EU Climate Commissioner Wopke Hoekstra sticks to the mechanism that links a carbon price to goods and raw materials imported into the European Union. This applies not only to plastics, metals and aluminum, electricity and cement but also to many chemicals.
This system is intended to ensure that imported products must comply with similar climate regulations as those that apply to European producers: the so-called mirroring. Hoekstra emphasized that the CBAM levy is not so much a trade tariff but primarily an environmental tax on the import of environmentally harmful substances.
According to the European Commission, this mechanism should create a level playing field for companies inside and outside the European Union. Importers are thus held to the same climate standards as producers within the EU. Moreover, European farmers appear to have already purchased large quantities of chemical agents in recent months at the end of last year.
Promotion
Since the introduction of the CBAM regulation, several EU countries have requested, after protests from the farmers' lobby, to exclude fertilizer from the system. They fear that the measure could increase costs for farmers.
The European Commission has rejected that request. According to Brussels, suspending the regulation would create new uncertainty for the European fertilizer sector and for companies considering investments. To encourage the establishment of a fully-fledged fertilizer industry within EU countries, curbing imports is desirable, it is argued.
The Commission does acknowledge concerns about rising import costs. That is why Brussels wants to take other (trade) measures to reduce price pressure. One of those measures is the temporary suspension of remaining import duties on certain raw materials for fertilizer. This includes, among other things, ammonia, urea, and a few other products.
However, this suspension of duties does not apply to imported raw materials from Russia and Belarus, from where much imported fertilizer actually originates. With this step, the Commission wants to partially compensate for the effects of the climate mechanism. According to Brussels, this can help limit costs for agriculture and industry.