Thailand Prepares for the EU’s CBAM Tariff with Expert Discussions

The European Union’s Carbon Border Adjustment Mechanism (CBAM), set to take effect on October 1st, 2023, has prompted the Department of Trade Negotiations (DTN) in Thailand to initiate discussions involving public and private sector experts. The objective is to prepare for the implementation of CBAM, a tariff system designed by the EU to apply to carbon-intensive products imported into the EU. CBAM aims to equalize the prices of these imports with the costs associated with carbon emissions in EU-produced goods, thereby promoting environmental sustainability and fair competition.

DTN Director-General Auramon Supthaweethum has led this initiative in collaboration with key organizations, including the Thailand Greenhouse Gas Management Organization (TGO), the Climate Action Academy (CAA), and the Federation of Thai Industries (FTI). The recent seminar convened experts to exchange ideas and insights on CBAM’s implications and applications.

CBAM is expected to apply to six categories of imported products: metal and steel, aluminum, cement, fertilizer, electricity, and hydrogen. Importers will be required to report the greenhouse gas emissions associated with the production of these products from October 1, 2023, until December 31, 2025. Starting January 1, 2026, importers must purchase “CBAM certificates”, the prices of which will correspond to the volume of greenhouse gases emitted during production.

The feedback and suggestions gathered during the seminar will be shared with EU experts who plan to visit Thailand in late September. These EU experts will provide further information and insights on the implementation of the CBAM measure.

Auramon expressed confidence that the exportation of Thai products falling under the six affected categories would not be significantly impacted by CBAM. Many producers of these items are already proactive in calculating their emissions and taking steps to reduce them.

In 2022, exports of products within these six categories to the EU accounted for approximately 1.49% of Thailand’s total exports, equivalent to about 14.712 billion baht. Among these categories, metal and steel products represented the largest share of export value.

The DTN’s proactive approach, along with collaboration between public and private sectors, reflects Thailand’s commitment to navigating the evolving landscape of international trade regulations and environmental standards. This collective effort aims to ensure that Thai businesses remain competitive while also contributing to global efforts to reduce carbon emissions and combat climate change. As CBAM’s implementation date approaches, Thailand appears well-prepared to meet the challenges it presents.

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