Remarks by Jim Prentice, Minister of the Environment, Canada
at the 39th Washington Conference on May 13, 2009.
Thank you for inviting me to speak at this 39th Conference of the Council of the Americas. I had the pleasure and privilege of speaking at last year’s conference. It is good to be back, so I can renew acquaintances with Canada’s friends and neighbours.
We are meeting here today in Washington, just a few weeks after the 5th Summit of the Americas in Port-of-Spain. At that meeting in Trinidad, the 34 leaders talked of promoting Prosperity, Energy Security and Environmental Sustainability. And the Final Declaration called for:
- an open, transparent, rules-based multilateral trading system; and
- a post-Kyoto climate change regime to come out of the Copenhagen negotiations later this year.
Canada has long been an advocate for an open multilateral trade system based on respect for the negotiated rule of law. It is a position that is not only sound in principle – it has allowed many, including Canada, to realize the promise of prosperity.
We believe that free trade, comparative advantage and competition foster prosperity, choice and opportunity; and that these in turn are the foundation for human security and social progress. So Canada is not standing still. We are acting on our beliefs.
We have initiated a comprehensive negotiation with the European Union of potentially great significance; and we are expanding the scale and scope of our relationships with neighbours in this hemisphere – from Mexico and Chile in the 1990’s; to more recently, Colombia and Peru; and hopefully soon with Panama, and the CA-4 nations of Honduras, Nicaragua, El Salvador and Guatemala.
History and economics show that an open, rules-based multilateral regime is in the interest of the global community. Math and science dictate we must reach a multilateral climate change agreement this year. Failure to reach such an accord is not a viable option. It would not just be wrong to remain divided but those of us in positions of responsibility have an obligation to ensure that we do the right thing.
It is the intention of the Government of Canada to play a constructive role in building an effective and equitable climate change agreement. We approach the challenge with confidence and optimism. Our confidence has been bolstered by the formation of the Major Economies Forum, which includes not just the US and Canada, but Mexico and Brazil. Our optimism is shaped by the knowledge that “none of us is as smart as all of us”; and there is a collective will to work through the Major Economies Forum process as a complementary process to the Copenhagen UNFCCC process.
It is time to get serious - to make tangible progress through principled pragmatism that will move the real toward the ideal.
We submit that the best way to achieve an effective and equitable compact in Copenhagen is to put into practice the sound principles found in the UN Framework Convention on Climate Change – the 1992 Rio agreement that gained the support and signature of 192 nations.
That means respecting the principle that “economic development is essential for adopting measures to address climate change”. Recognizing that economic prosperity is the bridge to environmental progress, with abject poverty its greatest obstacle.
It means recognizing that stabilizing greenhouse gas levels is a long-term process. Yes, we must begin to run harder in the time just ahead; but we must do so understanding that we are running a marathon, not a sprint.
It means acknowledging that “an effective and appropriate international agreement needs the widest possible cooperation by all countries”. Yes, developed countries have the responsibility to lead, given past emissions and current capacities. But all the major economies have an obligation to participate.
Three of the top five emitting nations, and eight of the top twenty, are from the emerging world. With rising power comes growing responsibility. The level of man-made greenhouse gas emissions in the atmosphere cannot be stabilized by 2050 without the active engagement of these fast-growing and populous nations.
For our part, Canada sees an effective and equitable agreement in the form of a single undertaking, with measurable, verifiable, reportable commitments covering the majority of emission sources.
Another key principle underpinning our approach is the need to acknowledge that stabilizing emissions will take not only time but technology, because we are engaged in the transformation of the capital stock of our societies.
Clean Technology is an area where we think Canada can pull above its weight. Can; should; and will.
Canada is one of the most energy consumptive societies in the world, on a per capita basis. The denominator in this equation reflects our relatively small population – a population that is 1/10 the size of the United States’, 1/5 that of Brazil’s and 1/3 of Mexico’s, living in the world’s second largest country. The numerator is the product of our vast size, our large natural resource endowment and our challenging climate.
I myself was born in a mining community that was described as having 10 months of winter and two months of bad ice hockey.
Why do we see technology as key to a Canadian contribution? Because when it comes to stabilizing greenhouse gas levels, it is not relative, but absolute size that matters absolutely.
Although Canada has a small population and therefore a small proportion of overall emissions, it has the potential to make a big contribution to the climate challenge through technological innovation. But producing technology in Canada that could reduce emissions in not just Canada, but around the world, could play a pivotal role.
