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Developing Countries’ Trade Vulnerabilities to EU Climate Policies

The European Union (EU) aims to take a lead in combating climate change and, as such, experiences a higher intensity of carbon leakage and competitiveness concerns. The EU is, however, an important export market for many developing countries, and BCAs implemented by the EU could therefore have a large impact on these countries. Even though there is currently no (draft) legislation in the EU that foresees the implementation of BCAs, it is not unlikely that these measures will be adopted in the future, especially considering the EU’s relatively high emission reduction targets compared to other countries. This paper focuses on such possible future measures implemented by the EU and identifies related vulnerabilities in developing countries.