Canada

Canada’s Green Energy and Jobs Programs Butt Up Against WTO Rules, says Japan

by Fran Smith on September 22, 2010 · 2 comments

in Energy, Environment, Global Warming, International, Trade

Do green energy and green jobs mandates run counter to World Trade Organization rules?  Japan says “yes” in relation to Canada’s program for renewable energy generation and green jobs in Ontario. Japan is complaining to the WTO that Canadian measures that mandate domestic content requirements for renewable energy generation equipment are inconsistent with WTO rules because they discriminate against equipment produced outside of Ontario and also represent a subsidy prohibited by the WTO. The country has asked the WTO for a formal consultation with Canada on the issues it raises in its September 13, 2010 filing. Consultations are often the first step in trying to resolve an issue before a country opens an official case with the WTO’s dispute settlement body.

Primarily Japan’s complaint hits Canada’s domestic content requirements in its “feed-in tariff” (FIT) program for Ontario, which requires that the renewable energy equipment, such as solar panels, wind turbines, biomass, and waterpower generation equipment, be produced in Ontario in whole or in part. (Feed-in tariffs are renewable energy payments that electric grid utilities obligate themselves to pay to purchase electricity generated from renewable sources.)  Under the program guaranteed prices for renewable energy electricity production are provided through long-term contracts.

According to a provincial government backgrounder on FIT, the domestic content requirements are intended to support “new green jobs in Ontario”:

Domestic content requirements for both FIT and microFIT projects are intended to help support the creation of 50,000 new green jobs in Ontario. MicroFIT projects will help create new local businesses and green jobs as demand grows for technologies such as solar panels, wind turbines, biomass and waterpower generation equipment, and for Ontarians who can design, build, install, operate and maintain these technologies.

And the domestic content requirements can be very specific (and somewhat ridiculous).   Here, for instance, is the one for silicon ingots and wafers:

Silicon ingots and wafer, where silicon ingots have been cast in Ontario, and wafers have been cut from the castings by a saw in Ontario.

From my quick review of the Canadian program, Japan seems to have a real cause for its complaint. Other countries looking to follow Canada’s example for green jobs creation should be wary about including their own protectionist measures.

H/T/ Julie Walsh

President Obama to push U.S.-Korea FTA

by Fran Smith on June 28, 2010

in Economy, International, Trade

Economic reality is beginning to take the place of anti-trade rhetoric on the U.S.-South Korea Free Trade Agreement, which has been on hold since it was signed three years ago.  Today, the Wall Street Journal reported that President Obama has said he will resolve issues relating to beef and autos for the November G-20 meeting in Seoul and then push for ratification of the FTA soon after.

According to the U.S. Trade Representative, that would be good news for the still-faltering economy.  It is estimated that Korea under the FTA would be reducing tariffs and quotas on goods and services, with goods alone adding “$10 billion to $12 billion to annual U.S. Gross Domestic Product and around $10 billion to annual merchandise exports to Korea.”

The pressure is on from other countries pursuing trade agreements with Korea. Last fall the European Union and Korea signed a trade pact, which has to be voted on by Members of the European Parliament.  Canada too has a pending trade agreement with Korea.

Check out CEI’s Issue Analysis on why the U.S. should move ahead on the FTA.

Canada sees a good deal in Colombia FTA

by Fran Smith on June 23, 2010

in International, Politics as Usual, Trade

Canada ratified a free trade agreement with Colombia on June 21, showing that the U.S.’s northern neighbor knows a good deal when it sees it. Not so the U.S., which has been sitting on the U.S.-Colombia FTA since it was signed four years ago.

And it’s not all likely that the FTA will be submitted to Congress before the fall elections.  Too many unions have campaigned against the agreement since it was first negotiated.  Maybe after the elections more enlightened policymakers will realize that there’s no downside to the trade pact.  After all, most Colombian goods and services – under preferential agreements – already come into the U.S. duty-free or with low tariffs.  With the FTA, Colombia would immediately eliminate most tariffs on U.S. goods and phase out other tariffs.

With all the talk about President Obama’s new export initiative, leaving Colombia out of the equation doesn’t make any sense.  After all, Colombia is the largest market for U.S. agricultural products in South America, according to the U.S. Trade Representative.

Canada knows that – and so do some U.S. exporters.  The National Association of Wheat Growers said that the Canada-Colombia pact would be a big blow:

“U.S. wheat producers stand to lose export sales to Colombia worth up to $92 million per year, roughly half of their current market share, if the U.S.-Colombia trade agreement isn’t quickly ratified.”

