International Trade Impacts

The European Commission has introduced a new carbon tax on imported goods called the Carbon Border Adjustment Mechanism (CBAM). This is meant to make sure that European companies and companies from other parts of the world are on the same page when it comes to carbon pricing and environmental commitments. Here are the main changes: 🔴 Emissions Reporting: Starting in October this year, companies have to start keeping track of how much carbon is linked to the goods they import. They need to start reporting this data by January 2024. This reporting will continue until the end of 2025. 🔴 Carbon Leakage Prevention: CBAM is a way to prevent companies from moving their production to places with weaker environmental rules to avoid carbon costs. It makes sure that European products and products made outside of Europe have similar carbon costs. 🔴 CBAM Certificates: Importers have to get CBAM certificates to match the carbon pricing between EU and non-EU products. They need to provide details about the product's carbon footprint, where it's from, how it's made, and its emissions data. This includes emissions during production and indirect emissions, like electricity use. 🔴 Covered Sectors: CBAM applies to industries with high carbon emissions like iron and steel, cement, fertilisers, aluminium, electricity, hydrogen, and some downstream products like screws and bolts. It also covers certain indirect emissions under certain conditions. Importers mainly need to report emissions during the transition phase until 2026. To help importers and producers outside of the EU adapt, the EU Commission is providing guidelines and tools to calculate emissions. They're also offering training materials and webinars. Some important data points to consider: 🟢 Carbon Leakage: A study by the European Environmental Bureau warns that unchecked carbon leakage could cause a 15% increase in global emissions, undermining climate efforts. CBAM aims to prevent this. 🟢 Emissions Differences: The World Trade Organization says that different countries have different emissions rules, leading to different carbon costs. CBAM aims to make this fairer. 🟢 Economic Impact: The European Commission estimates that the global carbon allowance market could be worth €4.5 billion per year by 2030. CBAM will significantly affect international trade and revenues. 🟢 Industry Shift: A study by the European Parliament Research Service shows that without CBAM, high-emission industries might move to places with weaker rules, leading to job losses and less competitiveness in the EU. 🟢 Green Transition: The International Monetary Fund says that well-designed carbon pricing like CBAM can encourage industries to become more environmentally friendly, contributing to a greener global economy. 🟢 Regulatory Challenges: CBAM's reporting requirements might be tough for importers initially. However, the long-term benefits of fair carbon pricing are expected to outweigh the challenges.

🌍 Can #CSDDD work for regions outside of the #EU such as Sub-Saharan #Africa? 📑 This extremely insightful report by Darshini Manraj Waibel explains how "for policymakers in Sub-Saharan #Africa, #CSDDD is a double-edged sword", meaning: ✅ #CSDDD can help rebuild sustainably from global & regional shocks by upholding #humanrights, decent work & #environmental protection ✅Enable African businesses to attract responsible FDI, enhance their global market reputation, & may bolster intra-African trade ...but #CSDDD may also... ❌ Push the burden of compliance to African businesses who will face increased scrutiny, particularly those tied to EU companies. ❌ While #EU companies are held responsible for their entire #valuechains, there is a real risk that the African suppliers will have to bear the costs of meeting the #duediligence standards to retain contracts with the EU buyers 📋 The report makes concrete recommendations to make #CSDDD work in the region by: ⚖️ Empowering human rights defenders.  🗣️ Engaging in multi stakeholder alliances at regional level 🖥️ Enabling tech innovation in traceability systems 👉 These are the recommendations that we should be focus on to make #CSDDD work for all & NOT the ludicrous debate on solving the perceived problems of the worlds largest & most resourced companies via an "omnibus" regulation... 📖 Read the full report here & below ➡️ https://lnkd.in/eqa7SbXF EU Africa RISE (Reform for Investment and Sustainable Economies) Greenpertise European Commission #duediligence #supplychains #corporateaccountability

In 2022, the EU launched its ‘Sustainable and Circular Textiles Strategy’ to address the significant environmental and social impacts associated with EU consumption and production of textiles. However, the EU imports ~80% of its textiles and is one of the worlds biggest exporters of used textiles. Achieving the textiles strategy goals is therefore highly dependent upon collaboration with non-EU value chain actors. Yet, little is understood as to the scale and nature of the direct trade consequences and industrial demands the EU textiles strategy will have on trading partners and in turn, what this means for the EU achieving its own goals. In this new detailed paper, we outline: 🌍 The likely short-, mid- and long-term EU textile trade flow changes resulting from the textiles strategy. 🚢 Trade opportunities and challenges that the EU strategy presents for Ghana – a major importer of used clothing from the EU. 🎽 Actions for EU policy makers to ensure success of domestic circular textiles policy goals whilst supporting the global transition to a more sustainable and equitable textile industry. Link to the full paper in the comments below 👇 #circulareconomy #textiles #ghana

