The Organization for Economic Co-operation and Development has been told that tariffs aimed at punishing countries -- mostly from such emerging markets as China -- that emit high levels of greenhouse gases carry "significant" risks, including sparking a global trade war. It is advised to "speak out strongly" against such levies.

Carbon tariffs "will neither improve the global environment nor strengthen the competitiveness of OECD industries, companies and firms," the OECD was told in a briefing dated Sept. 10.

The advice was from a coalition of 36 business associations that includes the Canadian Chamber of Commerce.

"Unilateral measures are likely to be considered a violation of international trade and climate-change commitments, could trigger trade protectionism, could damage the integrity of international environmental treaties and make it more difficult to achieve a much-needed global post-Kyoto agreement on GHG emissions reductions," the association said.

The advice to the OECD was contained in a briefing stamped "draft," a copy of which has been obtained by the National Post.

Carbon tariffs are seen as a way that governments can help their domestic businesses compete in a global marketplace where rivals may not face the same kind of stringent environmental regulations. Economists at CIBC World Markets have said carbon tariffs could boost inflation, as new charges are slapped on imports, and reverse companies' march toward moving manufacturing operations to countries with less-robust climate-change policies.

It is expected that once the United States puts a price on carbon -- either through a carbon tax or a cap-and-trade system -- it may be keen to use carbon tariffs as a weapon against the emerging economic powerhouses, most notably China. The European Union already prices carbon through its cap-and-trade system. Imposing carbon tariffs is part of the Liberal party's Green Shift plan, which Stephane Dion, has made the centerpiece of the Liberal election platform.

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