Nov 09, 2023
CBAM: WTO receives support against EU CO2 tax – Stainless Espresso

CBAM: WTO receives support against EU CO2 tax

It is no secret that the EU CO2 tax CBAM has been criticised around the world as problematic in terms of trade policy. It is therefore hardly surprising that resistance is growing, particularly among the major Asian economic powers such as China, India and Indonesia, but also in South Africa. This is because the WTO also considers the EU Green Deal and the CBAM measure to be questionable in terms of trade policy.

WTO: CO2 tax questionable in terms of trade policy

As recently as September 2023, the World Trade Organisation (WTO) stated that unilateral environmental measures such as CBAM and other EU Green Deal measures should be classified as questionable in terms of trade policy.

China insists on WTO rules

Resistance is also growing in China, one of the EU’s most important trading partners. Shortly before the start of CBAM on 1 October 2023, China insisted that the EU must ensure that the CO2 tax complies with WTO rules.

CISA: Carbon tax new trade barrier

At the beginning of November, the powerful Chinese steel association CISA also had strong words to say about the CO2 tax. 

“The EU’s unilateral establishment of CBAM is in essence a new trade barrier created under the auspice of low carbon,” the China Iron and Steel Association (CISA) said.

In addition to China and India, Indonesia and South Africa have also taken a critical stance towards CBAM.

Is an intra-European dispute about CBAM brewing?

But the EU is not happy with CBAM either, as was recently made clear by the Polish government’s complaint against the ETS system and the Carbon Border Adjustment Mechanism before the European Court of Justice.

Even the department in the European Commission responsible for the European Generalised Scheme of Preferences (GSP) had expressed concern in advance with regard to developing countries, which would suddenly be confronted with the CO2 tax and would be disadvantaged as a result.

So far, however, nothing has really been finalised by the responsible EU Commission. Not even the National Competent Authorities (such as customs or tax authorities of the member states), which are supposed to provide fundamental customs data digitally for the CBAM declarations, are fully connected or not even in a position to provide information on CBAM.

Germany? Digitalisation remains uncharted territory

And the German Federal Government, for which digitalisation has been considered uncharted territory not only since 2013, is still at a loss as to how and where exactly German companies should submit their CBAM declarations in this regard. 

US HRC prices continue to rise

Other US steel manufacturers have raised steel prices in the United States in recent days and weeks. Recently, a large steel producer from the US state of Ohio set the base price for net tonne at USD 1,000.

Steel manufacturers in Europe are also showing their teeth to their customers and are resisting falling prices in the ongoing negotiations for HRC deliveries in the first half of 2024. A clear statement from them: “There will be no further price cuts!”