The European Council and Parliament, the two co-legislative institutions of the European Union (EU), reached a provisional agreement yesterday morning for the implementation of a border tax on imports from third countries that compete with advantage for not be subject in their markets of origin to European environmental requirements or incur the costs of compulsory acquisition of carbon dioxide (CO2) emission rights as occurs in the EU. It was a continuous demand from Asturias to protect, above all, its steel industry.
This agreement, which will also protect the cement, aluminum, fertilizer, electricity and hydrogen industries (many of them also having a great impact on the Asturian economy), as well as some indirect emissions, is conditional on the decision to be taken –predictably by the end of this week– on the calendar for the reduction and elimination of the free emission rights that these sectors have received up to now because they are very carbon-intensive. The calendar for the disappearance of these compensations has been being negotiated for months by Parliament, the Council and the European Commission.
The EU considers that the tariff and the free duties are not compatible because keeping both in force would constitute double aid for the same concept, which would not fit, in its opinion, in the rules of the World Trade Organization (WTO).
The entry into force of the so-called border adjustment mechanism, which will penalize non-EU imports that incur a carbon footprint, will come into force on October 1 of next year, although during a transitional period it will only have the purpose of collecting information on non-EU companies. that will have to face the new environmental tariff in the future. Both the duration of this transitory stage and the date of effective application of the tariff will be decided based on the agreement reached on the withdrawal of free rights, given that the border adjustment will be introduced gradually in parallel with the progressive elimination of these compensations.
The negotiation on the elimination of free rights, which is in the final stretch, is based on three proposals. The Council and the European Commission postulate that the reduction begins in 2026 and that it extends until the end of 2035, so that in 2036 there would no longer be free rights. Although the dates coincide, the Council’s formula would be – of both – the most gradual decrease. Parliament defends that the reduction begins a year later (2027), but anticipates the total suppression in three years (to 2032).
The border adjustment mechanism (which still needs to be confirmed by the ambassadors of the EU member states and by the European Parliament, and adopted by both institutions before it is final) will protect the European industry from imports that do not incur in environmental costs and seeks to avoid the so-called “carbon leakage”, either because European companies relocate, relocating to territories exempt from the trading system of rights, or because imports without environmental cost from those countries increase.
European companies and Parliament also requested a mechanism that compensates their European exports for their environmental extra costs when they are destined for countries exempt from legislation against climate change similar to the European one. This request has not been endorsed by the Council and, according to community sources, it has not had an echo so far in the Commission, which sees difficulties in its acceptance by the WTO.
reactions
The Asturian Government and its President, Adrian Barbón, welcomed yesterday’s provisional decision. The agreement, he said, “is fair and beneficial for the Asturian industry” to eliminate the “competitive disadvantage”, but he “regretted” that “it has taken three and a half years to reach consensus” since they requested it, he said, the governments Asturian and Spanish.
Maria Calvo, president of the Asturian employers’ association (FADE), “celebrated” a principle of agreement “that we had been demanding for a long time.” “We consider it essential to protect our industry” from a “comparative injury” with its non-EU competitors and called for “speed” to “make this measure effective.” “It is an urgent need.”
The Asturian MEP Jonas Fernandez (PSOE) declared that “it is great news” because “it is a fundamental advance to guarantee the sustainability of the Asturian industrial sector”, and expressed his confidence that the negotiation on the end of the free CO2 emission rights will conclude with “a satisfactory agreement for the Asturian industry” and that “allows the ecological transition to be undertaken with guarantees”.
The Asturian MEP Susana Solis (Citizens) expressed that “the result is positive, although it is evident that the most decisive issues for Asturias have been left aside for the negotiation of the reform of the emissions market.” Therefore, he said, “you have to be cautious until the other half of the deal comes to fruition.” “The carbon adjustment at the border is a step forward for the EU and its industry”, but he called for “an digestible calendar” for the removal of rights and “creating a mechanism that protects our exports in markets where environmental standards are meager or do not exist”.
For Jozef SíkelaMinister of Industry of the Czech Republic (the country that holds the biannual EU presidency), the tariff “will ensure a balanced treatment of imports and is designed to encourage our partners in the world to join the EU’s climate efforts.” .