Green tariffs must not be barriers to trade

In his meeting with Portugal's Prime Minister Antonio Costa in Lisbon, the current holder of the European Union's rotating presidency, on Saturday, German Vice Chancellor and Finance Minister Olaf Scholz proposed that the EU should found a "climate club" with other countries to avoid trade frictions related to green tariffs such as the planned carbon border levy.

Scholz said that Europe must engage with other countries to agree on joint rules and common standards on how to reduce carbon emissions, suggesting that the EU should approach the United States, Canada, the United Kingdom, Japan and China to discuss these issues.

The German minister has indeed touched upon a pertinent issue as some countries are building trade tariff barriers under the pretense of protecting the environment or tackling climate change.

The green tariffs are taxes levied on products from countries where the climate policies are looser so as to prevent these countries from taking advantage of a lower-price advantage to occupy the market by driving away products from those countries where strict green standards and climate policies of higher standards mean the prices of goods are higher.

This is undoubtedly a good intention. But many factors have to be taken into consideration. Different economies are in different development stages, and it is unrealistic for developing countries to implement green policies of the same standards as those in the developed economies. So the green tariffs are fundamentally in favor of developed economies, as they would be granted with a new channel to levy taxes on imports from less developed countries.

Scholz has not specified whether the objective of setting up such a club is to prompt the countries to reach consensus on green taxes to be levied on imported products or on the transactions of carbon quotas.

If it targets taxes on imported goods, the club will apparently not be a good choice for big goods traders, such as China and Germany. If it is about transactions of carbon emissions, the EU's carbon emissions trading system, the first multilateral one in the world, would undoubtedly serve as a model for the club. However, many problems with the EU carbon emissions trading system, such as insider dealing, that have remained untended for years deserve attention.

No matter what climate mechanisms it takes part in, China should always adhere to its own charted course of carbon emissions reduction, and unswervingly uphold the common but differentiated principle in dealing with other countries in climate talks.