China proposes multilateral exchanges on environmental measures at WTO

China proposed on Wednesday to deepen multilateral exchanges on global environmental measures at the Word Trade Organization (WTO).

WTO members discussed the trade impact of environmental measures during a two-day Committee on Trade and Environment (CTE) meeting, which concluded here on Wednesday. China's proposal to hold multilateral discussions on the European Union's Carbon Border Adjustment Mechanism (CBAM) received widespread attention from WTO members.

Trade policies are increasingly being used as a tool to implement environmental objectives. In a communications note, China said the trade aspects of specific environmental measures have given rise to controversies.

Noting that the WTO is an essential forum for trade policy deliberations, China stressed that trade policies designed to achieve environmental objectives should be consistent with the basic rules of the WTO, strike a balance between environmental and trade considerations and not constitute protectionist measures nor barriers to green trade.

The note said China proposed using the CTE as a platform for dedicated multilateral discussions on the trade aspects and implications of certain environmental measures.

Since the CBAM was frequently mentioned in meeting notes and the interest shown by WTO members, China proposed the EU to make a special presentation on the topic at the meeting of the CTE in June, focusing on its international legal basis, its actual contribution to addressing its potential environmental concerns, its potential impact on international trade, specific implementation procedures and methods and its consistency with WTO rules.

Norway, the Philippines, Singapore, India, Brazil and other WTO members stated that the Chinese proposal is constructive and will help promote trade and environmental discussions.

In December 2022, the Council of the European Union and the European Parliament reached a draft political agreement on the carbon border adjustment mechanism. Major industries, including chemical fertilizer, electric power and hydrogen, will officially begin to pay taxes in 2026.

The trade-restrictive nature of CBAM is suspected of violating the WTO's most-favored-nation treatment and national treatment principles, as well as the principle of "common but differentiated responsibilities" of each country's emission reduction under the Paris Agreement.