(1) Policy Definition

Protectionism here is defined as setting a CO2 tax on imports from other zones, based on differential CO2 emission and differental "internal" CO2 taxes. In Europe, this is known as Carbon Border Adjustment Mechanism (CBAM). CO2 taxes and CBAM go together : CBAM is a way to enforce a similar level of CO2 taxes to some import partner that is set up locally.

CBAM is difficult to model since the sensitivity to taxes AND the impact of import/export on GDP are both hard to model. We lack enough data to calibrate.

(2) What the slider in  G2WS does ?

The slider simply changes the CBAM policy, that is the reduction of import from zones that have less cabon taxes and more emissions per GDP.

• Levels between 0 and 50 means that protectionism will be triggered by pain.

• Levels between 50 and 100 means that protectionism starts from the first year.

When you change the slider, the control KPI is the reduction of import flow in T$.