Good morning, Madam Chair and members of the committee. It's an honour to appear before you to discuss trade and climate change.

Let me start by introducing myself. I will then give an overview of two issues raised by the title of your study—namely, reducing emissions and trade impacts—and conclude by talking about Canada's leadership.

My name is Rambod Behboodi. I'm senior counsel at the law firm of Borden Ladner Gervais. For the last 32 years, my practice has focused on international trade law and policy. As trade lawyer, diplomat and negotiator for the Government of Canada, I had the privilege of negotiating key multilateral environmental agreements that advanced and protected Canada's interests in respect of trade in chemicals, control of pesticides and genetically modified organisms. I was also engaged for over a decade in trade litigation in defence of our natural resources and agriculture sectors. In private practice since 2017, I have advised developed countries and NGOs on deforestation, plastics and other climate change measures; and developing and less developed countries on trade liberalization.

I will now turn to the first of the two substantive issues, reducing emissions. Why should we do it? Simply put, if we go on as we have been going on, the human contribution to climate change will likely transform the planet in a way that we humans are not capable of dealing with. The planet will go on, of course, and so will some of us, but as things are, we're looking into the abyss. We have to change the way we do things.

What does that mean for trade? In the world of trade, we talk about win-win solutions. I'm here to tell you that, if we play our cards right—and Canada has an excellent hand—there is every reason to believe that we, our trading partners and the planet will come out on top.

Here, I want to mention two important concepts.

The first is externalities. Imagine that your neighbour is in the middle of major renovations. He dumps all the construction debris on his front lawn. It's an eyesore. It's possibly a health hazard if, like me, you’re allergic to dust. If you go to him and suggest that perhaps the debris should be landfilled, and he replies, “It’s my front lawn, and do you know how much landfilling costs?”, we would call that a negative externality. It's where economic activity, a good thing in itself, gives rise to costs imposed on others.

Uncontrolled carbon emissions are like the debris on the front lawn. No one is saying we should ban construction, but we should expect that the person creating the debris will have it removed and assume the costs.

The same applies to the second concept, carbon pricing. If you, as a consumer, knew the real impact of carbon emissions, you would adopt more responsible consumption habits. In a free market like ours, pricing is the best way to convey information to consumers and pass on costs to those who should pay.

We can do all that domestically, but we know it isn't enough. That is where trade impacts come in.

When the costs related to the production of goods within a country are high because of, say, carbon pricing, organizations tend to look at moving their operations outside the country for trade reasons. The result is an increase in carbon leakage, in other words, the relocation of production to an exporting country with a less stringent climate policy and carbon pricing system.

That does nothing to help trade, the environment or the legitimacy of climate change actions.

This is how we arrive at border carbon adjustments, which have been mentioned. We can discuss those later.

In my remaining time, let me turn to Canada's leadership. Canada is very trade-exposed. It's in our interest to ensure that the global framework for carbon pricing functions well. How? Abroad we must remain engaged and active, leading by persuasion and by example. At home—that's the example—judicious deployment of domestic and trade policy can ensure that our exports remain competitive internationally. A homemade carbon pricing framework, along with appropriate border adjustments, may be the most effective mechanism to forestall or offset all, or at least most of, the carbon costs associated with trade.

Thank you again for inviting me today. I will be happy to answer your questions.

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