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Future trade may require a roadmap of climate change initiatives

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April 7, 2021

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When we talk about trade, often times we talk about market access, tariff rate quotes, and other technical aspects. Climate change and carbon programing isn’t necessarily something that always comes to mind.

Ted Bilyea of the Canadian Agri-Food Policy Institute (CAPI), says there are currently big unknowns surrounding trade and climate change; particularly, how we are going to make all trade partners agree on a system.

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Standardizing climate policy may be more critical than we think, says Bilyea, as trade partners such as the EU and United States are headed in two different directions with their policies. “We all want to do something about climate change, but we all have different ideas of how to execute the ideas,” he says.

Bilyea says that there’s no specific road map for the globe at the moment — every country is doing their own thing, every country has come up with voluntary goals that they are going to try to achieve.

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“The problem is going to be: how do we network that together?” Bilyea says. “For example, if a country sets some very high standards, and puts a very high price on carbon, and a secondary country that you trade with doesn’t do that… then there’s a real chance that you are going to lose industries in your country, as imports would be favoured from the country with the lower cost structure.” (Story continues below interview)

All eyes are currently on the EU to see what they come up with, as it could set a precedent for what is expected. The next question will be whether the U.S. goes with a high carbon price (through taxation) as Canada has done, explains Bilyea.

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“We know the U.S. is going to take action, the question is what exactly the action will be. It’s very unlikely it’ll be a carbon tax. They will go after the largest polluters first, and set the standards there. This is all speculative, or course, but the thought process is they will spend a great deal on innovation, so they can work with companies to lower their big ticket emissions.”

Understanding the risks and opportunities to trade and climate change, and where everything all fits in, is crucial. CAPI, alongside the Farm Foundation in the U.S., is hosting a webinar “Dialogues on Trade and Climate Change” April 7-9 for those that have more questions. Find it here.

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