The Global Response to the EU's Carbon Border Adjustment Mechanism

The EU CBAM introduction has triggered a diverse range of reactions worldwide

Since its transition phase began in October 2023, many countries have sought to navigate this new trade landscape, resulting in three primary responses: opposition, the development of domestic CBAMs, and the implementation of domestic carbon pricing mechanisms.

The most vocal opposition to CBAM has come from the BASIC countries (Brazil, South Africa, India, and China). These nations argue that CBAM is discriminatory, unfairly burdens developing economies, and undermines the principle of "common but differentiated responsibilities" enshrined in the Paris Agreement. Concerns have been raised about CBAM's potential to disrupt global trade and hinder economic growth in developing countries. India, for instance, has formally challenged CBAM at the World Trade Organization.

In response to the EU's CBAM, several countries are exploring or implementing their own border carbon adjustments. Australia is conducting feasibility studies, while the United States Congress is considering legislation that could introduce import duties on carbon-intensive goods. Canada, Taiwan, South Korea, and the UK are also actively considering or have committed to implementing their own forms of CBAM. This trend suggests a growing recognition of the potential impact of carbon border adjustments on international trade.

Beyond the development of national CBAMs, many countries are responding to the EU's initiative by strengthening their domestic carbon pricing mechanisms. This includes the implementation or expansion of emissions trading systems in countries like Japan, Turkiye, Indonesia, and Vietnam. Other countries, such as Israel, Serbia, and Morocco, are planning to introduce carbon taxes. These measures can be seen as a proactive step towards mitigating the potential impacts of the EU's CBAM and aligning with global efforts to address climate change.

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