British exporters will face difficulties amid the final implementation of CBAM

British manufacturers will face a lot of paperwork regarding exports to the EU in January next year, as the government has failed to secure the expected exemption from the European CBAM, writes The Guardian.

The UK had hoped to secure an exemption from the mechanism before Christmas, but European commissioners recently confirmed that this would not happen. Moreover, according to insiders, this expectation was never realistic within the current political dialogue.

As noted by the industry association UK Steel, the exemption is unlikely to take effect before April next year. So British exporters will have to do detailed paperwork, repeating Brexit, when businesses were loaded with documentation on customs and product standards.

A government representative noted that it would now be prudent for businesses to prepare for CBAM requirements, as the mechanism will finally take effect in January, with support and information available from the Department for Business and Trade.

At the same time, the trade organization Make UK said that the paperwork would be extensive and would hit businesses hard.

Frank Aaskov, director of energy and climate policy at UK Steel, also believes that this will have a significant negative impact.

“The paperwork is definitely significant. It will be quite a burden on SMEs [small and medium-sized enterprises],” he explained.

According to Aaskov, the European carbon tax could be significant for the steel industry. Competition in the steel market is high, especially from China, so any markup could be decisive in winning or losing a contract.

In addition, British steelmakers have previously described the EU’s announced new protective measures on steel, which provide for an increase in import duties on steel from third countries to 50%, as an “existential threat.”

EU Climate Commissioner Wopke Hoekstra said on December 17 that the EU and Britain are in good talks. He also noted that the price the latter will pay under the CBAM is actually minimal, as the country is in full swing implementing decarbonization measures.

Responding to a question, Hoekstra said that negotiations on the two emissions trading systems must take place first. According to him, it is a matter of doing everything in the right order.

A spokesperson for the UK government, in turn, said that the government’s priority remains to conclude an agreement on linking carbon markets as soon as possible, which will exempt British exporters from paying a £7 billion levy.

Recall that, according to the European Commissioner for Climate Action, the EU does not exempt anyone from the CBAM mechanism. There may be an exception for the UK, provided that the parties’ carbon markets are integrated.