Canada's Kyoto Withdrawal May Trigger EU Tariffs

A majority of Canadians are disgusted today by the fact that our government has pulled out of the Kyoto Protocol.  Canada was one of the first countries to sign on to the Kyoto Protocol, and now as the distinction of being the first to formally back away from its commitments. 

There is much outrage and finger pointing between our political parties about whose fault it is that we have come to this point.  Frankly, I think all political parties bare some of the blame, but most importantly so does every Canadian, regardless for whom you voted. 

While it was briefly mentioned on CBC’s The National tonight, there has been very little coverage about what this could mean for Canada economically, especially regarding international trade.  There is a very real chance that tariffs could be applied Canadian products in the near future because we are no longer part of a climate pact or emissions trading scheme.

I remember first thinking that Canada might be threatened with tariffs because of our lack of climate policy when President Obama was elected.  It seemed that the US was going to adopt hard emissions targets and, through the workings of NAFTA, Canada would therefore be forced to follow suit.

More recently, we can see who is a far more likely candidate to impose the first carbon tariff on Canadian products: The European Union.  In fact, the EU is already considering applying a tariff on Canadian produced fuels because of its higher carbon content. ( Canada Fights Fuel Standards - Gazette ).  The Canadian and Albertan governments are desperately fighting this dangerous precedent, but I would imagine that Europe of all places right now is not likely to do Canada any favours. 

While Canada has done very little over the 15 years since it first signed on to Kyoto, countries and businesses in the EU have been working hard to reduce their emissions continuously.  With budget cuts and austerity measures becoming the standard in European financial policy, it is only a matter of time before Europeans demand that countries not sharing the burden to reduce global emissions be penalized before entering their economy. 

This means that even though Canada is avoiding $Billions in fines for non-compliance in Kyoto by withdrawing, we could be facing a much steeper economic hurdle from international tariffs.  The now 190 Kyoto Countries will not stand by and give unfettered access to their economies to countries and companies that are not accounting for their carbon emissions. 

There are far more important reasons for Canada not to pull out of Kyoto, however it may be the repercussions for international trade that will first show how irresponsibly Canada is acting regarding climate change.