The employers' organisation BusinessEurope published a concept paper on Tuesday 23 June on “What trade can do for climate”, calling on the EU to define “the right balance” so as not to undermine the Union's competitiveness.
Solutions at multilateral and plurilateral levels should be favoured, the organisation believes. EU efforts could focus on unblocking the negotiations of the Environmental Goods Agreement or stimulating the functioning of global value chains, or harmonising standards and regulatory frameworks in collaboration with non-Member States.
As for free trade agreements, they could promote green foreign investment in the EU or develop green public procurement, among other avenues, in line with the Green Deal.
Finally, any unilateral action, such as a carbon adjustment mechanism for borders, will need to be calibrated to avoid trade distortions and loss of EU competitiveness. The first version of this mechanism will have to be both administratively and financially manageable, and initially limited in terms of scope and duration. However, the risks of carbon leakage and investment leakage cannot be fully mitigated until other countries aim for climate neutrality, warned BusinessEurope.
Priority should therefore be given to the development of efficient international carbon markets and the setting of a global carbon price.
See the BusinessEurope document: https://bit.ly/2VbkLMr (Original version in French by Hermine Donceel)