As part of its commitment to become the first climate-neutral continent by 2050, the EU has introduced a number of highly ambitious targets and instruments through which they aim to achieve this. CBAM, or the Carbon Border Adjustment Mechanism, is one of these measures and stems from the European Green Deal.
This import tax is designed to put European and non-European producers on an equal footing when it comes to taxing carbon emissions and comes into effect as of October 1, 2023. CBAM however, is not just ‘another’ import tax.
Unlike anti-dumping and countervailing duties – which are the consequence of an investigation initiated by officials from the EC’s Directorate-General for Trade at the instigation of EU producers’ associations – the CBAM is the result of a democratic decision.
Its principle was voted by the European Parliament and approved by the Council of the EU and its content devised by the EC’s DG Taxud. Secondly, because, at its current stage, it (only) affects imports of 6 very different product categories: iron and steel, electricity, cement, hydrogen, aluminium, and fertilizers.
This green measure is probably one of the most complex import taxes ever designed by an authority. Firstly, because each individual product is taxed differently, depending on its embedded amount of carbon emissions. Secondly, because the rate of this duty isn’t fixed; its cost fluctuates with the market of the EU’s ETS-certificates.
We can’t argue the merits of a measure that undeniably has a well-intentioned green basis. However, we at EURANIMI do have two very serious reservations about CBAM:
- by taxing only imports of semi-finished products (steel and aluminium), it encourages a switch to imports of finished products, putting EU manufacturing at risk.
- The competitive advantage gained by non-EU producers through higher carbon emissions has already been sanctioned by anti-dumping duties imposed by the EC. Essentially, CBAM is taxing imports of these products a second time.
Although CBAM is aimed at producers, the heavy burden of its administration rests on the shoulders of importers, creating far-reaching impact on our members. After all, our members activities cover not one, but two products in the CBAM-range: steel and aluminium.
Producers’ associations were invited to advise the EC on this measure from the very beginning of its investigations. However, with no one voicing the importer perspective, we needed to make sure that the measure’s practical application takes the reality on the ground into account instead of becoming an administrative nightmare for importers.
And so, as the only importers’ association, EURANIMI approached the European Commission to offer its support and that of our members. Although we were only allowed to express our concerns and questions on the measure at the very last minute, we are happy to report that EURANIMI will be closely involved with the EC in the CBAM follow-up phase.
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