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1. Alignment or Misalignment? US and EU High-Tech Trade and Sanctions Policies toward China

Author:
Antonio Calcara and Jeffrey J. Schott
Publication Date:
04-2025
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
This Policy Brief focuses on the alignment or misalignment of the European Union and the United States on high-technology trade and sanctions vis-à-vis China. The Trump administration is likely to continue the aggressive US stance toward China in the technological realm, putting increasing pressure on its European allies to align with US policy. The Europeans, for their part, are in a difficult position: On the one hand, they are under pressure from the US government; on the other hand, the more Washington restricts Chinese trade, the more Chinese exporters will look to the European market to sell their manufactured goods. Increased competition from Chinese imports in Europe, especially in the automotive sector, could in turn trigger a political backlash that weakens support for transatlantic coordination on China.
Topic:
Science and Technology, Sanctions, European Union, Trade Policy, and Imports
Political Geography:
China, Asia, United States of America, and European Union

2. Can EU carbon border adjustment measures propel WTO climate talks?

Author:
Gary Clyde Hufbauer, Armen Hovakimian, and Jeffrey J. Schott
Publication Date:
11-2021
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Reforms proposed in the European Union’s “Fit for 55” climate policy package are likely to sharply increase the cost paid by European firms for their greenhouse gas (GHG) emissions. Recognizing that increased carbon prices would put European firms at a disadvantage in competing with imports from countries that produce without incurring these costs, the European Commission has proposed a Carbon Border Adjustment Mechanism (CBAM) requiring that the most carbon-intensive EU imports either incur comparable carbon charges as EU firms or pay the equivalent of a carbon-based tariff. The CBAM aims to deter carbon leakage, which could arise if firms shift carbon-intensive production out of Europe to facilities in countries that do not tax GHG emissions (or tax at a low rate) and then export the goods to Europe. European production and output would suffer and global climate efforts to reduce GHG emissions would be undercut. The loftier goal is to encourage other countries to follow the European example and strengthen their own national decarbonization policies, which in turn would exempt their goods from CBAM charges. The CBAM would cover five carbon-intensive industries: iron and steel, aluminum, fertilizer, electricity, and cement. Countries most affected by the CBAM include Russia, China, Turkey, the United Kingdom, Ukraine, South Korea, and India. Some are likely to contest the policy, claiming that the CBAM is a unilateral measure that violates World Trade Organization rules and bolsters protectionism while hampering rather than encouraging efforts in other countries to tackle climate change. A better and more feasible approach would be adoption of a CBAM moratorium while negotiations are conducted to promote carbon abatement policies that comply with the rules-based global trading system.
Topic:
Climate Change, European Union, Economy, Carbon Emissions, and Imports
Political Geography:
Europe