Carbon Trading and International Competition

Why Jobs Could Move Off-Shore

The argument is that not all industries will be able to increase their end prices to consumers to account for increased costs (sometimes very large) resulting from buying carbon permits. They wouldn’t be able to increase prices, because similar goods would still be coming in from international competitors at much lower prices, where those international manufacturers may not be facing any equivalent cost increases.

If businesses can no longer compete by manufacturing their goods in Australia, the fear is that it would be more cost-effective for them to re-locate the business (and therefore jobs) to another country where they could manufacture the same goods for less.

What the Government is Doing

The government hasn’t been ignoring the concerns about carbon trading and international competition. To account for this issue, they’re considering offering free carbon permits to heavily emissions-intensive businesses that have pricing constraints traditionally affected by international markets.

Government officials have also made it clear that, while interested in moving forward with Australia’s carbon trading scheme, they plan to do so in a way that balances the country’s ecological and economical needs.

Tougher competition doesn’t always have to be a bad thing – developing nations have generally been less expensive for companies to operate in. Yet companies find ways to be competitive. The carbon trading scheme may even be an incentive for Australian companies to find ways to improve their efficiency in other ways. It’s also important to note that while some industries could potentially be affected by this, it also leaves growth potential in others with new income opportunities through the selling of carbon permits.

Last updated 22 September 2008