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South Africa considers complaining to WTO against EU carbon border tax

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on Reuters or enjoy below:

🗞️ Driving the news: South Africa may lodge a formal complaint with the World Trade Organization (WTO) against the European Union's carbon border adjustment mechanism (CBAM), calling it "protectionist"
• The CBAM, starting full implementation in 2026, will levy charges on imports of carbon-intensive goods to Europe
• South Africa, among other developing nations, argues the measure unfairly penalizes their economies

🔭 The context: The EU's CBAM aims to prevent "carbon leakage," where companies relocate to countries with looser emission regulations
• It will impact imports of steel, cement, aluminium, fertilizers, electricity, and hydrogen
• The EU insists CBAM aligns with WTO rules and includes deductions for carbon prices already paid by exporters

🌍 Why it matters for the planet: CBAM is intended to reduce global greenhouse gas emissions by ensuring imported goods meet EU carbon standards
• However, it raises concerns about fairness and the economic impact on developing countries striving to cut CO2 emissions

⏭️ What's next: South Africa continues negotiations with the EU to reach an amicable solution but is prepared to escalate the issue to the WTO if necessary
• The dispute highlights the tension between global climate policies and economic development needs in different regions

💬 One quote: "Instead of recognising differential levels of development, it imposes a one-size fits on all firms across the world," said Ebrahim Patel, South Africa's Trade Minister

📈 One stat: The current CBAM could reduce South Africa's total exports to the EU by 4% in 2030, translating to a 0.02% reduction in GDP

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