aaron Cosbey Bali to Copenhagen A two-year programme of research and consensus-seeking on trade and climate change 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) 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 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 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? 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? 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 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? 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 Aaron Cosbey [email protected] www.iisd.org/trade/crosscutting