At the COP26 global climate conference currently underway here, four developing countries – Brazil, South Africa, India and China (the BASIC Group) – have jointly opposed the proposed carbon border tax, calling it “discriminatory”.

A joint statement issued by BASIC stresses on the importance of the successful completion of negotiations for operationalising Article 6 of the Paris Agreement, which deals with carbon markets.

In this context, the statement says: “Any unilateral measures and discriminatory practices, such as carbon border tax, that could result in market distortion and aggravate the trust deficit amongst Parties, must be avoided.”

Cheaper imports

The carbon border tax is a levy proposed by the European Union to protect its domestic industry from cheaper imports from countries where rules imposing low carbon production are not strict.

EU fears that while its industry would be at a disadvantage because European companies would have to comply with strict rules, those from other countries may not.

Developing countries fear that the carbon border tax might turn out to be a protectionist tool in the hands of European countries, leading to “market distortion”.

The joint statement makes a strong pitch for the framing of rules for carbon markets and underscores the need for an ‘Enhanced Transparency Framework’, and emphasised that flow of climate finance, including its predictability, “is a key component” of the framework.

“It is crucial to guarantee that all efforts of developing countries to comply with their new transparency obligations will receive adequate technical and financial support.”

The joint statement says “developing countries have made their first move, coming forward with high ambition despite not bearing historical responsibility for causing climate change”.

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