If you think governments around the world are going to stick to international agreements on climate change and GHG emissions, look at the free trade example and softwood lumber. We are still fighting over it, decades and many trade agreements later. Photo licensed to Brian Zinchuk by Storyblocks

Our experience with globalization over the past few decades offers a preview of what we can expect regarding international cooperation in reducing greenhouse gas emissions. Remember when global free trade was all the rage back in the 1990s and early 2000s? Prairie people working in agriculture and the energy business recognized that if globalized free trade worked as advertised, it would indeed be good economic news for our export-reliant livelihoods.

For those with progressive sensibilities it promised much more. It would provide the opportunity for a world-wide age of rainbows and unicorns. The more we traded with the world’s dictators, communists and assorted kleptocrats, the more we could reform them. Our trade connections would foster harmonious social relationships and overcome cultural barriers. The bad guys would mend their ways after seeing more of the good example we would set. Nationalism and national self-interest would wither away once we all got to know each other better. After all, who would not want to be more like Canada after getting to know Justin, Sophie and the kids from the WE charity?

The high point for optimism about globalization was probably around 2001 when China was finally admitted into the World Trade Organization (WTO) and signed onto the General Agreement on Tariffs and Trade (GATT). Since that time Canadian exporters have discovered that GATT or no GATT, you can’t expect to engage in free trade without ever getting your hair mussed.

It seems no matter how many times our free trade deals involving the US get rewritten, they still don’t apply to Canadian softwood lumber exports. Several years ago Canadian cattle producers won a judgment at the WTO against the US over labeling rules for meat which reduced US imports of Canadian beef. The US still hasn’t paid the fine and is threatening to reintroduce the labeling scheme. And, clearly we haven’t even adopted free trade in Canada because we can’t transport our oil to Quebec and the Maritimes.

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When “free trading” with China we run the risk of having our technology stolen and somehow, despite GATT rules, the Chinese government is allowed to heavily subsidize some of its exports and dump them into western markets at below fair market value.

Canada’s free trade deal with Europe isn’t all that prairie ranchers and farmers hoped it would be. The Europeans still apply quotas and non-tariff barriers on our meat exports which means we now allow far more of their meat imports into Canada than they buy from us. No doubt there are some Canadian winners in the Europe deal. Let’s not forget that what’s good for Bombardier must be good for Canada.

All that being said, for an export dependent part of the world free trade remains a good idea, at least in theory. And, perhaps we shouldn’t waste too much time fretting over trade deal disappointments. After all people buy our food commodities not just because of trade deals, but also because they need the food. Similarly, they buy Canadian coal, oil and gas because they need the energy not simply because the GATT makes them do it. They would, of course, buy more of it if the Canadian government allowed us to sell it.

Today, we find staunch free trade advocates like The Economist magazine (which was created specifically to support free trade policies in 1848) acknowledging it’s time for a rethink. While we want to be careful about throwing the baby out with the bath water, the current system allows for a lot of cheating and has made us vulnerable to supply chain disruption. And, those warm and fuzzy ideas about international harmony were clearly overly optimistic. Nationalism and national self-interest haven’t disappeared. Putin has shown us that even the deadly, psychopathic versions of nationalism have survived the GATT and made it into the 21st century. And, let’s not forget there are still tin pot dictators around the world who kill their own people and/or steal from them. Why would we assume they’ll be nice to us?

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Our history with modern day free trade illustrates some of the fatal flaws in the various international agreements and pledges associated with greenhouse gas (GHG) emissions reduction. Despite there being no meaningful teeth in recent agreements such as COP26, virtuous leaders from the western democracies assume everyone is nonetheless going to play ball, do the right things, and get us to net zero by 2050. Clearly they have not been paying attention.

Some countries that find it difficult – excessively expensive, economically disruptive or merely inconvenient can be expected to cheat. Why not free ride — let the virtuous Europeans and Canadians do the heavy lifting on emissions reduction while we take a pass and do what’s in our own self-interest? Not only would such a country forego the heavy costs of a rapid transition to unavailable renewables, they would be able to produce their export commodities much cheaper than the Boy Scouts who follow the rules and do things like implement carbon taxes. Much as was the case with global free trade, the free riders could eat the virtue signalers’ lunch, leaving them with whatever the economic version of a wedgie might be.

What’s more, some climate scientists now claim that the global emissions reduction crusade is doomed to failure. The vaunted goal of keeping warming below 1.5o above pre-industrial levels over the next three decades is simply unachievable. For example, a new study by Concordia University researchers looked at the current state of global climate systems and emissions levels as well as the predictions of various widely employed emissions reduction scenarios and concluded that given current conditions there is almost zero chance the 1.5 degrees Celsius goal will be met.

The best laid plans of Justin Trudeau and Steven Guilbeault will not prevent the planet from reaching 1.5 degrees of warming. Where they will succeed, if they don’t come to their senses, is in further damaging the economies of the energy producing provinces and dividing the country. This is not to say everyone should become an emissions free rider, only that we need to become realistic in our ambitions. To achieve meaningful success the pace of emissions reductions must reflect the fact that the adjustments, while possibly coming at some cost, can’t be flat out ruinous. If targets are more realistic cheaters might be less anxious to cheat particularly if trade sanctions are tied to egregious behavior. In addition, there needs to be greater recognition of the fact that the transition to renewables will be a multi-decade project. The world is still heavily reliant on fossil fuels and will be for a long time to come. There is simply no reason to trash our energy industry when the world still needs what we produce.

 

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