ESG Thought Leadership
- Learn More
March 19, 2021
Corporate partner David Lakhdhir was quoted in an article, “Avoiding 'Tax' Label May Ease Path For EU Carbon Measure,” published in Law360 – Tax Authority. The article discusses the European Commission’s planned carbon border adjustment mechanism (CBAM), which would make it more expensive to import items from parts of the world with weaker environmental regulations.
Although it’s impossible to know what form of the CBAM will be adopted—a border tax, or an expansion of the Emissions Trading System, for example—companies can make some inferences to prepare for the upcoming measure. Currently, David said, it is possible for U.S. producers to assess what the cost impact on them would be, as well as assess what they might be able to do to reduce that cost, if their production facilities are in the EU.
“If the system is then constructed in a nondiscriminatory way — as it must be to comply with WTO rules — that should give U.S. producers a decent window into the probable cost impact of the CBAM,” David said.