The European Union plans to expand its Carbon Border Adjustment Mechanism (CBAM) to include processed automotive parts and appliances, increasing the burden on domestic exporters. With the inclusion of downstream products, which have more complex supply chains than basic materials, the South Korean government is stepping up its efforts to provide guidance and tailored support to the industry.
On October 23, the Ministry of Trade, Industry and Energy held an industry briefing at the Trade Tower in Seoul regarding the downstream products affected by the EU's CBAM. Over 100 employees from major companies expected to be impacted by the expanded scope attended the event.
CBAM imposes costs based on carbon emissions during the production of products imported into the EU. The mechanism was officially implemented this year for carbon-intensive imports like steel, and it is set to expand to downstream products made from steel and aluminum starting January 2028.
Downstream products are those manufactured from basic materials such as steel and aluminum. The EU aims to prevent regulatory circumvention by imposing carbon costs on finished goods as well. Under the expansion plan, costs associated with purchasing CBAM certificates will also apply to exports of automotive parts and appliances to the EU.
However, the final list of applicable items has not yet been confirmed. A specific list will be established once the EU's internal amendment process is completed.
The briefing was organized to inform the relevant industry about the recently announced expansion of downstream products and to explore response strategies. It covered an overview of the CBAM, the latest developments, and specific response measures for downstream companies.
While the basic materials sector has been developing response systems during the transition period, the Ministry noted that the downstream sector is relatively less prepared and aware of the regulations. Concerns have been raised that the complex supply chains of downstream products, which involve multiple materials and components, make it difficult for individual companies to respond effectively.
The Ministry plans to quickly share relevant regulatory information and response guidelines, and will continue discussions with EU authorities to improve the system.
Kim Jang-hee, the Ministry's Director of New Trade Strategy Support, stated, "With the expansion of CBAM to downstream products following its implementation this year, we are concerned that the burden on export companies will increase significantly. Especially since downstream products have more complex supply chains than basic materials, individual companies face limitations in their ability to respond. We will work to minimize the industry's burden by strengthening tailored support systems and maintaining ongoing discussions with EU authorities."
On October 23, the Ministry of Trade, Industry and Energy held an industry briefing at the Trade Tower in Seoul regarding the downstream products affected by the EU's CBAM. Over 100 employees from major companies expected to be impacted by the expanded scope attended the event.
CBAM imposes costs based on carbon emissions during the production of products imported into the EU. The mechanism was officially implemented this year for carbon-intensive imports like steel, and it is set to expand to downstream products made from steel and aluminum starting January 2028.
Downstream products are those manufactured from basic materials such as steel and aluminum. The EU aims to prevent regulatory circumvention by imposing carbon costs on finished goods as well. Under the expansion plan, costs associated with purchasing CBAM certificates will also apply to exports of automotive parts and appliances to the EU.
However, the final list of applicable items has not yet been confirmed. A specific list will be established once the EU's internal amendment process is completed.
The briefing was organized to inform the relevant industry about the recently announced expansion of downstream products and to explore response strategies. It covered an overview of the CBAM, the latest developments, and specific response measures for downstream companies.
While the basic materials sector has been developing response systems during the transition period, the Ministry noted that the downstream sector is relatively less prepared and aware of the regulations. Concerns have been raised that the complex supply chains of downstream products, which involve multiple materials and components, make it difficult for individual companies to respond effectively.
The Ministry plans to quickly share relevant regulatory information and response guidelines, and will continue discussions with EU authorities to improve the system.
Kim Jang-hee, the Ministry's Director of New Trade Strategy Support, stated, "With the expansion of CBAM to downstream products following its implementation this year, we are concerned that the burden on export companies will increase significantly. Especially since downstream products have more complex supply chains than basic materials, individual companies face limitations in their ability to respond. We will work to minimize the industry's burden by strengthening tailored support systems and maintaining ongoing discussions with EU authorities."
* This article has been translated by AI.
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