Ukraine is negotiating with the European Union about possible mitigation or exceptions to the CBAM carbon duty mechanism for metallurgy. At the same time, this instrument already creates serious risks for exports and could undermine one of the country’s main industries, Politico writes.
The CBAM duty mechanism imposes payments on CO₂ emissions when products are imported into the EU. For Ukrainian manufacturers, in particular metallurgical enterprises operating in wartime conditions, this mechanism increases costs and threatens their competitiveness, the publication wrote. The impact of the mechanism has already been noted by representatives of Ukrainian business. Some European buyers are refusing contracts due to increased costs, and the EU remains the main market for Ukrainian metallurgy, so such changes have a systemic effect.
An additional pressure factor is the reduction in export volumes due to the war, the authors of the publication emphasized. Supplies of metal products from Ukraine after the start of the full-scale invasion were halved. The industry faces security risks and logistical challenges, particularly attacks on port infrastructure.
According to Politico, the Ukrainian government is negotiating with the European Commission on special conditions or delaying the application of the mechanism for Ukraine.
“But the EU does not yet have a clear position regarding possible exceptions. Similar requests from other countries have not been supported, and the decision on Ukraine will depend on the assessment of the European Commission. Some European politicians admit the possibility of a revision of approaches, but emphasize that this requires additional analysis. The Ukrainian side views metallurgy as a critically important industry – both for the economy and for the defense sector and post-war reconstruction. Consequently, the CBAM issue goes beyond trade policy and concerns the economic sustainability of the state,” the publication noted.
