Steel Industry: "EU Carbon Border Adjustment May Violate WTO Rules"

[Asia Economy Reporter Oh Hyung-gil] The domestic steel industry is expressing concerns about the Carbon Border Adjustment Mechanism (CBAM) being introduced by the European Union (EU).

The Korea Iron & Steel Association announced on the 2nd that it held meetings with domestic steelmakers such as POSCO and Hyundai Steel, as well as EU industry stakeholders including the European Steel Association, the European Automobile Manufacturers Association, and BusinessEurope, to express concerns about the CBAM introduction and discuss future cooperation measures.

CBAM is a system that imposes carbon costs on steel, aluminum, and other imports entering the EU. Since the EU Commission announced the draft bill last July, the EU Commission, Council, and Parliament have been conducting tripartite consultations to finalize the legislation. The EU plans to implement a transition period of three or four years from next year until 2025, and to impose carbon costs starting in 2026 or 2027.

The Steel Association conveyed to the EU Commission that CBAM measures could act as trade barriers and may violate World Trade Organization (WTO) rules prohibiting discrimination against imports.

In the event CBAM is introduced, the association emphasized that Korea, which operates a national-level Emissions Trading System (ETS) similar to the EU’s ETS, requires relief from CBAM burdens, and that the CBAM system must be aligned with international norms to eliminate discrimination against steel companies within the EU.

The steel industry is closely consulting with the government through the Carbon Trade Advisory Group and the CBAM Steel Consultative Body to respond to CBAM, and plans to strengthen public-private cooperation in preparation for the finalization and implementation of CBAM legislation.

Byun Young-man, Vice Chairman of the Korea Iron & Steel Association, said, “The Korean steel industry is making various efforts to achieve carbon neutrality by 2050, including short-term greenhouse gas reductions through energy efficiency improvements and production process optimization, and mid- to long-term development of hydrogen reduction steelmaking technology to replace existing steelmaking methods. Even if CBAM is introduced, the Korean steel industry’s carbon neutrality efforts must be sufficiently reflected to ensure it does not become an unfair trade barrier.”