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Open Trade with the U.S. without Compromising Canada’s Ability to Comply with its Kyoto Target

Author

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  • ZhongXiang Zhang

    (Research Program, East-West Center, Honolulu, USA, Centre for Environment and Development, Chinese Academy of Social Sciences, Beijing, and China Centre for Regional Economic Research, Peking University, Beijing, China)

Abstract

There are no other two countries in the world that trade as much between themselves as do Canada and the U.S.. It should thus come as no surprise that the U.S. deviation from international obligations makes Canadian industries’ competitiveness (trade) concerns become even more rigorous. Against this background, this paper aims to address competitiveness concerns brought about by the different level playing field where Canadian industries face mandatory emissions constraints but U.S. industries’ emissions are uncapped. To that end, the paper has addressed: 1) ways to deal with increased emissions in Canada as a result of increasing energy exports to the U.S.; 2) treatment of Canadian subsidiaries of U.S. multinationals in initially allocating Canada’s assigned amount; 3) transferring Kyoto permits to non-Annex B Parties and transferring credits generated by non-Kyoto Parties to Kyoto Parties; 4) whether the U.S. bears any economic costs even when it faces no mandatory emissions targets during the first commitment period and why does Canada like to bear additional costs, if any, relative to the U.S. and the EU.? and 5) what other measures might Canada take to further mitigate its trade concerns, in addition to taking advantage of the opportunities offered by the Kyoto flexibility mechanisms? If Canada and other like-minded countries invoke trade measures (to meet their Kyoto targets) against another WTO member but non-Kyoto Party like the U.S, would these measures be upheld if challenged by the U.S. under WTO? In so doing, attention is paid to the trade effects of the proposed measures to ensure their close consistency with the WTO rules, thus maximizing the WTO’s contributions to sustainable development. It should be pointed out that although this study focuses on the U.S. and Canada, the results are of high policy relevance to Japan and the EU as well. The latter also have to address the similar issues facing Canada, although to a lesser extent.

Suggested Citation

  • ZhongXiang Zhang, 2003. "Open Trade with the U.S. without Compromising Canada’s Ability to Comply with its Kyoto Target," Working Papers 2003.68, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2003.68
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    Citations

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    Cited by:

    1. ZhongXiang Zhang, 2013. "Trade in environmental goods, with focus on climate-friendly goods and technologies," Chapters,in: Research Handbook on Environment, Health and the WTO, chapter 19, pages 673-699 Edward Elgar Publishing.
    2. Zhang, Zhong Xiang, 2012. "Competitiveness and Leakage Concerns and Border Carbon Adjustments," International Review of Environmental and Resource Economics, now publishers, vol. 6(3), pages 225-287, December.
    3. Jürgen Hogrefe & Jörg Jasper & Uwe Knickrehm & Felix Würtenberger, 2007. "Fragen der künftigen Entwicklung des europäischen Handelssystems für Emissionsrechte," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 76(1), pages 126-139.
    4. ZhongXiang Zhang, 2010. "The U.S. proposed carbon tariffs, WTO scrutiny and China’s responses," International Economics and Economic Policy, Springer, vol. 7(2), pages 203-225, August.
    5. Bao, Qin & Tang, Ling & Zhang, ZhongXiang & Wang, Shouyang, 2013. "Impacts of border carbon adjustments on China's sectoral emissions: Simulations with a dynamic computable general equilibrium model," China Economic Review, Elsevier, vol. 24(C), pages 77-94.
    6. ZhongXiang Zhang, 2012. "Climate Change Meets Trade in Promoting Green Growth: Potential Conflicts and Synergies," Chapters,in: Responding to Climate Change, chapter 6 Edward Elgar Publishing.
    7. Zhang, ZhongXiang, 2009. "Multilateral trade measures in a post-2012 climate change regime? What can be taken from the Montreal Protocol and the WTO?," Energy Policy, Elsevier, vol. 37(12), pages 5105-5112, December.
    8. Zhang, ZhongXiang, 2004. "Ways to improve the design of the EU emissions trading scheme: key issues and answers," MPRA Paper 14668, University Library of Munich, Germany.
    9. Zhongxiang Zhang, 2011. "In what format and under what timeframe would China take on climate commitments? A roadmap to 2050," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 11(3), pages 245-259, September.
    10. Bao, Qin & Tang, Ling & Zhang, ZhingXiang & Qiao, Han & Wang, Shouyang, 2012. "Impact of Border Carbon Adjustments on China’s Sectoral Emissions: Simulations with a Dynamic Computable General Equilibirum Model," Working Papers 249391, Australian National University, Centre for Climate Economics & Policy.
    11. Zhang, ZhongXiang, 2009. "Liberalizing climate-friendly goods and technologies in WTO environmental goods negotiations: product coverage, modalities, challenges and the way forward," MPRA Paper 16943, University Library of Munich, Germany, revised 10 Aug 2009.
    12. Medalla, Erlinda M. & Lazaro, Dorothea C., 2005. "Does Trade Lead to a Race to the Bottom in Environmental Standards? Another Look at the Issues," Discussion Papers DP 2005-23, Philippine Institute for Development Studies.
    13. Kemfert, Claudia & Zhang, ZhongXiang, 2003. "Linking developing country's cooperation on climate control with industrialized country's R&D and technology transfer," MPRA Paper 41473, University Library of Munich, Germany.
    14. Zhang, ZhongXiang, 2009. "Encouraging developing country involvement in a post-2012 climate change regime: carrots, sticks or both?," MPRA Paper 13174, University Library of Munich, Germany.

    More about this item

    Keywords

    Clean energy exports; Emissions trading; Competitiveness concerns; Border tax adjustments; WTO; Kyoto Protocol;

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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