Canada’s climate-change plan threatens business competitiveness, Trudeau warned

Published Tuesday, Jul. 25, 2017 12:54PM EDT

Canada’s climate-change plan and other government measures are heaping costs on businesses and pushing them to a breaking point, the Chamber of Commerce says in a warning to Prime Minister Justin Trudeau.

Chamber President Perrin Beatty, in a letter Tuesday, asked Trudeau to find ways to cut business costs to offset the impact of an emissions plan that includes a minimum carbon price beginning next year. Failure to do so could mean “seriously undermining Canada’s competitiveness,” he said.

“The cost of doing business in Canada is rising,” Beatty said in the letter, which was also sent to the country’s provincial premiers. “Our members are deeply worried about their ability to both grow their businesses within Canada or compete for investment and customers from abroad.”

A cocktail of new regulations, taxes, climate measures and pension changes are having a “serious cumulative impact,” Beatty said. The business community supports measures to tackle climate change but argues they should be accompanied by cutting costs elsewhere, he said. High labor costs, low productivity growth, electricity rates and employment insurance changes are also raising costs. “If we don’t give Canadian businesses breathing room, many will suffocate,” Beatty added in a press release.

The warning comes ahead of upcoming negotiations on the North American Free Trade Agreement and amid U.S. President Donald Trump’s plans to cut taxes and regulations. Canadian “concern becomes even more substantial when we see the determination of the U.S. administration to dramatically cut both regulation and business taxes in that country,” Beatty wrote.

Climate change is one of the foremost policy differences between Trump and Trudeau. The president pulled the U.S. out of the Paris agreement last month, while Trudeau continues to champion it at home and abroad.

“The solution is not to ignore climate change, but to proceed in a way that makes sense for Canada’s economy,” Beatty said. “We believe that the negative impact of carbon pricing mechanisms on competitiveness can be minimized if they are designed with competitiveness in mind and offset by cost reductions in other areas.”

Trudeau’s climate plan kicks in next year, though Canada’s most populous provinces already have either a cap-and-trade regime or a carbon tax. Beatty urged Trudeau and the premiers to discuss competitiveness at their next meeting.