Carbon tariffs seen as risk for trade wars: OECD

The Organization for Economic Co-operation and Development is advising condemning attempts by countries to impose carbon tariffs on certain imported goods, a program the Liberal Green Shift Plan would promote, says the National Post in an article today. The view is based on a draft copy of a briefing released Sept. 10 and obtained by the National Post.

"The Liberal environmental platform adds there should be no risk to Canada's trading relationship with the United States because it is expected that the next U. S. president, whether Republican or Democratic, will pursue a policy that prices carbon.

However, the business advisory group warns the OECD that trade policy should not be used to "coerce" countries to adopt more stringent environmental policy. It adds an unintended consequence for countries that pursue carbon tariffs is that their business communities will become complacent and less productive -- leading to drops in their respective standards of living.

"The initial advantage of protection for domestic companies will over time likely turn into a competitive disadvantage as companies that are partially shielded from competition tend to be less innovative, less active in seeking new business opportunities and less eager to reduce excessive costs than companies that are exposed to effective international competition," the OECD warned."