"Turning EU Economic Legislation Including Carbon Border Adjustment Mechanism from Burden into Opportunity"

EU Trade Issues Task Force 2nd Meeting Held
"Proactive Response Needed to Expand Opportunities for EU Market Entry"

Jung Dae-jin, Deputy Minister for Trade at the Ministry of Trade, Industry and Energy, stated on the 10th that the Carbon Border Adjustment Mechanism and the rules on foreign subsidies, which will be implemented from the second half of this year, "may pose burdens on companies in areas such as environment, labor, and fair competition," but also added, "If the government and industry proactively analyze the impact of the legislation and prepare response strategies, it could serve as an opportunity for entry into the European Union (EU)."

For example, in the case of the Carbon Border Adjustment Mechanism, the administrative and cost burdens arising from the quarterly carbon emissions reporting obligations may act as a burden on Korean companies, but it could also become an opportunity by strengthening industrial competitiveness through the development of carbon reduction technologies.

The Ministry of Trade, Industry and Energy held the '2nd EU Trade Issues Task Force' meeting chaired by Deputy Minister Jung on the same day, where the public and private sectors jointly discussed response strategies to various recent EU trade issues.

An official from the ministry said, "The EU has recently been promoting various economic legislations aimed at addressing climate change and strengthening advanced industrial supply chains within the EU," adding, "Accordingly, the government has continuously engaged in consultations with the EU to develop response strategies through communication with the industry and to minimize the burden on our companies."

In February this year, the EU announced the 'Green Deal Industrial Plan' and, as part of it, released drafts of the Critical Raw Materials Act and the Net-Zero Industry Act. In March, the revised automotive carbon dioxide emission standards, which ban the sale of new internal combustion engine vehicles after 2035, came into effect. In April, the trilateral negotiations (European Commission-European Parliament-Council) on the Semiconductor Act, aimed at strengthening semiconductor production capacity within the EU, were concluded, and the legislative procedures for the Carbon Border Adjustment Mechanism were finalized by the European Parliament and the Council, with carbon emissions reporting obligations set to begin in October this year.

Since the kickoff meeting of the EU Trade Issues Task Force in February, the ministry has held four subcommittee meetings by legislation to discuss impact analyses and response measures with related industries and experts. Additionally, three briefing sessions for companies were held to share key contents and legislative trends of the bills with the industry. To minimize the burden on domestic companies caused by EU economic legislation, the ministry conducted on-site meetings with the EU Commission (Directorates-General for Trade, Taxation and Customs Union, and Internal Market, Industry, Entrepreneurship and SMEs) regarding the Critical Raw Materials Act and engaged in various consultations with the EU.

At the meeting, the ministry presented recent legislative trends in the EU. Following this, the Korea International Trade Association provided a briefing on recent EU trade-related issues. Industry and research participants discussed the sector-specific impacts of EU economic legislation and the support needed for domestic industries. They analyzed the burden and opportunity factors for domestic companies by legislation, explored strategies for consultations with the EU to minimize burdens, and sought ways to help domestic companies prepare in advance. Furthermore, they discussed countermeasures to actively utilize opportunity factors to expand the entry of Korean companies into the EU.

[Image source=Yonhap News]

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