It’s time for a serious discussion on international trade and climate change – 07/15/2021 – Tatiana Prazeres

The global influence of the European Union (EU) is partly explained by what is called the Brussels effect. In the phrase coined by Anu Bradford, the bloc sets rules that guide discussions around the world, influence international standards and ultimately inspire other countries to adapt or take inspiration from Europeans. The EU’s personal data protection regulation has served as a benchmark, for example, for new legislation in Brazil and China.

On climate change, the EU’s ability to shape the international debate is undeniable. Because it is precisely with what is called the “Brussels effect” that the Europeans have taken an ambitious step this week.

The European Commission has released details of what is expected to be the world’s first carbon import tax – or border carbon adjustment mechanism, in common parlance. In the world of initiatives already adopted to combat climate change, this is by far the measure with the greatest commercial impact on third countries. And that comes from the EU, which as a bloc is one of the three biggest trading powers in the world.

Here is the motivation presented by the Europeans: companies have chosen to produce in countries with more lax environmental requirements and then to export to the bloc. In addition to causing unfair competition, this practice – called carbon leakage – undermines efforts to reduce CO₂ globally.

Here’s what irritates the rest of the world: here are the Europeans again saying how the rest of the world should behave. If they do not follow the European guide, they will pay more to access the block market.

Indeed, in its proposal, the Commission has cleverly provided for the possibility of recognizing the climate efforts of other countries, and can, on this basis, create exceptions to this import tax. With that, he invites – or summons – business partners to come to the table to negotiate. But not on an equal footing. The EU is a stakeholder and judge in this process, evaluating the climate actions of others. Difficult for the rest of the world to swallow. The Brussels effect thus enshrines the Brussels defect. Many feel stuck in the European modus operandi.

In addition, EU trading partners complain about the lack of dialogue. They suspect that, under the legitimate climate argument, European protectionist interests could find refuge.

Brussels, naturally, says it can’t wait for a star alignment to tackle climate change. At the same time, it expects other countries to adapt to current events and, ideally, to be inspired by European environmental policies.

Despite the unease it causes among its trading partners, the EU’s decision has the potential to serve a great cause. This is because the carbon tax is a huge goat in the climate, competitiveness and international trade discussion room. And since it is now impossible to ignore the animal, perhaps the Europeans have created the incentives to finally have a serious discussion on the subject, whether at the World Trade Organization, the G20 or elsewhere.

And before that sounds like an illusion, it’s worth remembering that until recently the idea of ​​a global corporate tax sounded like it was. One of the big triggers of the discussion was the proposal for a digital tax, announced by the Europeans. Fees, of course, would have a particularly big impact on tech multinationals. To get the goat – or digital tax out of the coin – countries have decided, for real, to discuss rules allowing multinationals to pay more taxes.

It wouldn’t be a bad outcome if the EU’s carbon tax were to be the next goat online – after all, it’s time to start a serious discussion about how international trade can help fight climate change. .

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