Border Carbon Adjustment Measures: Informal Technical Dialogue for Capital-Based Officials of Concerned Trade Partners

BACKGROUND

As countries consider more ambitious climate mitigation policies to accelerate reductions of emissions and meet the Paris Agreement goal of limiting global warming to 1.5 degrees by 2030, “border carbon adjustment” (BCA) schemes have been increasingly considered as a potential trade policy tool. The European Union has already taken the first step and adopted a “Carbon Border Adjustment Mechanism” (CBAM) which entered into force on 17 May 2023. BCAs are also being considered in other jurisdictions, such as Canada and the United Kingdom.

The debate on BCA has gained momentum, including in the context of the multilateral trading system where cooperative approaches to BCAs have begun to be called for to ensure the inclusion of concerns of all trading partners. To proponents, BCA is key to preventing carbon leakage, that is, the increase of emissions abroad in response to strong domestic climate policies. They consider it also a potential for incentivising carbon pricing and carbon footprint reductions in partner countries. On the other side, BCA will have direct impacts on trading partners that export goods in the concerned sectors. Developing countries have been particularly vocal on their concerns towards BCAs, including their potential to disguise protectionism and create trade distortions and their non-consideration of the principle of Common but Differentiated Responsibilities and Respective Capacities (CBDR-RC) that is at the heart of multilateral climate action. Many also question the effectiveness of BCAs in incentivising carbon emission reductions.

ABOUT THE EVENT

IISD, in collaboration with CUTS International Geneva, organized a technical webinar for the capital-based officials of concerned WTO Members who are likely to be affected by BCAs. The event offered participants an opportunity to learn about the latest developments regarding BCAs, share their concerns regarding BCA proposals, and exchange views on options to address concerns and integrate development dimensions in BCA designs, as well as review the possibilities for stronger international cooperation while developing such instruments. This event follows on from an informal dialogue organised for Geneva-based delegates of these same WTO Members earlier this year, and was designed to provide capital-based officials with the opportunity to hear and discuss the material presented at the previous event, with updates to reflect developments.

AGENDA

11:00 – 11:10 Welcome Remarks

• Alice Tipping, IISD
• Suddha Chakravartti, CUTS International Geneva

11:10 – 11:25 Scene-setting: State of Play of BCA discussions and Key Policy Questions

• Aaron Cosbey - IISD

11:25– 11:40 Potential Implications for Developing Countries

• Yasmin Ismail – CUTS International Geneva

11:40– 12:20 Open discussion
12:20 – 12:30 Closing Remarks