Assessing the Impact of Environmental Policies on South African Trade

South Africa’s economy is highly reliant on the export of goods and services. In the last few years, there have been a wave of trade policies to supplement domestic efforts to reduce emissions by incentivizing trading partners to reduce greenhouse gas (GHG) emissions. South Africa will be amongst the most affected by these policies. This is because it is one of the most emissions intensive economies in the world, and after Laos, it has the second highest carbon intensity embedded gross exports in the world.

This discussion paper focuses on three policies rolled out by the EU and US – the clean vehicle mandate, the Carbon Border Adjustment Mechanism (CBAM) and the Farm to Fork policy – and explains how the South African economy may be impacted in the future. It highlights the risks from key export partners and those related to policy. It also identifies policy recommendations for South African policymakers, that can be used to mitigate the potential negative impacts of the three trade policies being rolled out by the EU and the US.