Syllabus: GS-II
Subject: International Relations
Topic: Effects on industrial growth
Issue: Carbon Border Adjustment Mechanism.
Context: The European Union’s Carbon Border Adjustment Mechanism (CBAM), set to be implemented in 2026, imposes carbon emission tariffs on certain imports, including iron, steel, aluminum, and cement.
Synopsis:
- CBAM transition began on Oct 1, 2023, requiring India and other exporters to share sensitive trade data with the EU.
- Concerns in Indian sectors (steel, oil, cement) about compromising trade secrets and losing competitiveness.
- India exports 15% ($75B in 2022-23) to the EU; slowing exports and crises add to worries.
- EU’s data collection aims to boost local manufacturing, reduce trade deficits; concerns raised at WTO and TTC.
- TTC discussions involve CBAM challenges, data privacy, seeking concessions, and a longer transition for MSMEs.
- Argentina, Brazil, Taiwan, and Thailand share data privacy concerns related to CBAM.
- Global worry about trade secrets at risk due to extensive CBAM data collection.
- CBAM solutions discussed in EU-FTA negotiations; final details pending.
- Indian officials seek relief, including a longer transition and MSME concessions, in FTA talks with the EU.
Top of Form
Conclusion: CBAM raises global concerns. Indian exporters seek relief in FTA talks. Data privacy and competitiveness issues persist. Ongoing negotiations are crucial.
