Europe is about to shake up the global trade network—all in the name of climate change.
The European Union is scheduled this week to release its plan for a carbon border adjustment—basically a fee on planet-warming carbon embedded in goods produced outside the 27-member bloc.
The E.U. border tax—which would be the first of its kind in the world—is part of a package of 13 different climate policies set to be unveiled tomorrow.
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Its intent is twofold. The tax is designed to help the E.U. meet emissions targets enshrined in a new climate law. And it’s supposed to protect E.U. industries from overseas competitors less constrained by climate regulations.
Not surprisingly, the plan has attracted global interest since a draft was leaked early last month. The E.U.’s trading partners will be watching closely to see if the border tax is designed to reduce emissions and can survive accusations of protectionism, which could rub up against the World Trade Organization’s regulations.
If the E.U. tax is well-received, it could set the standard for similar border adjustments. If not, it could inflame global tensions over international commerce.
Source: Scientific American