South Africa considers filing WTO complaint against EU CBAM

South Africa’s Potential WTO Complaint Against EU’s CBAM

South Africa, Africa’s largest exporter of iron ore, ferroalloys, and semi-finished steel products, is considering a WTO challenge against EU CBAM, filing a formal complaint with the World Trade Organization (WTO) over 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 European Commission spokesperson stated that the EU’s CBAM follows WTO rules and allows deductions for carbon prices paid abroad. However, many exporting countries, including South Africa, argue that CBAM unfairly impacts developing nations struggling to secure investments for reducing industrial emissions.

Economic Impact on South Africa

Minister Patel stated, “The EU’s CBAM treats all companies equally, ignoring differences in economic development among countries.”

He warned that South Africa could face significant economic damage if CBAM takes effect. In February, the country raised concerns about the EU’s climate policies at the WTO.

The South African Reserve Bank (SARB) reported in April that the EU, South Africa’s largest trading partner, may reduce imports from the country by 4% (0.02% of GDP) by 2030 under CBAM.

Global Response to CBAM and International Cooperation

Meanwhile, Japan and South Korea are working with the EU on CBAM negotiations. Both nations aim to resolve uncertainties, especially confusion over the CBAM reporting system, which requires detailed carbon emissions data from steel exports.

A study by the International Emissions Trading Association (IETA) found that the EU’s CBAM has prompted some countries to introduce their own border carbon charges. Emerging exporters like China, India, and South Africa are also considering WTO complaints against the policy.