Evidence of meeting #133 for International Trade in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was emissions.
A video is available from Parliament.
Legislative Staff Representative, Political Action and Communications, United Steelworkers
I'm not sure whether I forgot anything.
Bloc
Legislative Staff Representative, Political Action and Communications, United Steelworkers
Thank you for your questions.
Liberal
NDP
Blake Desjarlais NDP Edmonton Griesbach, AB
Thank you very much, Madam Chair.
Thanks to my colleagues for being present. It's always a really fantastic opportunity when we have many labour representatives to help us talk about this.
Of course, Mr. Campbell, it's always good to have an expert mind here as well. I thank you all for being present on this issue.
I think we all agree in many ways that the most important piece to this is protecting Canadian jobs. That's a really important piece, and I think it's the frame you're all coming from. I appreciate that frame because we have serious issues, like the climate crisis and, of course, potential tariffs. Softwood lumber is already facing some of these tariffs, so I'd like to get your perspective on the recommendation by Ms. MacEwen related to why Canada should have a CBAM.
It's an important question, because I think we can very easily take a different approach. There are a couple of steps to understanding why a CBAM is important, so I want to wrap up some of the conversation from my colleague on the Conservative benches and try to answer some of those questions.
I think his question deserves more time, so I'd like to ask all of you, starting with Ms. MacEwen, why having a CBAM is a fair request and fair recommendation for this committee and for our report as a means to protect Canadian jobs and industries and, in particular, to ward off potential threats.
Senior Economist, National Services, Canadian Union of Public Employees
I think it's really important to understand what a CBAM mechanism does. Globally, many different countries are working towards moving to a low-carbon economy, which often includes pricing or border adjustments. Canada has a price domestically that adds extra costs, but it also means we have much cleaner production.
When we import from countries that haven't done that yet, they don't have to pay the full cost of their environmental damage, so the CBAM applies a cost to level the playing field domestically. Also, if we're monitoring and measuring, as some of the previous witnesses have said, it allows us to be compliant when countries bring on a CBAM so that our industries aren't paying an additional cost when they go overseas. This helps protect domestic jobs and helps protect industries in a global world where people are moving to price carbon.
Partner, McMillan LLP, As an Individual
I think I said this in my opening, but just briefly, there are two situations that drive you to want it: You have significant carbon costs for your domestic producers and, once you're at that level, you have sectors facing significant imports that are enjoying an advantage, basically, from not paying the same carbon cost. That's what makes it sensible.
That's sensible regardless of what the source is, and it relates to jobs, Canadian companies, production, plants and so on. It's a level playing field.
NDP
Department Leader, Research, Public Policy and Bargaining Support, United Steelworkers
In general, the CBAM can serve three main purposes.
My colleagues have already identified the levelling of the playing field to ensure that foreign producers are paying the acceptable costs of the carbon they're producing and exporting into the Canadian economy. However, the carbon border adjustment also prevents carbon leakage. It imposes costs on imports equivalent to carbon pricing faced by domestic producers, and that reduces incentives for producers in Canada to relocate production to high-emission or other foreign markets. In that sense, it prevents leakage in carbon and leakage of Canadian jobs overseas. Finally, the carbon border adjustment, if implemented properly, should encourage action globally on climate. It encourages exporting countries to adopt or enhance their carbon pricing or emissions reduction measures if they want access to our markets.
I think it serves those three key purposes.
NDP
Blake Desjarlais NDP Edmonton Griesbach, AB
I think that's a fantastic perspective that I share with all of you.
My concern, in part, is the domestic framework that already exists. There are a lot of analytics that go into monitoring and even into the declaration by companies of how much carbon they're producing—being transparent with that. That's a lot of hard work that's already there. That's a valuable piece to this, and Mr. Campbell really hit that point home.
I want to focus now on another important reason we have carbon pricing to begin with in many ways, which is that the cost of the climate crisis is so great. If we could have done away with the climate crisis, we would have. Everybody here would have said that since there's no climate crisis, we'll have no price on pollution or on anything.
That is the kind of world that some people believe exists, but the reality is that we don't live in that world. We live in a world where carbon emissions are harming our industries. We heard from the forestry industry, for example, that they had no revenue in Quebec last year because wildfires stopped them. That is a greater impact. It's a huge impact to the livelihoods and well-being of those in Quebec and those across forestry.
This is part of a plan, I'd say, somewhere within the ABCs of what needs to be done not just to combat the climate crisis but to protect our industries, with a long-term perspective. I think that is the missing piece in this conversation.
Would anyone like to comment on why that's a critical piece to this?
Senior Economist, National Services, Canadian Union of Public Employees
If I could just borrow from what Elizabeth Kwan said in the previous panel, you want to skate to where the puck is going. This is where the puck is going, and an industrial strategy that recognizes that and puts in place the supports we need to get there is how we're going to be successful and weather the storm.
Liberal
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
Thank you, Madam Chair.
Thank you, everybody, for taking the time on a Wednesday evening, right before we break, to be here with us today.
To get a bit of clarification, I'll start with you, Mr. Campbell, and then maybe move on to you, Ms. MacEwen.
Mr. Campbell, to follow up on some of your comments earlier, to cut right to it, would you support the government enacting these measures unilaterally without the United States and Mexico following suit?
Partner, McMillan LLP, As an Individual
It would make sense to develop this in parallel with the negotiation strategy around CUSMA and have the opportunity to decide whether to go ahead without it or do something that may introduce very interesting possibilities in that negotiation.
One possibility is that the U.S. will want to do something that blocks carbon beyond a particular standard. They may do something that turns out not to be WTO-compliant. We might decide to do something that aligns with that to some degree and could be WTO-compliant. I'm talking about, for example, a standard plus an associated price where we treat all domestics and foreigners on a level playing field even if they chose not to do that. I can't guarantee this would work, but it's conceivable to do a bilateral or regional trade agreement that might have some specific different treatment.
This could be the subject of a negotiated resolution vis-à-vis the United States and Mexico in a CUSMA negotiation that might be different from what Canada would do elsewhere. That's tricky but not out of the question, from a trade law point of view.
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
I want to get back to some of that, but I'll quickly give Ms. MacEwen an opportunity to respond first. Then I'll go from there.
Senior Economist, National Services, Canadian Union of Public Employees
What I recommended was that you go into the negotiations open to the possibility of trying to have the CBAM and trying to make a level playing field. The goal with trade negotiations is to try to create a level playing field, so it makes sense to go in there and have that as part of the conversation and negotiations.
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
You mean going into the trade negotiations trying to convince the new administration that the CBAM is a good idea?
Senior Economist, National Services, Canadian Union of Public Employees
Yes—that this is part of our policy.
Conservative
Senior Economist, National Services, Canadian Union of Public Employees
Yes.
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
Do you think that would be successful in negotiation with the new administration?
Senior Economist, National Services, Canadian Union of Public Employees
It would be successful to include it in the tool box for negotiations, yes, which is different from unilaterally going forward with something.
