Green Development leads the restructuring of World Trade

In short, these rules tax the carbon footprint and push companies to go green with more pressing time pressure. Recently, the 2024 China International Fair for Trade in Services (2024 CIFTIS) was held in Beijing. The Global Green Economy Development Forum, the first thematic forum of CIFTIS, also highlighted the importance of green development in international trade. During the meeting, Qian Keming, former vice minister of the China Ministry of Commerce, said that with the increasing global concern about environmental protection and climate change, green trade has become the development trend of international trade.

At present, the international rules for carbon governance in the field of trade have formed a basic framework, including multilateral incentive mechanisms, unilateral punishment mechanisms, and market trading mechanisms. It’s noteworthy that the EU CBAM represents the unilateral punishment mechanism. Despite this great contribution, there is something we need to pay attention to. According to the 2024 edition of the Global Resources Outlook published by the United Nations Environment Programme, high-income countries have the highest per capita carbon footprint. At present, the per capita resource consumption of high-income countries is six times that of low-income countries, and the per capita climate impact is 10 times that of low-income countries.

The current international green trade rules place extremely high demands on raw material producers led by developing countries. According to the EU CBAM, failure to reduce carbon emissions will result in costly feedstocks entering the EU, which will be borne by the producers alone. Meanwhile, due to EU CBAM, information on the implied emissions of goods subject to the CBAM should be communicated by their non-EU producers to importers registered in the EU.

If this information is not available at the time of importing the goods, EU importers will be able to use the default value of CO2 emissions for each product to determine the number of certificates they need to purchase. However, in actual production, the carbon footprint calculation is quite difficult for many raw material exporting countries, and it is also difficult for non-EU carbon markets to be integrated with EU carbon markets even if they are established. In other words, these carbon tariffs place extremely high demands on producers’ carbon footprint confirmation, which may lead to trade discrimination issues.

These green trade rules are indeed of great help to the world’s green development, but whether they are reasonable and whether they have an impact on trade fairness is worth paying attention to. Trade accounts for 1/4 of the world’s carbon emissions, and the solution to trade issues will be a great boost to the world’s green development. We call for fair and sustainable green trade rules for a better future.

By Le Tianyu