China Calls EU Carbon Border Tax Unfair, Warns of Counter-Moves

The European Union's carbon border levy is "unfair" and "discriminatory," China's Ministry of Commerce said in a statement on Thursday, vowing to take countermeasures to defend the country's interests.

The EU has published a series of legislative proposals and implementation rules regarding its Carbon Border Adjustment Mechanism, according to the statement, referring to Brussels' flagship climate policy that puts a levy on emissions-intensive products coming into the bloc. CBAM takes effect from Thursday.

The EU has assigned excessively high baseline default carbon-intensity values on Chinese products and plans to raise them over the next three years, the ministry said. The benchmarks, which effectively determine the carbon cost importers face at the border when verified data are unavailable, are inconsistent with China's current conditions or future development trajectory and "constitute unfair and discriminatory treatment" against the country, it said.

"We will resolutely take all necessary measures to respond to any unfair trade restrictions" to safeguard China's development interests and maintain global supply chain stability, said the ministry.

CBAM seeks to shield the EU's carbon-intensive sectors from unfair competition during the bloc's green transition - particularly from producers operating in nations with weaker climate laws. But it has drawn criticism from trading partners over its protectionist implications, with the US pressing for "flexibilities" for its companies.

The Ministry of Commerce said China opposes the bloc's proposal to expand CBAM's coverage to include about 180 steel- and aluminum-intensive products such as machinery, automobiles and auto parts, and household appliances. The plan "goes beyond the legitimate scope" of addressing climate change, it said.

The ministry went on to blast the EU's recent decision to pull back from an effective ban on new internal-combustion-engine vehicles, saying that moves to ease green regulatory requirements within the bloc while erecting trade barriers externally in the name of environment protection amounted to "double standards."

"The EU is advancing a new form of trade protectionism under the pretext of preventing 'carbon leakage'" that will raise the cost of climate action for developing countries and "severely undermine international trust," the ministry said, urging Brussels to keep its market open.

Source: Bloomberg Europe