The Chambers of Commerce has some straightforward advice for MPs considering the emissions trading scheme legislation: Throw it out.
"We are rushing to implement a world-leading scheme covering all sectors and all gases when we don't know what the world regime [after 2012] will be," Charles Finny, aformer diplomat and trade negotiator, said yesterday, appearing before the finance select committee for the New Zealand Chambers of Commerce.
"We know a little about what Australia intends but Canada is backpedalling and who knows about the United States? It is most unlikely China, India and Brazil will adopt our kind of policies any time soon."
Rather than risk putting in place a scheme which could end up, counter-productively, as a horrible example to the rest of the world of the costs of getting it wrong, New Zealand would do better to concentrate on trying to ensure the international regime was the best possible.
"Because it is a global problem we are talking about."
The legislation did not deal adequately with leakage, Finny said. Leakage is jargon for what happens if costs imposed by climate change policies in one country cause emissions-intensive industries to migrate to other countries which do not impose those costs; the first country suffers an economic loss but the planet is no better off.
"World Trade Organisation rules as they stand stop us doing anything about it by way of a border tax adjustment," Finny said.
A border tax adjustment would impose a tariff on imports from countries which imposed no carbon cost on their producers, and would give a subsidy to exporters facing competition in offshore markets from such countries.
"We need to take time out and negotiate a variance with the WTO. It won't be easy," he said.
