EU Carbon Tax Condemned by BRICS Countries

• The BRICS group has condemned the EU's carbon tax as 'punitive and protectionist'.
• The levy could weaken the terms of trade for poorer states with fewer resources to cut carbon emissions.
• China has raised concerns within the World Trade Organization about CBAM, but has not filed an official complaint.
• BRICS leaders have repeatedly condemned unilateral climate-linked trade measures as discriminatory protectionism.
• The EU's justification for CBAM is that it creates a level playing field without creating trade barriers or breaching WTO rules.

The BRICS group has struggled to act as a cohesive bloc on trade and regulation, despite the fact that the expanded BRICS countries now account for approximately 23 percent of international trade.

The BRICS group of countries, which expanded to include Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates in January 2024, and Indonesia in January 2025, has been vocal in its criticism of unilateral climate-linked trade measures, including the EU's carbon tax. The bloc's stance is not surprising given that the levy could weaken the terms of trade for poorer states with fewer resources to cut carbon emissions. This concern was echoed in a recent declaration on climate finance, where BRICS countries expressed worry about the potential diversion of critical resources away from their own development priorities. In fact, China has raised concerns within the World Trade Organization about CBAM, although it has not filed an official complaint. The EU's justification for CBAM is that it creates a level playing field without creating trade barriers or breaching WTO rules. However, critics argue that this may not be the case in practice.

The World Trade Organization (WTO) plays a crucial role in regulating international trade agreements, including those related to climate change. The EU's carbon tax, known as CBAM, is designed to ensure that imported goods are subject to the same carbon pricing regime as domestic producers. However, this has raised concerns among developing countries, which argue that it could lead to increased costs for their industries and undermine their ability to invest in their own just transitions. In July, BRICS leaders issued a joint statement condemning unilateral climate-linked trade measures as discriminatory protectionism. The group's stance is significant given its growing influence on the global stage, with the expanded BRICS group now accounting for approximately 23% of international trade.

The EU's carbon tax has sparked a heated debate about the role of unilateral climate-linked trade measures in promoting sustainable development. Critics argue that such measures can be used as a form of protectionism, undermining the ability of developing countries to invest in their own transition to a low-carbon economy. The BRICS group's opposition to CBAM is not surprising given its concerns about the potential impact on its member states' industries and economies. As the global community continues to grapple with the challenges of climate change, it is essential that trade agreements are designed in a way that promotes fair competition and cooperation between countries.

Lawyers advising clients on international trade should be aware of the potential for retaliatory measures against countries imposing unilateral climate-linked trade measures, and monitor developments in the World Trade Organization regarding CBAM.

Source: Original reporting via {Source}