Europe’s Carbon Tax Plans May Hinder US-EU Deal
The European Union is considering introduction of a carbon tax, which will hit importers from countries that do not comply with climate goals. US officials have already expressed concerns about such plans, arguing that the measures could harm American business.
The new confrontation could undermine efforts to reach a US-EU trade agreement this year, CNBC experts said.
At the end of 2019, European Union leaders pledged to achieve climate neutrality by eliminating net carbon emissions by the middle of this century.
As part of this effort, European enterprises must reduce their CO2 emissions. European Commission President Ursula von der Leyen said. Businesses from other countries would have to take similar action or face a carbon tax when selling their products in Europe.
However, US Commerce Secretary Wilbur Ross told the Financial Times that the US will take action against the EU if the bloc’s actions appeare « protectionist. »
Last week, the EU and the US announced renewed efforts to negotiate a new transatlantic trade agreement until the end of 2020.
According to ING chief economist Carsten Brzeski, it’s hard to say whether carbon tax can interfere with trade negotiations, but it “will definitely add another layer (to the negotiations).”
Negotiations are ongoing between the US and the EU on a range of trade issues, from subsidies for aircraft manufacturers to trade barriers and plans by France and other European countries to introduce taxes on digital services.
French President Emmanuel Macron has agreed to postpone the collection of digital tax until the end of 2020. In return, US President Donald Trump promised not to introduce trade duties on French goods.