India Criticises the EU's Carbon Tax on Steel: CBAM, Trade Barriers and the India-EU FTA

CBAM is an EU rule that puts a price on the carbon pollution released while making certain goods abroad, when those goods enter the EU. It works like a carbon tax at the border. Inside the EU, factories already pay for their pollution under the EU's carbon market. CBAM makes foreign makers of the same goods face a similar cost, so that EU factories are not at a disadvantage. The EU says this also stops polluting industries from simply moving to countries with weaker climate rules (this is called carbon leakage).

A non-tariff barrier (NTB) is any trade hurdle other than a plain import tax that makes it harder or costlier to sell goods in another country. Examples are strict product standards, testing and labelling rules, licences, quotas (limits on quantity) and long paperwork. Some such rules have a fair purpose, like protecting health or the environment. They become "barriers" when they are stricter or costlier than needed and end up blocking foreign sellers.

A Free Trade Agreement (FTA) is a deal between two or more countries to remove or sharply cut import taxes (tariffs) on most of the goods they trade with each other. Each member still keeps its own tariffs for countries outside the deal. Modern FTAs also cover services, investment, standards and other trade rules. WTO rules allow FTAs as an exception to the rule of equal treatment for all, provided they cover "substantially all the trade" between the members.