EU's Carbon Tax Unfair Towards Developing Countries: Chief Economic Advisor

EU's Carbon Tax Unfair Towards Developing Countries: Chief Economic Advisor

The European Union announced the phased implementation of the Carbon Border Adjustment Mechanism in October.

ANIUpdated: Thursday, February 15, 2024, 12:15 PM IST
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Chief Economic Advisor (CEA) Anantha Nageswaran | File image

Measures like the Carbon Border Adjustment Mechanism, taken by developed countries to combat climate change, are unfair towards the developing economies that are themselves taking action against climate change, Chief Economic Adviser V. Anantha Nageswaran said today. "By taking actions against climate change, developing countries are also ensuring the lives and properties of the people in the developed world. If so, what is the premium they are getting in return for taking action?" Nagsewaran asked.

Unfair on the developing world

"Obviously, the kind of premium that the developed world is contemplating paying to the developing world cannot be the Carbon Border Adjustment Mechanism. It has to be something more positive than that." As a step to mitigate the risks of climate change, the European Union announced the phased implementation of the Carbon Border Adjustment Mechanism in October.

Under this, those importing goods into the European Union have to report the carbon content of the commodity, based on which, they would be taxed. The carbon tax collection is expected to begin from 2026. The move from the EU may affect the profitability of Indian exporters as Europe is among the top import destinations for India.

'Carbon tax is morally inappropriate'

The country's total trade with the EU was USD 134.71 billion in 2022-23 (Apr-Mar), with imports worth USD 59.87 billion and exports of USD 74.84 billion. Earlier, Finance Minister Nirmala Sitharaman had also said that the move to impose carbon tax is mono-sided and morally inappropriate. "The (carbon) border adjustment tax logic just goes against the concern of the global south.

But cross-border imposition and that money going towards somebody else's green agenda, if anything, is not moral at all." The Indian trade ministry has said that the government will approach the World Trade Organization regarding the Carbon Border Adjustment Mechanism. "We are committed to opposing unfair taxes or levies that may harm the industry," Trade Minister Piyush Goyal had said in November.

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