India plans to challenge European Union’s carbon border tax at WTO

Source: The post is based on the article “India plans to challenge European Union’s carbon border tax at WTO” published in Business Standard on 17th June 2023

What is the News?

India and South Africa along with some other nations have planned to challenge certain provisions of the European Union’s Carbon Border Adjustment Mechanism (CBAM).

What is Carbon Border Adjustment Mechanism (CBAM)?

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Why is India and other developing countries planning to challenge the EU’s CBAM?

Firstly, CBAM compromises the “common but differentiated responsibilities” principle established under the Paris Agreement on climate change in 2015.

– According to the principle, all countries have a shared obligation to address environmental hazards. However, they are not “equally” responsible as far as environmental protection is concerned, considering that every country is at a different stage of development. 

Secondly, at the WTO there are special provisions for developing nations, allowing — them to avail themselves of a longer time frame to implement certain commitments or agreements. 

– The CBAM is not compliant with this principle of the WTO because it will be applicable to all the partners of the trade bloc without any exemption for developing nations.