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Thursday, March 27, 2008

Carbon Tariffs can save N.A. Jobs and the environment

Another voice has joined the choir supporting the taxation of carbon. For the most part these calls have been from economists supporting the GPC concept of a domestic carbon tax as the most effective way of lowing green house gases but now Jeff Rubin chief strategist and economist at CIBC World Markets claims a Carbon Tariff will not only lower green house gases but allow the west to repatriate lost manufacturing jobs! How much better than that could it get?

CALGARY — Manufacturers that have relocated to China may soon be coming home if the Western world imposes a “carbon tariff” on countries that spew greenhouse gas emissions, according to Jeff Rubin, chief strategist and economist at CIBC World Markets.

Mr. Rubin, in a report issued on Thursday morning, said it is clear Western countries are moving quickly to reduce their own greenhouse gas emissions and he highlighted that China's estimated emissions in 2007 supplanted the United States after rising rapidly through this decade.

Given the increasing emissions imbalance between the developed world and countries such as China, Mr. Rubin said the “only leverage is through trade access,” specifically a “carbon tariff.” Mr. Rubin predicted such a tariff, based on $45 per tonne of carbon dioxide or equivalent, would be $55-billion annually, a 17-per cent levy on all Chinese imports to the U.S. — almost six times greater than the effective current import tariffs.

The main impact of such a scenario would be on companies that have moved their factories to China — and consumers in North America. In a world where carbon emissions cost nothing, moving to China, with its cheap labour, made perfect sense, Mr. Rubin said. That situation is unlikely to last, he added.

“For many industries that joined the exodus to the cheap labour markets of East Asia, imposing a carbon tariff means coming home,” Mr. Rubin said in his report entitled “Coming Home,” co-authored with economist Benjamin Tal.

“Without such a tariff, the earnest efforts of [developed] countries to decarbonize their own economies would become absurdly quixotic in the face of the avalanche of emissions that will come from the rest of the world.”

Companies — because of their high carbon output — that are mostly likely to re-relocate are makers of chemical products, as well as makers of non-metallic mineral products such as cement, glass and lime, according to Mr. Rubin. Printing, primary metals makers and machinery manufacturing are also exposed.

For North American consumers, such a tariff of course would mean imported products would become more expensive. At a carbon cost of $45 a tonne, Mr. Rubin projected the U.S. inflation rate would be increased by about 0.6 percentage points, roughly a 25-per-cent increase from the current core U.S. inflation rate of 2.5 per cent.


If such a carbon tariff will mitigate the differences in labour costs it should also help offset reductions in manufacturing from a high Canadian dollar. So what the hell is the problem folks? let's move on this it's a WIN/WIN proposition.Recommend this Post

1 comment:

Tony Trepanier said...

Making steps to solve the global warming problem are good, but you need to be careful in restricting developing economies. We want to stop global warming, but not at the cost of sentencing half the world to a life of poverty.