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First of all, 90% of those goods being produced aren't even staying in the local economy. The per capita consumption of the Western world dwarfs the higher population levels of the developing countries in which these goods are produced. This is why I'm arguing that the people in Western countries are responsible for the carbon, because it's their goods and business owners are deliberately producing goods elsewhere instead of locally because its profitable.

Second, let's say the EU really did force any goods to be produced according to their local standards. This would obviously include wage/worker standards in addition to environmental standards, so those factories would suddenly become the best places to work. This would provide pressure on other local factories to improve conditions so as to retain workers, thereby uplifting the local economy and helping everyone.

For the sake of consideration, let's say scenario 2 doesn't play out like that and locally produced goods become too expensive for people to afford. In that case, they can then turn to an even poorer country and start doing the same thing the EU did to them, thereby perpetuating the capitalist cycle.