"The West expects the rest of the world to implement green-energy requirements through various mechanisms and channels such as development aid, financial support, bilateral and multilateral agreements, and investments tied to ESG (environmental, social and governance) requirements. However, what is ignored by these rich nations is that climate change is not considered a pressing issue by Africans. According to polling conducted by Afrobarometer, a pan-African research network, the most pressing issues facing Africa are unemployment, health and education. Across the 34 countries surveyed, unemployment is a significant concern for Africans aged 18 to 35, ranking as the highest and most critical issue in every country. This is followed by approximately one-third (33 per cent) of African citizens identifying health as one of their top three priorities, coming just above education (29 per cent). Climate change does not make the list. The reasons are not hard to fathom. Africa is home to many of the roughly 3.5 billion people worldwide with no reliable access to electricity and are most vulnerable to high energy and food prices. It is no surprise that Africans increasingly ignore the West and, in concert with China, are building new fossil-fuel plants (coal consumption is at a historic high), as well as hydroelectric and nuclear facilities, all of which are anathema to many Western greens. To make matters worse, the EU is already considering carbon taxes on imports in ways that could cut African economies off from global markets. Under the proposals, a surcharge would be levied on carbon-intensive imports to nullify the cost advantage non-EU countries enjoy by virtue of not being subject to such stringent CO2 rules in their countries of origin. The sectors that will be hit first are cement, iron and steel, aluminium, fertilisers and electricity. Africa may be poor, but it is growing. Over the past two decades, it has enjoyed average annual GDP growth rates ranging between four per cent and six per cent. However, much of this growth is tied to resource production, not to the ‘knowledge economy’ or to services. High commodity prices, especially in the past two years, have been critical to sub-Saharan Africa’s economic growth, just as they have helped Russia and Iran survive Western sanctions, and have created a vast new boom in the Gulf. Africa needs to maintain these growth levels if it is to ever catch up with the rest of the world. According to World Bank data, sub-Saharan Africa has a per capita income of just $1,600, compared with the world average of $11,000. Yet such growth would simply not be possible under the West’s decarbonisation regime." Bheki Mahlobo Joel Kotkin African Energy Chamber Read more https://lnkd.in/dXc5BCxY

The FATF's revised greylisting processes are a positive development; however, the associated EU listing mechanisms create a risk that FATF greylisting will continue to affect countries unevenly. While the FATF's greylisting public statement ("Jurisdictions under Increased Monitoring") clearly states, "The FATF does not call for the application of enhanced due diligence (EDD) measures to these jurisdictions," the EU takes a different approach: The EU mandates EDD but only for non-EU countries. Countries greylisted by the FATF are typically added to the EU's high-risk third countries list, which exclusively applies to non-EU nations. EU and European Economic Area (EEA) members, such as Iceland, Liechtenstein, and Norway, are exempt from this EU listing. In contrast to the FATF’s stance, the EU's listing compels its institutions to implement EDD in relation to greylisted countries. As a result, the risks of negative economic impact of greylisting tend to be more limited for greylisted EU and EEA members compared to third countries on the FATF list. It will be helpful if the EU revisited their processes too. The new FATF processes will only apply in the next round of mutual evaluations. The FATF is likely to add more countries to the grey list this week during their meeting in Paris. https://lnkd.in/gX4qB8bu

The "Trickle-Down Effect of EU sanctions": how the EU sanctions have effects beyond their targeted jurisdictions (and it now has a mandatory angle). ----------------------------- What's the Trickle-Down Effect of EU Sanctions? Even companies that don't have to follow EU regulations may have to comply if they partner with European companies. For example, an Indian company may not have to comply with EU sanctions, but it must comply with the contract if it does business with a European company. This is because the European company has to follow EU laws and ensure that all its transactions and business relationships comply with EU sanctions. So, the European company will require its non-EU partners to comply with these sanctions in their contracts. As a result, the Indian company must follow the EU sanctions de facto to maintain its partnership with the European company. This shows how regulatory measures can affect international business networks, influencing companies far from the legislation. --------------------------------- The new mandatory nature of this effect: art. 12g of Reg. 833/2014: As of tomorrow, new contracts concluded since 19 Dec. 2023 must include a so-called re-export clause when trading very sensitive products (they are listed in the Regulation). This means that the scope is rather minimal. But the impact is significant. Why? Because the EU Sanctions are trickling down into contracts with non-EU partners. ---------------------------------- Most companies have voluntarily included a similar clause in their contracts. But it's good to check the template provided by the EU Commission. Even if the obligation does not apply to you, it is still worth checking the guidance. #sanctions #tradefinance #supplychain #contractdrafting