EU Carbon Border Tax Proposal... FKI Expresses Concerns Over Industry Competitiveness Weakening

[Asia Economy Reporter Jeong Hyunjin] On the 14th (local time), the European Union (EU) Commission announced a proposal to introduce a Carbon Border Adjustment Mechanism (CBAM) that imposes carbon costs on imported goods with higher carbon emissions than products produced within the EU. The Federation of Korean Industries (FKI) expressed concerns about this.

In a commentary signed by Yoo Hwan-ik, Director of Corporate Policy at the FKI, it was analyzed that "this system ultimately raises tariffs on exports, and imposing a carbon border adjustment tax on South Korea, which has a manufacturing-centered industrial structure and high carbon intensity, could lead to a weakening of competitiveness across the industrial sector."

It added, "In the short term, a decrease in exports of major Korean export items with high carbon emissions, such as steel and aluminum, is expected," and "if the range of items expands in the future, there are concerns about the deterioration of the export environment across the manufacturing industry."

The FKI also stated, "The government should strengthen international cooperation with relevant countries such as the United States, India, Russia, Japan, and China to ensure that the EU's Carbon Border Adjustment Mechanism does not violate the principles of international trade norms," and "it is necessary to make efforts to be exempted from the application of the EU CBAM based on domestic carbon reduction systems currently in operation, such as the carbon emissions trading system."

Furthermore, it emphasized, "In the long term, we hope efforts will be made to strengthen support for incentives related to technological innovation so that carbon emissions from industries with high carbon intensity can be reduced."

This content was produced with the assistance of AI translation services.