The United States has asked the European Union (EU) to exempt its steel and aluminum products from the EU’s carbon border adjustment mechanism (CBAM). However, the EU is unlikely to agree to the request, as the EU’s legislation makes such an agreement difficult to reach and it would also violate World Trade Organization (WTO) rules.
A European Commission spokeswoman said that the CBAM is an „external adjustment” for the decarbonization costs incurred by EU companies. As there are no such costs for US producers, and the United States does not have a carbon price, it is impossible for US companies to receive an exemption.
The EU’s decision not to exempt US steel and aluminum products from the CBAM is likely to be met with disappointment by US businesses. However, the EU is likely to argue that the CBAM is a necessary measure to ensure that EU companies are not at a competitive disadvantage to those from countries that do not have carbon pricing systems.