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South Africa Weighs WTO Complaint Against EU's Carbon Border Tax

© AP Photo / Stephen B. MortonContainer ship Ever Far, left, sails down river past the Georgia Ports Authority's Port of Savannah, Wednesday, Sept. 29, 2021, in Savannah, Ga.
Container ship Ever Far, left, sails down river past the Georgia Ports Authority's Port of Savannah, Wednesday, Sept. 29, 2021, in Savannah, Ga. - Sputnik Africa, 1920, 23.05.2024
The EU Carbon Border Adjustment Mechanism (CBAM), designed to address "carbon leakage" – the relocation of industries to countries with less stringent emissions regulations – will impose charges on imports of carbon-intensive goods such as steel and cement. The EU initiated a trial phase in October, with full implementation scheduled for 2026.
South Africa is considering filing a formal complaint with the World Trade Organization (WTO) against the European Union's carbon border adjustment mechanism, which the country views as "protectionist."
While the EU maintains that its carbon border adjustment mechanism aligns with WTO rules and allows for deductions based on carbon prices already paid abroad, South African Trade Minister Ebrahim Patel argued that it unfairly penalizes developing countries grappling with the financial burden of transitioning to cleaner industries.

"We believe that the first prize always is to reach agreement through engagement and negotiation, and our door remains open to finding a settlement with the European Union on this matter," Patel told Western media.

Leaders from left to right, South Africa's President Jacob Zuma, Indian Prime Minister Narendra Modi, Brazilian President Michel Temer, Russian President Vladimir Putin, Chinese President Xi Jinping, Egypt's President Abdel-Fattah el-Sissi, Guinea's President Alpha Conde, Mexico's President Enrique Pena Nieto, Tajikistan's President Emomali Rahmon and Thai Prime Minister Prayuth Chan-ocha pose for group photo ahead of the Emerging Market and Developing Countries meeting at the BRICS Summit, in Xiamen, China, Tuesday, Sept. 5, 2017. - Sputnik Africa, 1920, 22.05.2024
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The South African official added, "Failing everything else, we would be obliged to take the next step, which would be to lodge a formal complaint [at the WTO], but we are still continuing discussions with a view to finding an amicable solution."

"Instead of recognizing differential levels of development, it imposes a one-size fits on all firms across the world," Minister Patel said.

South Africa, a major exporter to the EU, fears a significant economic blow should the CBAM be fully implemented. A recent report by the South African Reserve Bank estimated a 4% reduction in total exports to the EU by 2030, translating to a 0.02% decrease in GDP.
In February, the African country expressed concerns about the implications of the EU's new policy for developing nations and raised the issue of trade-related climate change measures at the WTO.