At the 13th BRICS Summit on Thursday, Brazil, Russia, India, China, and South Africa are expected to strongly reject the European Union’s proposed Carbon Border Adjustment Mechanism (CBAM), as the five developing countries will likely be the greatest losers from its implementation.
BRICS trade ministers warned last week, in a veiled reference to CBAM, that any action to combat climate change must adhere to global trading standards and should not impose arbitrary trade barriers.
The European Commission adopted a proposal for a new CBAM earlier this year as part of a plan to decarbonize economies by 2050. The CBAM will impose a carbon price on imports of products like cement, steel, aluminum, oil, chemical products, and fertilizers, ensuring that ambitious climate action in Europe does not push carbon-intensive production outside Europe and instead encourages industry outside the EU to take carbon-intensive production in Europe. Many countries, however, are likely to oppose such action because it would directly affect their industries and exports.
Furthermore, given the combined contribution of the European Union and the United States to CO2 emissions, countries such as China, Brazil, India, and South Africa continue to contend that developed countries bear the major responsibility for reducing emissions.
Environment ministers expressed grave concern regarding the proposal for introducing trade barriers, such as unilateral carbon border adjustment, that are discriminatory and against the principles of Equity and CBDR-RC, according to a statement released by the 30th BASIC (Brazil, South Africa, India, and China) Ministerial Meeting on Climate Change on April 8. (Common but Differentiated Responsibilities and Respective Capabilities).
UNCTAD, the UN’s trade and development agency, claimed in research that CBAM might lead to a drop in exports from developing nations in favor of industrialized ones, which have less carbon-intensive manufacturing processes.
With the biggest amounts of exports to the EU in specified sectors expected to be included in the CBAM, the Russian Federation, China, and Turkey are the countries most exposed to the CBAM. However, the CBAM’s actual impact on these sectors’ exports to the EU will be determined by the degree of carbon emissions buried in exports as well as any carbon pricing previously paid in the countries of origin. According to this projection, India will lose the most exports ($3 billion), followed by Brazil and South Africa.