Besides the economic benefits of the agreement, the pact would recognize Colombia’s role in Latin America as a defender of democratic governance.  Colombia’s president-elect, Juan Manuel Santos, could be a strong American ally, following in the footsteps of President Uribe.  Ratifying the FTA would go a long way in cementing this relationship.

Check out CEI’s publications on this issue.

Regulation of the Day 105: Not Driving Your Car

by Ryan Young on January 26, 2010

in Deregulate to Stimulate, Nanny State, Personal Liberty, Regulation, Regulation of the Day

John Delacey of St. John’s, Newfoundland, Canada, received a court summons for keeping a car in his driveway and not driving it.

The car, which he bought for his daughter, needs new brakes. He claims it is otherwise in good condition, and not an eyesore. Delacey had been saving up money for the repair.

Here’s the really shameful part:

“City property inspectors became involved when someone in the neighbourhood complained about the car.”

It would have been considerate of the offended neighbor to talk to Mr. Delacey first. Maybe they could have come to a compromise (economist Ronald Coase‘s preferred solution). Instead, he went right to the authorities.

Take a look at some other St. John’s by-laws here.

(Hat tip to Jonathan Moore)

Stimulus Package Forces States to Raise Taxes, Harms Economy

by Hans Bader on January 2, 2010 · 2 comments

in Deregulate to Stimulate, Economy, Employment, International, Labor, Politics as Usual, Stimulus to Nowhere, Trade

The federal government’s $800 billion stimulus package, which failed to cut unemployment, is now forcing states and local governments to raise taxes. The Wall Street Journal describes how “stimulus dollars came with strings attached that are now causing enormous budget headaches . . . At the behest of the public employee unions, Congress imposed ‘maintenance of effort’ spending requirements on states. These federal laws prohibit state legislatures from cutting spending on 15 programs,” such as ”welfare, if the state took even a dollar of stimulus cash,” even if a state’s tax revenue has since fallen due to the recession.  “So when states should be reducing” their spending ”to match. . . lower revenue collections, federal stimulus rules mean many states will have little choice but to raise taxes.”

Obama claimed the stimulus package was needed to prevent the economy from suffering from “irreversible decline,” but the Congressional Budget Office admitted that the stimulus package actually would shrink the economy “in the long run.”  Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.

The Washington Examiner says that “75,000 jobs” Obama has claimed credit for are “clearly imaginary” or “highly doubtful.”  That includes thousands of jobs the administration claims credit for creating in nonexistent Congressional districts. As the Examiner notes:

If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent this year. The reality is that it passed 10.3 percent in October. So now the stimulus books are being cooked to mollify an anxious public worried that real-world jobs continue to disappear and angry that Obama has thrown almost $1 trillion down the stimulus rathole.

The stimulus package actually destroyed thousands of real world jobs by triggering trade wars with Canada and Mexico that killed jobs in America’s export sector (the stimulus package barred a measley 97 Mexican truckers from U.S. roads, a minor NAFTA violation that led to massive Mexican retaliation against U.S. exports of 40 farm products and kitchen goods worth $2.4 billion).  It also is wiping out jobs by inflicting costly mandates on state governments (such as repealing welfare reform, and imposing costly “prevailing wage” regulations and expensive racial set-asides).

The stimulus package has since spawned countless examples of government waste and corruption.  Recently, Obama fired an inspector general, Gerald Walpin, who uncovered millions of dollars of waste and fraud in the AmeriCorps program, including by a prominent Obama supporter, endangering the Obama supporter’s ability to administer federal stimulus spending in Sacramento.  Obama’s alleged justification for firing the inspector general turned out to be false.

“Millions of jobs are at stake on both sides of the border”

by Marc Scribner on August 10, 2009

in Deregulate to Stimulate, Economy, International, Trade

So says British Columbia Premier Gordon Campbell. At a meeting of Canada’s provincial premiers held in Regina, Saskatchewan, last week, slapping retaliatory tariffs on U.S. goods was barely averted.

Harper and his Trade Minister Stockwell Day scored an important victory Friday when provincial premiers finally agreed not to retaliate. “We’ve made it clear we won’t ask the U.S. for anything we are not willing to give the U.S.,” said British Columbia Premier Gordon Campbell, who attended a meeting of premiers held in Regina, Sask. this week.

