EU’s new carbon scheme — how will it affect trade with ASEAN?

The European Commission on July 14 adopted a long-planned proposal for a Carbon Border Adjustment Mechanism (CBAM), a de facto levy on imported products that do not conform to the EU’s own rules on carbon emissions.  

As Brussels rushes ahead with its climate action, it is concerned that European companies could relocate their carbon-intensive production abroad to take advantage of lax environmental standards in some countries. The bloc is also worried about industries abroad adapting less slowly than the EU to more environmental-friendly energy use.

But foreign governments have accused the EU of protectionism with this scheme, which is expected to begin in 2023.

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David Hutt