September 11, 2008 / 9:56 PM / in 9 years

Tories reject rivals' fear of carbon tariff

OTTAWA (Reuters) - Trade Minister Michael Fortier rejected the notion on Thursday that some countries might slap tariffs on Canadian products because of the Conservative government’s weak climate change policies.

Liberal leader Stephane Dion, campaigning for the October 14 general election, warned on Thursday that Canada could face tariffs on its exports if it did not take tougher action to combat climate change.

Dion’s major campaign promise is to impose a tax on carbon emissions to cut greenhouse gas output. He says he would offset the carbon tax with income tax cuts and higher subsidies to the poor. His plan would boost taxes on most fuels, with the exception of gasoline.

“Other countries are considering slapping carbon tariffs on those who don’t take action on climate change. As hard as it is to believe, for now, Canada is one of those countries,” Dion said in a speech in New Brunswick.

Under Dion’s plan, in addition to taxing carbon a Liberal government would try “where possible” to put a tariff on imports from other countries that do not put a price on carbon.

Fortier told reporters that he had returned from international trade ministerial talks where no one had given any indication of applying tariffs on Canada or any other countries.

“I think Mr. Dion is inventing a trade war,” he said.

In January, the European Commission debated whether to push for a carbon tariff, an idea first put forward by former French President Jacques Chirac.

But the plan ran into opposition from European Trade Commissioner Peter Mandelson, who has said it would be hard to implement and could lead to trade disputes, and the European Commission dropped the idea at least for now.

A U.S. climate bill which was voted down in the Senate in June would have added a carbon tariff on energy-intensive imports from countries such as China by 2020.

Fortier said Canada would be violating countless trade obligations were it to impose its own carbon tariffs.

“We would be triggering trade wars with countries,” he told reporters.

Reporting by Randall Palmer; Editing by Peter Galloway

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