{"id":246217,"date":"2023-06-03T20:25:15","date_gmt":"2023-06-03T14:55:15","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=246217"},"modified":"2023-06-03T20:25:15","modified_gmt":"2023-06-03T14:55:15","slug":"international-trade-has-a-carbon-problem","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/international-trade-has-a-carbon-problem\/","title":{"rendered":"International trade has a carbon problem"},"content":{"rendered":"\n

Source-<\/strong> The post is based on the article \u201cInternational trade has a carbon problem\u201d published in \u201cThe Hindu\u201d on 3rd June 2023.<\/p>\n

Syllabus: <\/strong>GS3- Economy. GS3- Environment<\/p>\n

Relevance<\/strong>– Issue related to green economy<\/p>\n

News-<\/strong> The European Union has introduced the Carbon Border Adjustment Mechanism (CBAM).<\/p>\n

Why has the EU introduced CBAM?<\/strong><\/h2>\n

In 2005, the EU adopted the Emissions Trading System (ETS)<\/strong>. ETS is a market-based mechanism<\/strong>. It aims at reducing greenhouse gas emissions<\/strong> by allowing bodies emitting GHG to buy and sell these emissions.<\/p>\n

The EU is concerned that emissions embedded in products<\/strong> imported from other countries may not be priced in a similar way due to less stringent policies<\/strong> in those countries. This would put its industries at a disadvantage.<\/p>\n

To tackle this, the impacted industries in the EU had so far been receiving free allowances or permits <\/strong>under the ETS.<\/p>\n

The EU has issues regarding \u2018carbon leakage<\/strong>\u2019. Due to the application of ETS, European firms operating in carbon-intensive sectors<\/strong> might possibly shift to countries having less stringent GHG emission norms.<\/p>\n

CBAM is aimed at addressing these issues, and ensuring a level playing field <\/strong>for the EU industries.<\/p>\n

What is CBAM?<\/strong><\/h2>\n

Under the CBAM, imports of certain carbon-intensive products<\/strong> like cement, iron and steel, electricity will have to bear the same economic costs<\/strong> borne by EU producers under the ETS. The price will be linked to the weekly average of the emissions priced under the ETS. However, where a carbon price<\/strong> has been paid for the imported products in their country of origin, a reduction can be claimed.<\/p>\n

What are legal issues related to CBAM?<\/strong><\/h2>\n

A cornerstone principle of WTO law is non-discrimination<\/strong>. Countries have to give equal treatmen<\/strong>t to products irrespective of their country of origin<\/strong> and to treat foreign-made products as they treat domestic ones.<\/p>\n

CBAM\u2019s may discriminate between goods from different countries on account of an inadequate carbon pricing policy<\/strong>, or due to reporting requirements for importers.<\/strong><\/p>\n

However, even if the EU\u2019s CBAM is discriminatory, it can be justified under the General Exceptions clause<\/strong> given in Article XX of the GATT. <\/strong><\/p>\n

Under Article XX, measures can be taken by countries that violate GATT obligations<\/strong>. They Should fall under one of the listed policy grounds<\/strong>.<\/p>\n

One of the listed policy grounds<\/strong> in Article XX is \u2018conservation of exhaustible natural resources\u2019<\/strong>. CBAM would fall under this category.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source- The post is based on the article \u201cInternational trade has a carbon problem\u201d published in \u201cThe Hindu\u201d on 3rd June 2023. Syllabus: GS3- Economy. GS3- Environment Relevance– Issue related to green economy News- The European Union has introduced the Carbon Border Adjustment Mechanism (CBAM). Why has the EU introduced CBAM? In 2005, the EU… Continue reading International trade has a carbon problem<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10498],"class_list":["post-246217","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/246217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=246217"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/246217\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=246217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=246217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=246217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}