The World Economic Forum was held late last week in Davos (Switzerland) with foreign leaders all around the globe coming together to talk about the global economy and hopefully generate some fruitful action.
Probably one of the more market shifting proposed schemes put forward at the World Economic Forum was that of European Commission President, Ursula von der Leyen. Von der Leyen’s proposal is a daunting one from Australia’s point of view, as it could have a significant impact on the country’s vast economic dependence on exportation of minerals and goods.
The proposed scheme, labelled the ‘carbon border adjustment mechanism,’ would be a tax applied to carbon-intensive good from those countries that are not pulling their weight as to lowering emissions under the Paris climate accord.
The economy likely to feel the brunt of this proposed tax-scheme would be China, with the scheme’s proposed first target industries being steel, cement and aluminum. Von der Leyen did however message the scheme could expand into the mining and resources sectors.
Although Australia’s most prominent trade partner in the resources sector is China, Europe was a big receiver of coal exports from Australia in 2019 and could very well be in the firing line with constant debate between Australian politicians and other world leaders as to whether Australia is indeed pulling their weight per the Paris agreement.
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