- The European Union is assessing whether to implement a carbon border tax, which would hit importers from countries that do not respect climate goals.
- U.S. officials have already raised concerns about such plans, arguing they could hurt American businesses.
- The EU and the U.S have been at odds over trade since President Trump took power in 2016.
The European Union is assessing whether to implement a carbon border tax, which would hit importers from countries that do not respect climate goals. U.S. officials have already raised concerns about such plans, arguing they could hurt American businesses. Their latest standoff could dent efforts to reach a U.S.-EU trade deal this year, experts told CNBC.
“The benefits of a carbon import tariff are clear. If domestic producers are hit by higher carbon emission prices at home, foreign producers should also be forced to de facto pay that price by a border tariff that equalizes the difference between the domestic and foreign price on carbon emissions. Otherwise, production would shift abroad,” Holger Schmieding, chief economist at Berenberg bank told CNBC Monday.
The European Union announced in late 2019 new commitments to become more climate friendly. This includes asking European businesses to reduce their CO2 emissions through an emission tax. In order to compensate their efforts, Ursula von der Leyen, president of the EU’s executive branch, said that business from other countries will have to take similar action domestically or face a carbon border tax when selling their products in Europe.
“There is no point in only reducing greenhouse gas emissions at home, if we increase the import of CO2 from abroad. It is not only a climate issue; it is also an issue of fairness,” European Commission President von der Leyen told the World Economic Forum last week.
However, U.S. Commerce Secretary Wilbur Ross told the Financial Times that the U.S. will take punitive action against the EU, if its measures proves to be “protectionist.”
Lode van den Hende, an international trade law lawyer at Herbert Smith Freehills, based in Brussels, told CNBC that the protectionist nature “will depend on the design” of the measures.
Source/s: Silvia Amar, CNBC.com
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