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Macroeconomic implications of climate policies in the Global North for the Global South. The case of the European Green Deal

Development
European Union
Trade
Climate Change
Chandni Dwarkasing
SOAS University of London
Chandni Dwarkasing
SOAS University of London

Abstract

This paper addresses a question so far under-researched in the current ecological economics literature: the potential macroeconomic effects of the EU’s recent climate policies for countries in the Global South. It assesses European Green Deal policies and discusses their potential implications for commodity-dependent European trading partners. We discuss the following policies in detail: the Carbon Border Adjustment Mechanism, the recent revision of the Energy Taxation Directive and the Farm-to-Fork-strategy. In doing so, we highlight the EU Green Deal’s present policy shortcomings when it comes to the disregard of carbon accounting comparative advantages, existing trade agreements and the EU’s significant role as a producer and re-exporter of soybeans, fertilizers and pesticides. These shortcomings impair the ability to evaluate the balance-of-payments implications of the EU Green Deal for countries which are i) dependent on the exports of fossil fuels and agricultural products and ii) subject to subordinated monetary integration.