WTO - China Calls for Climate Leadership

China has called for the World Trade Organization (WTO) to host dedicated multilateral discussions to deepen understanding of controversial trade-related environmental measures. These measures include the European Union's Carbon Border Adjustment Mechanism (CBAM) and other imminent border adjustment tariff schemes, which China argues may be specifically targeted against developing countries. China sees these measures as having significant implications for these nations and for the broader multilateral trading system.

The CBAM, which was introduced by the EU in May 2023, levies import fees on carbon-intensive products, aligning the cost of these imports with the EU's internal carbon pricing scheme. China perceives this as an emerging trend where climate measures are entering the realm of trade policy. China has called for extensive WTO discussions about these policies' impact on international trade.

China's proposal for WTO discussions covers several key perspectives:

1. Basic operating mechanism: China is calling for scrutiny of the methodologies underlying the CBAM and similar measures. For instance, the CBAM extends the EU's emission trading system to imports, which China sees as a methodologically challenging task.

2. Policy design: Implementing measures like CBAM involves numerous complexities, such as authorizing declarants, calculating emission data, managing the registry, and administering certificates.

3. Environmental effects: China is interested in understanding the contribution of these measures to their intended environmental objectives and how they align with the principles of the Paris Climate Agreement.

4. Trade impacts: China wants to analyze the overall impact on international trade and the potential impact on developing countries, as it believes the costs of the CBAM will mainly be borne by these countries due to their more carbon-intensive output and sensitivity to higher carbon prices.

5. Inclusiveness: China argues for the need to ensure these measures are implemented in an open, non-discriminatory, and non-arbitrary manner, with capacity building and technical assistance for developing countries.

As such, China is pushing for a systematic approach to WTO discussions on these measures, with detailed reports and question submissions from the affected members. It has also proposed the creation of a working program to facilitate these multilateral discussions. Despite raising important points, critics argue China needs to clarify its overall environmental policy stance.