Trade Analysis

European Carbon Tax Will Cast A Cloud In FTA Talks

Published: March 24, 2023

According to trade experts, India should discuss the proposed carbon tax with the EU because it could result in a 20–35% charge on important shipments from that country and jeopardise free trade negotiations.

The CBAM regulation allows for the potential of establishing a deal with the EU in order to comprehend how much carbon is priced in those nations. According to the official, this may lessen the administrative burden on operators.

Industry experts, however, are worried that the EU’s first carbon price could harm trade, particularly Indian metal shipments to the 27-member union if it is put into place.

“CBAM has been completed, and the only thing left to do is notify. On October 1st of this year, all exports of steel, aluminium, and other materials will be tracked, and Indian exporters will disclose to their importers the carbon content of these products per tonne. But, taxes will start on January 1st, 2026. This indicates that the goal of the transition time is to gather accurate data. Ajay Srivastava, co-founder of Global Trade Research Initiative, stated that the default tax rate for the EU is 100 euros per tonne (GTRI).

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