For months Canada’s premiers, who are that country’s equivalent of state governors, have spoken out forcefully against the Buy-American clause, which requires that stimulus-financed public works projects use American materials. But until now they have been unable to agree on reciprocity. Since most government procurement happens at the provincial and municipal levels, this lack of consensus has allowed Washington to easily deflect Ottawa’s efforts to secure an exemption from its Buy-American position.

Failure to make a deal on procurement has already cost Canadian companies billions of dollars, and spread pain far beyond the stimulus business. “Buy American has created a trade chill,” says Jayson Myers, president of Canadian Manufacturers & Exporters, the country’s largest trade and industry association, noting some U.S. companies are dropping Canadian suppliers to avoid filing waivers that prove they are playing by the new rules.

While a trade war with Canada doesn’t seem to be on the immediate horizon, Canadians are rightfully upset by the Obama administration’s and Congress’s belligerent and idiotic trade agenda. This week, President Obama is meeting with Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon in Guadalajara to discuss the future of North American relations. Unfortunately, the press and most observers are already declaring the chances of progress on trilateral trade dead on arrival.

As the global recession drags on, expect more outrage from the United States’ global trade partners. CEI’s Ryan Young mentioned a few potential future trade flashpoints in a post this morning. For a good crash course on the absurdity of “Buy American,” see Reason.tv’s short video, Is Your iPod Unpatriotic?, which brilliantly debunks the tired, baseless claims of protectionists.

Stimulus Ignites Job-Killing Trade War With Canada

by Hans Bader on May 15, 2009 · 1 comment

in Economy, Employment, Energy, Environment, Global Warming, International, Odds & Ends, Politics as Usual, Stimulus to Nowhere, Trade

The $800 billion stimulus package pushed through by Obama has ignited a trade war with Canada, reports the Washington Post. In response to vague “buy American” provisions in the stimulus, “A number of Ontario towns, with a collective population of nearly 500,000, retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.”

A trade war is also underway with Mexico, thanks to a provision in the stimulus package that blocked a measley 97 Mexican truckers from U.S. roads. That minor NAFTA violation “caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade,” destroying 40,000 American jobs.

Obama’s protectionism echoes Herbert Hoover’s protectionism, which helped spawn the Great Depression. President Hoover signed the Smoot-Hawley tariff, which helped turn a recession into the Great Depression by triggering a trade war with other countries.

Unemployment is now even higher than what Obama predicted it would be without the stimulus. The White House now admits that there will be no job growth until 2010. The Congressional Budget Office repeatedly predicted that the stimulus would shrink the economy “in the long run,” but increase it in the short run, i.e., by the next election.

But so little of the stimulus money has gone into sectors of the economy where unemployment is high (like construction and transportation) that it seems to be doing nothing for the economy even in the short run. The $100 billion it pours into education — a sector where unemployment is very low, and where the U.S. also spends more per capita than almost every other country — appears likely to be wasted. Only 5.9 percent of the stimulus will go to transportation, a small amount compared to the amount of money it showers on state governments, which are using it to continue to provide lucrative pension and health benefits for state employees, whose wages continue to rise much faster than private sector workers.

Obama is following in Herbert Hoover’s footsteps on taxes and spending. In the Great Depression, Hoover raised marginal tax rates to 63%, and went on a deficit spending binge. Similarly, Obama has proposed higher marginal tax rates, which will produce another $1.9 trillion in tax increases. One of Obama’s own advisers now says that “the barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.” He compares Obama’s tax increases to those that deepened the Great Depression.

Hoover imposed regressive taxes that burdened consumers, like the Revenue Act of 1932. Obama is now doing the same thing through his proposed $2 trillion cap-and-trade carbon tax. Obama privately admitted to the San Francisco Chronicle (which didn’t report it) that under his “plan of a cap and trade system, electricity rates would necessarily skyrocket.” As Obama admitted, that cost would be directly passed “on to consumers” — just the way Herbert Hoover’s 1932 excise tax increase was. Although the tax’s supporters claim it will cut greenhouse gas emissions, it may perversely increase them and also result in dirtier air. It is also chock full of corporate welfare, regional favoritism, political pay-offs, and give-aways to special interests.

When it Comes to Climate Change, Errors Abound

by William Yeatman on February 24, 2009 · 5 comments

in Environment, Global Warming

“A Matter of Fact,” a new report from the Center for American Progress Action Fund, challenges the Washington Post to correct George F. Will’s “Dark Green Doomsayers” column, published February 15th. The report, by CAP’s Brad Johnson, asserts that George Will made three factual errors:

  • Current “global sea ice levels” equals those of 1979
  • There hasn’t been warming in “more than a decade”
  • “Global cooling” joins a list of well publicized “planetary calamities that did not happen.”

