News: BRICS nations supported India’s stance on the European Union’s Cross Border Adjustment Mechanism (CBAM), calling it discriminatory. The BRICS grouping also highlighted the need to enable settlements in local currency, in line with the BRICS Cross Border Payments Initiative (CBPI).
1. Cross Border Adjustment Mechanism (CBAM): Carbon Border Adjustment Mechanism is a carbon tariff that is imposed on certain carbon intensive goods such as steel, iron, cement, aluminum, electricity, fertilizers, hydrogen products that are imported into the EU.
2. It is launched as a part of EU’s ‘Fit for 55’ Package.
3. It aims to create a level playing field for EU and non-EU producers by aligning the carbon price of imports with domestically produced goods, which are subject to EU’s Emission Trading System (ETS).
4. It will be implemented in phases, with transitional phase from 2023 to 2025 and definitive regime beginning from 2026.
5. BRICS Cross Border Payment Initiative (CBPI): It aims at streamlining payments, promoting settlements in local currency and minimizing trade barriers among the member states. It is voluntary and non-binding.
6. The initiative seeks to reduce reliance on traditional western dominated payment systems and lower the costs of cross-border payment.
