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China Strikes Back At EU For Carbon Border Tax

The European Union is breaching trade principles with its proposal to impose a so-called carbon border tax that would push up the prices of non-EU products sold in the bloc to account for their carbon footprint.

"CBAM is essentially a unilateral measure to extend the climate change issue to the trade sector. It violates WTO principles ... and (will) seriously undermine mutual trust in the global community and the prospects for economic growth," a spokesman for China's Ministry of Ecology and Environment told media today, as quoted by Reuters.

The Carbon Border Adjustment Mechanism (CBAM) was proposed earlier this month by the European Commission following complaints by European manufacturers that Brussels' increasingly tighter emission standards for locally produced goods and materials undermine the competitiveness of these goods and materials on international markets.

The aim of the tax is to help the EU reduce emissions but also protect European manufacturers. Per the EC proposal, the tax would be levied on some importers from 2026. Before that, between 2023 and 2025, these importers would be required to monitor and report their emissions footprint.

According to Liu Youbin, the ministry's spokesman, the tax, which is effectively an import tariff, will severely affect developing economies' efforts in tackling climate change. The official also noted Beijing's official stance on these climate change efforts, which is that these should take into account every country's economic development level.

"Carbon border tax is essentially a kind of unilateral measure. The unprincipled extension of climate issues to trade is not only a violation of WTO rules, a blow to the free and open multilateral trading system, and may cause serious damage to international trust and economic growth, it is also inconsistent with the principles and requirements of the United Nations Framework Convention on Climate Change and its Paris Agreement," Liu also said, as quoted by the Global Times.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on July 26 2021 said:
    The EU can’t have its cake and eat it too. The so-called carbon border tax is essentially intended to fund the EU’s emission-reduction costs at the expense of foreign exporting countries.

    That is why China won’t stand for it. It will certainly retaliate by imposing a similar tax against EU exports to China. China has the clout since its market is probably the biggest export market in the world for EU countries.

    With its competitiveness, the world is China’s oyster. If the tax is imposed, the EU will be the loser. Furthermore, the United States and other exporters to the EU will also retaliate.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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