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.
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.