BRICS bloc endorses India’s stance on EU’s carbon tax; pushes for local currency settlements

Echoing India’s stance on the European Union’s carbon tax, BRICS nations, in the Kazan Declaration under Russia’s chairmanship, rejected the carbon border adjustment mechanism (CBAM), calling it discriminatory.  The group also advocated for trade settlements in local currencies amid thinning dollar reserves globally.

This comes after India’s criticism of the EU’s carbon tax, which as per industry estimates, could raise the costs of Indian exports by 20-35 per cent, making them uncompetitive in the European market. Notably, more than a quarter of India’s exports of iron, steel, and aluminium in 2022 were destined for the EU.  “We reject unilateral, punitive, and discriminatory protectionist measures that are not in line with international law, under the pretext of environmental concerns, such as unilateral and discriminatory CBAMs, due diligence requirements, taxes, and other measures, and reconfirm our full support for the call at COP28 to avoid unilateral trade measures based on climate or environment,” the joint statement read.

The statement also sought to encourage the strengthening of correspondent banking networks within BRICS and to enable settlements in local currencies, in line with the BRICS Cross-Border Payments Initiative (BCBPI), “which is voluntary and non-binding.” The alliance that initially included Brazil, Russia, India, China and South Africa when it was founded in 2009 has expanded to embrace Iran, Egypt, Ethiopia, the United Arab Emirates and Saudi Arabia. Turkey, Azerbaijan and Malaysia have formally applied to become members