Now amongst the principles upon which our approach to climate change is based is that of our commitment to trade. We intend to go forward reminding Parties that we all agreed in 1992 to promote “an open and supportive international economic system”; and that “measures to combat climate change should not constitute a means of arbitrary and unjustifiable discrimination; or a disguised restriction on international trade”.
As we all know, concerns have been expressed in both the European Union and the United States about so-called carbon leakage – the potential exporting of carbon, and jobs, to jurisdictions without acceptable greenhouse gas regulations.
The Energy and Commerce Committee of the United States House of Representatives has been debating two linked proposals. One would provide rebates to certain carbon and trade-intensive domestic industries to offset the cost of regulatory compliance. The second involves a potential requirement that importers of goods from countries without commensurate greenhouse gas regulations should pay a new charge at the border.
Like beauty and fairness, the definition of “commensurate” will apparently lie in the eye of the American beholder.
I trust that Canadian firms will not be forced to pay such a charge at the American border. We will ensure that our greenhouse gas regulations will constitute a comparable effort with those eventually enacted here in the United States. It is in our power, and in our interest, to do so. We will provide comparable domestic flexibilities to Canadian-based firms, if we determine they are necessary to ensure fair cross-border competition in North America, that is, if we are forced to act to save both our industries and our climate change objectives from subsidization elsewhere.
We are very concerned – for ourselves, for our neighbours, and for the multilateral system as a whole – with the idea of carbon border adjustments. We are concerned with border carbon adjustments as a matter of substance – we believe they would violate the core principles of the multilateral trading system. And we are concerned with them as a matter of tactics. Because we do not believe the threat of unilateral action is the best way to build a multilateral consensus in general, and with Governments in Mexico City, Brasilia, Beijing and New Delhi in particular.
Trade protectionism in the name of environmental protection would be a prescription for disaster for both the global economy and the global environment. Environmental progress is not possible without economic progress and environmental progress, like all progress, requires prosperity as its essential driver. And the threat of such unilateral action is a threat to global progress at this critical time in multilateral negotiations.
It is for these reasons that we take some comfort in the position of the Obama administration as expressed by the United States Trade Representative – that the Administration does not support the concept of border carbon adjustments at this time. We hope that this position is amended in future to be not “at this, or any time”.
Not at this, or any time since border carbon adjustments would create huge risks for the integrity of the multilateral trading system and its carefully-crafted agreements governing rights and obligations of trading partners.
Not at any time because there exist more positive ways to encourage clean growth in the developing world – measures like shaping the criteria for clean development mechanisms or technology transfer supports. And we must never allow fear to replace confidence as a driver of public policy.
Not at any time because border carbon adjustments are an academic idea that will always work in theory – just never in practice. Energy efficiencies can vary widely between facilities making the same product due to the technology and process used.
Stringent regulations cannot be enforced. If such adjustments are to be applied fairly and effectively, investigators will be required to reverse-engineer products, re-trace supply chains and allocate the use of energy between multiple products made in the same facility.
Trade flows can be re-routed in any event, making the entire exercise futile. And that is before we consider the uncertain impact of floating exchange rates and currency adjustments.
Border carbon adjustments would be a thinly-disguised restriction on trade, and an impediment both to wealth creation and the attainment of our collective objective, to address greenhouse gas emissions and to reduce them. They would constitute arbitrary discrimination. They won’t work. And they threaten constructive negotiations.
Before entering politics, I was a negotiator for over twenty-five years. In any event, in this interdependent world, “He who aims across a border, inevitably shoots himself in the foot”. So let us proceed in a measured way. Let us ask questions first, not later. Let us ponder the answers and only then decide how we will best proceed.
At the recent London G-20 Summit, the leaders stated that we faced the greatest challenge to the world economy in modern times – a global crisis that requires a global solution. Many have already called climate change the greatest threat to the global environment of all time.
Crisis comes from a Greek word that means a “turning point” – a moment when things can take a turn for the worse, or the better. The American baseball player, Yogi Berra of the New York Yankees, was known as much for mangling the English language as hitting a curveball. For example, he advised us all that, “When you get to a fork in the road, take it.”
Well, with all due respect to Yogi, I am a Boston Red Sox fan; and I prefer the famous thoughts of New England’s poet Robert Frost on diverging paths. “Green Protectionism should be the road not taken; for that will make all the difference. “