China asks EU to justify upcoming carbon tax at World Trade Organization
- Beijing has long opposed the border tax, set to be implemented in October, saying it does not comply with global trading rules
- When the tax takes full effect, companies wanting to import goods into the EU must buy certificates reflecting the emissions generated in producing them
China has asked the European Union to justify its incoming carbon border tax at the World Trade Organization, a move that suggests it may challenge the law at Geneva’s trade courts.
Beijing’s WTO envoy on Wednesday proposed using the Committee on Trade and Environment for multilateral talks on “environmental measures that have given rise to controversies”, starting with the EU’s carbon border adjustment mechanism (CBAM), which China has insisted is not compliant with global trading rules.
If the proposal is accepted, the EU would have to defend the measure’s legality, its environmental objectives, its impact on trade, its consistency with WTO rules and its impact on developing members, according to a proposal filed to the Geneva body’s secretariat. However, it would not constitute a formal dispute.
The proposal does not mention the EU directly, but at a committee meeting on Wednesday Beijing made clear that CBAM was the initial target, according to a Geneva-based trade source.
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The document said “environmental objectives should be consistent with the fundamental principles and basic rules of the WTO, strike a balance between environmental considerations and trade considerations, and do not constitute protectionist measures or green trade barriers”.
CBAM, which is scheduled to be implemented in October, is a cornerstone of the EU’s quest to reach climate neutrality by 2050.