Study On The Potential Impact Of Carbon Tariffs On China’s Export Trade

On December 12,2015 in Paris,the Parties to the United Nations Framework Convention on Climate Change(UNFCCC)adopted a new Paris Agreement to control global climate measures after the expiration of the second commitment period of the Kyoto Protocol in 2020.However,these measures still have problems like carbon leakage.To address these issues,countries will eventually choose new regulations,such as carbon tax.In particular,following the U.S.declaration of its withdrawal from the Paris Agreement,several countries are suggesting that trade-related measures should be implemented to counter the U.S.decision.As one of the measures against this,carbon tariffs are frequently mentioned,which allows the world community to equally distribute each country’s burden to protect the environment.This study was analyzed in 23 countries where China has the highest export trade volume.Through analysis using theory before empirical analysis,we found out the effect on China’s export trade if carbon tariff is implemented.Theoretically,the implementation of the carbon tariff has a negative effect on China’s export trade.In particular,the collection of carbon tariffs,especially when the carbon emission trading system already exists,resulted in economic losses for both consumers and producers,and,on the contrary,has a positive impact from the international community’s welfare perspective.The above theoretical analysis gave us the assumption that the collection of carbon tariffs would have a negative impact on China’s export trade,and based on this assumption,this study conducted an empirical analysis using data such as China’s export data and fossil fuel consumption.The analysis of this study concluded that carbon emission strength has a negative effect on China’s export trade.Whenever Chinese manufacturing produces 10,000 tons of carbon by directly or indirectly consuming fossil energy,the amount of export trade in China increases by 4 percent.According to the report,the intensity of carbon emissions is correlated with China’s export trade,and it can be seen that among Chinese export products,relatively high carbon content is included.And that the collection of the carbon tariff would not only cause economic damage to some industries in China,but also negatively affect China’s national economy.Unlike previous carbon tariff studies,this study performed empirical analyses that were more realistic using carbon emission strength and embodied carbon volume variables and historical data.Carbon tariffs have not yet been officially implemented,but the contents of this study give a glimpse into the relationship between embodied carbon volume and export trade in each sector of China.In addition,we can estimate the extent of the impact of future carbon tariffs.