The European Union (EU) has just formalized to the World Trade Organization (WTO) the introduction of the Carbon Border Adjustment Mechanism (CBAM).
After a transitional period - only as a reporting obligation - from 1 October 2023 until 31 December 2025 it will initially apply to cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen that are exported to the EU. After 2025, CBAM will be phased in gradually.
"CBAM promotes the import of goods by non-EU businesses into the EU which fulfil the high climate standards applicable in the 27 EU member states. And ensure a balanced treatment of such imports, designed to encourage the EU’s partners in the world to join the EU’s climate efforts", according to the 25 April 2023 press release refered to in our post "European Union: new carbon tax on imported goods approved yesterday, among others".
China suggested discussions on CBAM now at June WTO's Committee on Trade and Environment (CTE) meeting.
United Kingdom suggested "revitalising" WTO's CTE. We quote"The triple planetary crisis of climate change, pollution, and biodiversity loss is one of the most urgent challenges facing humanity today ... multilateral trading system might need to evolve to adequately account for the green transition."
India exposed its concern over the increasing use of environment as a non-tariff measure.
Brazil, grains and beef producers are worried about increasing restrictions to products lacking environmental certificates. And expansion of CBAM scope, specially after the current food security pressure in Europe and UK relieves.
For producers in the United States, CBAM’s impact is likely to be felt most by steel and aluminum exporters.
And Turkey, actions calling for EU funding to support the country's alignment with the CBAM. For example from its Industry and Business Association.
Click at the image below for the 2 June communication from the EU to the WTO. The EU will organise an open (YouTube) dedicated information session on Wednesday 14 June during the Trade and Environment Week. Details here.
