South Africa Considers Filing WTO Complaint Against EU CBAM

South Africa, the largest exporter of iron ore, ferroalloys, and semi-finished steel products in Africa, is considering officially filing a complaint with the World Trade Organization (WTO) against the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM).

Reuters reported that South African Trade Minister Ebrahim Patel is preparing a WTO complaint against the EU’s CBAM.

However, Minister Patel stated, “We always believe that reaching an agreement through interaction and negotiation is the top priority, and the door is still open to find a solution with the European Union on this issue.”

He added, “If we cannot find a solution through negotiations with the EU, South Africa will submit an official complaint to the WTO.”

Both parties are continuing negotiations to find a mutually acceptable solution.

A spokesperson for the European Commission stated, “The EU’s CBAM has been designed to comply with WTO regulations and will allow for the deduction of carbon prices already paid abroad.”

However, many countries exporting to the EU, including South Africa, argue that CBAM disadvantages developing countries struggling to attract the significant investments needed to reduce industrial carbon emissions.

Minister Patel noted, “The EU’s CBAM imposes the same conditions on all companies worldwide instead of recognizing each country’s different levels of development.”

He added, “South Africa, which could suffer significant economic damage if CBAM is implemented, raised concerns about the EU’s climate change regulations at the WTO in February this year.”

The South African Reserve Bank (SARB) reported in April that “the EU is South Africa’s largest trading partner, and the current version of CBAM could reduce total exports to the EU by 4% (or GDP by 0.02%) by 2030 compared to a baseline scenario without the mechanism.”

Meanwhile, Japan and South Korea are set to cooperate with the EU on CBAM consultations. Both countries have pledged to work together to address uncertainties related to the EU’s CBAM, particularly the confusion over the CBAM reporting system that requires detailed data on carbon emissions from steel exports to the EU.

According to a study by the International Emissions Trading Association (IETA), the introduction of the EU’s CBAM has encouraged some countries to develop their own border carbon charges, while emerging exporters such as China, India, and South Africa are considering measures like filing WTO complaints.