Minister of State in the Ministry of Foreign Affairs and Foreign Trade Sandra Husbands is raising concerns that a plan by the European Union (EU) to impose a new carbon dioxide (CO2) emission tariff on some products entering that market could one day affect the region’s competitiveness.
She said while it would not immediately affect Barbados and some other Caribbean Community (CARICOM) member states, she feared this tax, a variation of which was also being considered by two of Barbados’ main trading partners – the US and Canada – could one day be expanded to include products that are exported by this country.
As such, Husbands told a forum on Friday that Barbados was already exploring financial and technical support in order to be proactive in transitioning its industries to more environmentally friendly practices.
Starting in 2026, the EU is planning to introduce a yet-to-be-determined tax on imports of cement, steel, fertilisers, aluminum and electricity from countries not using environmentally processes to produce those goods. There will be a three-year transition phase for the levy, starting in January next year.
The EU has indicated that the move, which received the backing of EU member states last month, was aimed at helping to reduce carbon emissions and fight climate change while protecting its industry from being destabilised by cheaper goods made in countries that had weaker environmental rules.
The details of the plan are to be ironed out in upcoming negotiations, before a decision is made later this year.
Husbands expressed concern that several requirements and standards related to trade over the years have served as barriers to small countries as they tried to get products in overseas markets. As such, she said Barbados was not about to take any chances.
“This has been claiming the attention of not only the Barbados Government but CARICOM governments as well,” said Husbands.
She was speaking as a panelist during a Barbados Trek hosted event at the Hilton on Friday, which was designed to have graduate students of the Wharton School out of Pennsylvania interact with Government and other officials on issues relating to tourism and trade.
Husbands noted that while Barbados was engaged in a two-pronged strategy to meet changing quality and standard needs and to build capacity for export, she feared the new tax could one day become a challenge.
“We don’t have any guarantee as far as we can see right now that goods that we export to them are not likely to be affected,” Husbands later told Barbados TODAY, as she gave the assurance that the island was being proactive.
“When we first heard about the carbon tax we alerted the Ministry of Business Development that this is going to be coming down the pipeline and we have to start a programme to transition,” said Husbands.
“The other concern is that Canada and the United States want to do different types of carbon taxes. So there seems to be a growing trend of people looking at carbon taxes which, if we are not careful, can become a way of shutting out goods that you think will compete with you.
“Our best countermeasure is to ensure that we do environmentally-friendly production. We have got to prioritise transitioning our enterprises to environmentally-friendly practices, environmentally-friendly inputs, and work closely with the BNSI [Barbados National Standards Institution) on standards and make sure we have a good monitoring programme, and at the level of the foreign trade division we are responsive and agile when enterprises indicate that they are experiencing problems even though they meet the standard
“So it is that proactive ‘press on it’ type of approach that we are going to need to ensure that the carbon taxes don’t come and further push us back,” she explained.
Husbands said in addition to the Ministry of Business Development helping firms to find more environmentally-friendly ways of producing items, Export Barbados has started to court an international funding consortium to secure low interest financing for the transition required by the manufacturing sector.
She also disclosed that CARICOM countries were exploring opportunities for increasing export through free-trade agreements, pointing out that while most countries trade between 48 per cent and 60 per cent under such agreements, CARICOM was doing only between 12 and 18 per cent. (MM)
