Brazil has requested the UN to reconsider a proposed global shipping levy, citing concerns over its potential impact on exports and economic inequality.
Brazil has asked the United Nations to scrap plans for a new levy on global shipping that aims to raise funds to combat climate change. This move comes despite Brazil hosting the next UN climate summit, Cop30, in November.
The proposed levy on carbon dioxide emissions from shipping is set to be discussed at a crucial meeting of the International Maritime Organization (IMO) starting on Monday. Supporters of the deal, including the UK, EU, and Japan, hope it will generate billions of dollars annually to help poor countries cope with climate breakdown effects.
A global shipping levy is a proposed tax on international maritime trade.
The idea aims to generate revenue for climate change mitigation and adaptation efforts.
Studies suggest that up to 3% of global greenhouse gas emissions come from shipping activities.
In 2020, the International Maritime Organization (IMO) estimated that a $2-per-ton levy could raise $55 billion annually.
This would fund cleaner fuels, energy efficiency measures, and carbon capture technologies.
The concept is still in its infancy, with many countries awaiting further research and agreement on implementation.
However, Brazil, China, Saudi Arabia, and 12 other countries have submitted an opposing proposal to the IMO. They argue that a levy could reduce exports from developing nations, increase food prices, and exacerbate inequalities.
Levy Opponents Cite Concerns Over Economic Impact
A shipping levy, also known as a port charge or terminal fee, is an additional cost imposed on imported goods.
According to the World Trade Organization (WTO), shipping levies can have a significant economic impact on trade flows.
In 2020, shipping levies accounted for approximately 2% of global trade costs.
Higher shipping levies can lead to increased production costs, reduced competitiveness, and higher prices for consumers.
In some cases, shipping levies may also generate revenue for governments, which can be used to fund infrastructure development or other public services.
Brazil’s opposition to the shipping levy is seen as significant, given its highly export-dependent economy. John Maggs, representative of the Clean Shipping Coalition at IMO, stated that Brazil is ‘very sensitive‘ about the potential impact of a levy on its exports.
The countries opposing the levy also claim it is not necessary to meet the IMO’s greenhouse gas reduction targets. They argue that a levy would be ‘fundamentally divisive‘ and could trigger negative economic impacts.
IMO’s Stance on Levy Remains Uncertain
Despite opposition from some member states, experts believe that the IMO could still pass the levy if it takes a firm stance. At least 46 countries, representing about two-thirds of the global shipping fleet, are thought to favor a deal.
Arsenio Dominguez, secretary general of the IMO, expressed confidence in reaching an agreement on emissions pricing mechanisms this year. However, the complexities surrounding the levy’s implementation and opposition from some member states may hinder progress.
Global Trade Concerns Complicate Discussions
The US presidency under Donald Trump has introduced uncertainty into the negotiations. The US has not formally adopted a position on the levy, and some diplomats believe it could ‘sit this one out.‘ However, even if the US does not obstruct the deal, Trump’s threats of sweeping tariffs are causing concern among countries worried about global trade.
Delaine McCullough, campaign manager at Ocean Conservancy, pointed out that Trump’s tariffs would have a more significant impact on global trade than any potential effects from a shipping levy. ‘The cost of a levy would be dwarfed by the tariff levels [Trump is proposing],‘ she said.
A tariff is a tax imposed on imported or exported goods.
It is a trade policy tool used by governments to regulate international trade, protect domestic industries, and generate revenue.
Tariffs can be fixed or variable, depending on the type of goods and the trading partners involved.
The World Trade Organization (WTO) regulates tariffs under the Agreement on Tariffs and Trade (GATT).
In 2018, the United States imposed tariffs on Chinese imports worth $50 billion to address intellectual property theft.
The impact of tariffs can be significant, affecting global supply chains and consumer prices.
Levies and Climate Action
Friederike Roder, director of the secretariat for the Global Solidarity Levies Task Force, emphasized the need for stable and predictable means of financing climate action. She cited Trump’s freezing of USAid as an example of the consequences of inadequate funding for development aid and climate adaptation efforts.
The taskforce is consulting on proposals for levies on airline tickets, financial transactions, cryptocurrency, and taxes on fossil fuels. Roder believes that levies can work even if not all countries participate, citing evidence that shows they can be designed to function without global agreement.
Shipping Industry‘s Role in Reducing Emissions
The IMO meeting will also discuss a ‘carbon intensity indicator,’ fuel standards, and energy efficiency measures to reduce the CO2 output of the shipping industry. Experts estimate that reducing speed by 10% could lead to a 20% cut in emissions.
John Maggs emphasized the importance of agreeing on CO2 targets and efficiency measures to make a significant difference in the short term. ‘It’s a very potent way to bring emissions down quickly,‘ he said.
- theguardian.com | Brazil asks UN to ditch proposed levy on global shipping
- cleanshipping.org | The Guardian: Brazil asks UN to ditch proposed levy on global ...
