The application of the call border adjustment mechanism (CBAM)which will protect Community production of steel, cement, aluminum, fertilizers, hydrogen and electricity from competition from third countries that are lax in environmental matters, in order to avoid factory relocation, is “difficult to manage and will not be easy to implement and supervise,” he said yesterday Andres Barcelogeneral director of Unesid, the Spanish steel industry association.
Barceló maintained that, while the European Union has begun to implement – for now only informative – the mechanism that should equalize the conditions of competition by taxing in the future imports that do not bear the same costs in their countries of origin. emit CO2 that falls on European producers, the reality is that “steel is increasingly easier to produce,” he said, “outside the European Union.”
The border adjustment came into force on October 1 for statistical purposes only during a transitional period that will last until January 2026, from which moment surcharges will begin to be gradually and increasingly applied to imports that do not bear the same penalties for carbon emissions as those in Europe. Progression will reach 100% of the environmental costs avoided by third-country manufacturers by 2034. This process of tightening the conditions will evolve in step with the gradual reduction between 2026 and 2034 of the program for granting free emission rights currently received by the industry that is intensive in greenhouse gas emissions and on which the risk of factory relocation if it is not guaranteed comparable competitive conditions with its competitors from Turkey, China, Singapore and other nations.
Unesid alerted importers of the complexity of the procedures and copiousness of the documentation that they must provide to the competent authority in their control, which in Spain will be, as was learned on Friday, the Ministry of Energy Transition, although it has not yet been explained what specific department, as well as by the General Directorate of Customs for monitoring.
The measure affects all non-EU countries, except Iceland, Liechtenstein, Norway and Switzerland because they have preferential agreements with the EU.. The United States tried to be excluded, but was unsuccessful, Unesid reported.
The steel industry association highlighted that the procedure will be easier to formalize in the case of basic products such as steel coil and more complex in transformed products, given that the importer must declare the amount imported, its price, the carbon footprint of the plant in which it was produced and also that of the factory or factories that produced the steel before its transformation. Importers who do not provide this information will be fined from January, which is when the first quarterly declaration will have to be made. Starting in 2026, the declarations will be annual.
Some products such as scrap metal, ferroalloys, cables, wire, metal fabrics, nails (although not screws), chains, springs and stoves will be exempt from the so-called “environmental tax”, Unesid reported.
Until 2026, the Commission must still publish 18 implementing regulations on the mechanism. Although no mention was made of it yesterday, the so-called border adjustment does not satisfy the demands of the industry, which demands a similar compensation system for European exports to third countries to compensate them for the cost differential due to European environmental policy.
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