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Carbon tariffs next big headache of textile exporters
Jun '10
Since implementing wide ranging economic reforms and opening up of the economy, China's industrial output value has realized an annual growth of 11.2 percent. Industrial capital stock has achieved an average yearly growth rate of 9.2 percent.

However at the same time, industrial energy consumption and carbon-dioxide emissions reveal an average annual growth of 6 percent and 6.3 percent, respectively. Studies show that about 23 percent of China's carbon emissions were caused by exporting industries in 2004.

Industrial GDP accounts for about 40.1 percent of total national GDP, but industrial energy consumption accounts for 67.9 percent of country's total energy consumption and industrial carbon-dioxide emissions account for 83.1 percent of China's total carbon-dioxide emissions.

China is the largest developing country and is also one of the biggest global bases for manufacturing exports. If Europe and the US were to implement carbon tariffs policies around 2020, it will have serious impact on Chinese manufacturing competitive ability.

Carbon tariff proposal originated from the European Union, aiming to impose special tariffs on carbon-dioxide emissions on products imported by EU countries, which did not cater to the "Kyoto Protocol", in order to eliminate unfair competition of EU's carbon-intensive products.

The impact of carbon tariff proposal may be even more serious than special safeguard measures and anti-dumping measures, as it may target many manufacturing industries with higher export proportion rather than anti-dumping duty, which targets at individual and specific products.

Industry estimates reveal that, for electronic communication and electrical machinery, textiles, clothing, footwear and chemical industry with relatively high export proportion, the implied carbon emissions from per 10,000 Yuan output were at the level of 2.5-5.5 tons carbon.

Based on the calculation of imposing carbon tariff at the rate of $30-60 per carbon ton, it will be equivalent to imposing 6–14 percent or even 12–28 percent tariff on per 10,000-Yuan exports. If $60 per carbon ton was to be imposed, the rate is close to or higher than the anti-dumping duty suffered by some export products.

For example, the European Union put 16.5 percent of anti-dumping tax rate on Chinese-made shoes in August 2006, and 33 percent of anti-dumping tax rate on Chinese-made alloy wheels in June 2009. So China's industries with high-energy consumption, high-emissions and high exports may be seriously hit by proposed carbon tariff.

Fibre2fashion News Desk - India

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