South Africa, Africa’s largest exporter of iron ore, ferroalloys and semi-finished steel products, is considering filing a formal complaint with the World Trade Organization (WTO) against the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM).
Reuters reported that South African Trade Minister Ebrahim Patel is preparing a WTO complaint against the EU’s CBAM.
However, Minister Patel stated, “We always believe that reaching an agreement through interaction and negotiation is the first priority, and the door is still open to finding a solution with the European Union on this issue”.
He added, “If we cannot find a solution through negotiations with the EU, South Africa will make an official complaint to the WTO.
Both parties are continuing negotiations to find a mutually acceptable solution.
A spokesperson for the European Commission said, “The EU’s CBAM has been designed to comply with WTO rules and will allow the deduction of carbon prices already paid abroad.
However, many countries that export to the EU, including South Africa, argue that the CBAM discriminates against developing countries that are struggling to attract the significant investment needed to reduce industrial carbon emissions.
Minister Patel noted, “The EU’s CBAM imposes the same conditions on all companies worldwide, rather than recognizing the different levels of development of each country.”
He added: “South Africa, which could suffer significant economic damage if the CBAM is implemented, raised concerns about the EU’s climate change regulations at the WTO in February this year.
The South African Reserve Bank (SARB) reported in April that “the EU is South Africa’s largest trading partner and the current version of the CBAM could reduce total exports to the EU by 4% (or 0.02% of GDP) by 2030 compared to a baseline scenario without the mechanism.
Meanwhile, Japan and South Korea will cooperate with the EU in the CBAM talks. Both countries have pledged to work together to address uncertainties related to the EU’s CBAM, particularly confusion over the CBAM reporting system, which requires detailed data on carbon emissions from steel exports to the EU.
According to a study by the International Emissions Trading Association (IETA), the introduction of the EU CBAM has encouraged some countries to develop their own border carbon charges, while emerging exporters such as China, India and South Africa are considering measures such as filing WTO complaints.
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