Sunday, July 21, 2024

‘Not a trade barrier with India:’ EU official clarifies CBAM’s environmental focus

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In a clarificatory comment, the European Union’s Carbon Border Adjustment Mechanism (CBAM), Gerassimos Thomas, Director General of the European Commission’s Directorate General of Taxation and Customs (DG TAXUD), has emphasised that the initiative is not a tax or tariff, but a measure designed to deal with carbon emissions. Addressing misconceptions around it, Thomas pointed out that CBAM is intended to promote sustainability, rather than acting as a trade barrier for Indian companies.

Speaking to WION, Thomas highlighted, “the instrument is not designed as a barrier or a tax; it is just an instrument that allows companies with more sustainable products to benefit.” 

The clarification dispels concerns of Indian exporters as many see it as a potential obstacle to their access to the European market.

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Currently in its transition phase, CBAM which is expected to be implemented in 2026, is incorporating feedback from various stakeholders, including trading partners, companies, and industries. The initiative focuses on high-emission sectors such as steel and aluminium.

“A lot of the industries that I have met are saying that they have products that are sustainable, even having embedded emissions less than the EU,” noted Thomas.

 He explained that CBAM is designed to create a level playing field, rewarding sustainability and incentivising companies to produce greener products. 

“It creates positive competition between the companies, and the ones that are greener have a better and more open access,” the EU official stated. 

Emphasizing that the mechanism will not negatively impact the trading ties with India, Thomas remarked, “It will remain an instrument that does not color our trading relationship with India. It is an environmental measure focusing primarily on specific sectors such as steel and aluminum, where we have substantial imports.”

 EU and India will be holding a summit-level meeting early next year with both sides working on several areas including the free trade agreement. Thomas emphasised on a broad spectrum of cooperation areas, including economic, trade, environmental, and sustainability issues. “The overall EU-India relationship is becoming increasingly important as part of the geopolitical developments,” he noted.

Sidhant Sibal

Sidhant Sibal is the principal diplomatic correspondent for WION. When he is not working, you will find him playing with his dog.

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