The Impact Of EU Carbon Border Adjustment Mechanism On China’s Export Trade To The EU

On March 10 th,2021,the European Parliament passed the resolution of the EU Carbon Border Adjustment Mechanism(CBAM).On July 14 th,2021,European Commission submitted the proposal,beginning the process of formal legislation on CBAM,which plans to introduce carbon tariffs on imports from the EU with implementation in 2026.The proposal will have a significant influence on developing countries’ exports to the EU and the layout of the global industrial chain.As the largest carbon emitter,China’s exports to the EU are mainly carbon-intensive products.In this context,if the EU imposes a border tax adjustment on China,it will have a great impact on China’s exports of carbon-intensive products to the EU.Based on the Global Trade Analysis-Energy Model(GTAP-E)and the European Commission’s proposal Carbon Border Adjustment Mechanism fact-sheet,this thesis analyzing on the impact of the EU Carbon Border Adjustment Mechanism on China’s Export Trade to the EU from theoretical and empirical perspectives.Firstly,the local equilibrium analysis method is used to analyze the economic effect of carbon border adjustment on trade from the theoretical level,which is mainly manifested as the inhibitory effect on exports,the transfer effect of trade,and the deterioration effect of terms of trade.Secondly,based on the GTAP-E model,comprehensively analyzing the impact of the implementation of border tax adjustment by the EU on China’s exports to the EU in 2026 for all non-exemption countries such as China.The results show that if carbon tariffs are levied at $ 60 per ton and $ 100 per ton,China’s total export volume to the EU will fall by 2.27 percent and 3.31 percent,respectively,and there will be a slight decline in the export prices of taxed industries.In terms of industrial structure,China’s exports of the above industries to the EU all experienced a serious decline,with the greatest impact on China’s chemical industrial structure.Under the$ 60 per ton carbon tariff,the direct impact of China’s chemical industry will reach $ 8.318 billion,accounting for about 39.91 % of the total value of chemical products exported to the EU.At the same time,China’s exports to the United States and the ASEAN light industry,automobile and transportation equipment,and metal products industry all show varying degrees of potential growth.As an additional cost,carbon border adjustment inevitably leads to the decline of international competitiveness of China’s export products,and the trade balance shows a greater negative impact,which has the greatest impact on the terms of trade of China’s chemical industry.Considering the future expansion of the scope of the Carbon Border Adjustment Mechanism,this thesis covers the scope of the whole industry.Under this scenario,the biggest impact on China’s exports to the EU’s mechanical and electrical industry and textile and garment industry.In this regard,the government and enterprises should take precautions to deal with the possible impact of the EU’s Carbon Border Adjustment Mechanism.Combining the above findings,this thesis systematically responds to the four levels of law,politics,economy,and technology.At the legal level,emphasizes the conflict between EU carbon border adjustment and the UNFCCC principle of “common but differentiated responsibilities” and the dispute with the WTO provisions.At the political level,China can jointly promote the establishment of multilateral coordination mechanisms with other countries to oppose EU unilateral carbon tariff measures.At the economic level,accelerating the domestic carbon trading market and carbon tax,and other related carbon measures to promote the implementation of the domestic carbon pricing system.At the same time,strengthening the transformation of enterprise energy and industrial structure will turn challenges into opportunities.At the technical level,keeping real-time tracking and speeding up the integration of traditional manufacturing and new digital technologies.