Will’s column is not perfect, and Johnson raises some valid questions. For the sake of intellectual honesty, however, Johnson should broaden his fact-checking scope to incorporate misstatements on both sides of the global warming debate—including his own fudging of the truth.

But first, let’s address CAP’s critique of Will’s column.

Error 1. It seems that Will is guilty of delay. On the one hand, the University of Illinois Arctic Climate Research Center, the source of his assertion that global sea ice levels haven’t changed in 30 years, publically disavowed Will’s claims. On the other, ACRC reported on January 1, 2009 that global sea ice levels were “near or slightly lower than those observed in late 1979.” Will’s column appeared 45 days later, during which the discrepancy between current levels and 1979 levels grew by 8%.  If anything, this demonstrates the perils of reporting on an ever-changing global climate.

Error 2. CAP and George Will have it wrong. Will wrote that it hasn’t warmed in “more than a decade,” while Brad Johnson claims that “global warming is continuing.” According to data from the University of Alabama in Huntsville, compiled by NASA’s Dr. Roy Spenser, there has been no statistical warming of lower atmosphere temperatures over the past seven years, despite the fact that global greenhouse gas emissions have increased.

Error 3. Will is right and CAP is wrong. Johnson notes that there was never a “scientific consensus” on global cooling, but that’s not what Will claimed. He only wrote that some scientists and media outlets warned of global cooling, which is true.

I am an unabashed global warming “denier,” but I nonetheless applaud Brad Johnson’s efforts. On the topic of global warming, misrepresentations of the science abound, and we in the energy/global warming policy community should root them out and expose them with vigilance.

With that in mind, I have a “Matter of Fact” list of my own:

Fiction: Al Gore claims in his documentary, An Inconvenient Truth, that “there is one relationship that is more powerful than all the others and it is this. When there is more carbon dioxide, the temperature gets warmer ….”

Fact: It hasn’t warmed in 7 years, despite a steady increase in global greenhouse gas emissions. Where’s the Warming, Al?

Fiction: Dr. James Hansen, ultra-alarmist, has suggested that a 2-3 degree warming would cause sea levels to rise by 80 feet. Hansen then lowered his estimation to 20 feet. His most recent estimate is “at least” 3.2 to 6.4 feet.

Fact: The preeminent body of climate scientists, the Intergovernmental Panel on Climate Change, suggests that a 2-3 degree warming would cause sea levels to rise 7 to 23 inches.

Fiction: In 1986, Dr. John P Holdren, President Barack Obama’s choice to become White House Science Adviser, is quoted as having said that global warming could cause the deaths of 1 billion human beings by 2020. During his confirmation hearing two weeks ago, Holdren was questioned about this claim, and said that “it is still possible.”

Fact: To fulfill Holdren’s alarmist warning, climate change would have to kill twice as many people as died in World War Two, each year, for the next ten years.

Fiction: The Center for American Progress’s Brad Johnson last summer reported that the death of two Boy Scouts in Iowa was “evidence” of “the consequences” of global warming.

Fact: As recently noted on Roger Pielke Jr’s Prometheus, the Center for Research on the Epidemiology of Disasters cautions that “justifying the upward trend in hydro-meteorological disaster occurrence and impacts essentially through climate change would be misleading.”

If Obama Rewrites NAFTA, Canada Could Hit Back Hard

by Fran Smith on December 4, 2008 · 2 comments

in Energy, Trade

As President-elect Obama fills his Cabinet and top-advisor positions, he has not yet named a U.S. Trade Representative, but, as CEI noted, he purportedly has offered the job to Rep. Xavier Becerra (D-CA). Becerra had joined the chorus to redo the North America Free Trade Agreement, even though he did vote for the trade pact in 1993.

To revisit NAFTA and try to include protectionist measures would be a huge mistake. What many NAFTA critics may not realize is that the trade agreement benefits all three countries — the U.S., Canada, and Mexico — and the U.S. has some sweet deals from NAFTA.

Take a look at just one benefit the U.S. would stand to lose if NAFTA were rewritten. It’s likely that the Canadians would try to renegotiate the extremely preferential treatment the U.S. receives in energy imports from Canada. (Canada by far is the U.S.’s largest provider of crude oil and petroleum imports. Mexico has usually been the second.)

Under NAFTA, the U.S. is guaranteed a regular supply of oil and gas from its Northern neighbor at preferential prices except in very limited circumstances.

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