CARBON BORDER ADJUSTMENT MECHANISM AS A FACTOR OF INCREASING ASYMMETRY IN EU–UKRAINE TRADE RELATIONS
Abstract
The article looks into theoretical foundations of implementation of the carbon import adjustment mechanism as a component of the state's modern climate policy in the absence of internationally coordinated efforts to combat climate change. The essence, key objectives, advantages and difficulties of implementing this mechanism are outlined. The main principles and design of EU’s carbon border adjustment mechanism are analysed. The main types of carbon pricing as well as its conjuncture in the EU and other jurisdictions are analysed. Forecast estimates of the impact of further climate policy intensification on the carbon emissions prices in the EU are examined. The scale, structure and dynamics of CBAM-covered export flows from Ukraine to the EU are found out. The potential restrictive impact of CBAM on the access of Ukrainian goods to the EU market is estimated, taking into account production technologies and the intensity of direct and indirect carbon emissions in Ukraine and the EU. The potential effects of CBAM implementation on Ukraine are calculated at the sectoral and macroeconomic levels, including the impact on GDP growth, merchandise exports, industrial production, tax revenues, and employment. The impact of these effects on the further strengthening of asymmetry in bilateral trade between Ukraine and the EU is clarified. Emphasis is placed on the advantages of excluding Ukraine from CBAM charges while maintaining the current regime of CBAM transitional period, under which Ukrainian exporters will continue to provide counteragents in the EU with information on direct and indirect greenhouse gas emissions embodied in exported goods, without charging for these emissions. The proposals are provided on areas for intensifying trade and investment cooperation between Ukraine and the EU to reach the goal of net-zero greenhouse gas emissions in Europe by 2050, achieve the goals of EU’s open strategic autonomy, modernise Ukrainian industrial complex and prepare it for effective operation in the highly competitive environment of the common market on the eve of Ukraine's accession to the EU.
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