South Africa may move to WTO against EU’s carbon tax
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According to Reuters, South Africa’s Trade Minister Ebrahim Patel said the country is considering lodging a formal complaint at the World Trade Organization against the European Union’s ‘protectionist’ carbon border levy.
To address climate change, the EU plans to apply the Carbon Border Adjustment Mechanism (CBAM) as a tool to “put a fair price on the carbon emitted during the production of carbon-intensive goods that will enter the EU.”
It aims to encourage cleaner industrial production in non-EU countries by imposing charges on imports of carbon-intensive goods like steel and cement into Europe. The proposal has faced criticism from developing nations and sectors such as China’s steel industry.
The trial of the proposed carbon border levy was launched last year, and its definitive regime will begin in 2026.
Read more: EU carbon price drop threatens funding for green tech
“We believe that first prize always is to reach an agreement through engagement and negotiation, and our door remains open to find a settlement with the European Union on this matter,” the South Africa’s Trade Minister told Reuters.
He added, “Failing everything else, we would be obliged to take the next step, which would be to lodge a formal complaint (at the WTO), but we are still continuing discussions with a view to finding an amicable solution.”
EU spokesperson told Reuters that Europe’s domestic industry also pays a carbon price, “We need to make sure importers pay an equivalent price, based on the carbon content of their goods, to prevent carbon leakage and help reduce greenhouse gas emissions.”
The EU is South Africa’s largest trading partner, and the current version of CBAM could lead to a reduction of total exports to the EU of 4% in 2030 (or 0.02% reduction in GDP) relative to a baseline with no CBAM, an April report from the South African Reserve Bank mentioned.
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