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ICC invited the European Union to a dialogue on the problematic issues of CBAM

The International Chamber of Commerce (ICC) has identified a number of issues facing businesses during the first reporting period of the transition phase of the Carbon Border Adjustment Mechanism (CBAM). This is stated in an open letter to the Director General of the European Commission for Taxation and Customs Union (TAXUD).

ICC raises the following issues.

Access to the CBAM reporting platform. The decentralized process for gaining access through national competent authorities varies significantly between EU member states, making it difficult for businesses to navigate. Additionally, there have been technical issues that have prevented many companies from accessing the platform. However, they also appeared after gaining access. For example, there were validation errors with commodity codes when using default values ​​for direct emissions.

Navigate the reporting process. Following the filing instructions, it has been a major challenge for companies to determine how a report can be filed by the declarant on behalf of the signatory certifying that the information is correct. Another problem is that the platform is not available in more EU languages.

High administrative burdens. Due to the low de minimis threshold of €150, a large number of transactions fall within the scope of the CBAM, including transactions traded in small volumes (such as screws and bolts), resulting in disproportionately high compliance costs that are particularly challenging for smaller companies .

“It is also difficult for companies making irregular, low value/weight shipments or sending samples for which a quarterly or annual threshold could be considered or a simplified reporting procedure. The climate impacts of such low weight/value shipments are negligible compared to the bureaucratic burden and resulting impact on international transactions,” the ICC notes.

Data collection and calculation of embodied emissions. There is an urgent need to help companies in the EU and – in collaboration with partner countries – abroad with easy-to-use calculation methods and to recognize and facilitate the complexity of collecting data across extended global supply chains.

Although many companies worldwide already monitor and calculate their embedded emissions, they are based on different methodologies, the use of which is only possible until the end of 2024.

For the CBAM collection method, the installation manual and the ‘communication template’ are too complicated for most suppliers. In addition to the complex data collection, the legally required information differs from the information required by the CBAM excel sheet. All importers are focused on completing this Excel sheet, while exporters focus on the legally required data.

Collect data across the entire supply chain. Many suppliers outside the EU are reluctant to provide crucial information and even risk breaching national data protection laws. A mechanism should be considered allowing DG TAXUD to obtain the necessary information directly from economic operators, without importers having access to it. For non-European companies registered in the EU only for VAT purposes, it is particularly difficult to determine the volume of imports into Europe.

Protection of confidential business information. The kind of information collected, especially in the importer’s Excel sheet, reveals confidential business information related to the product, production process and inputs that exporters do not want to share.

Uncertainty about default values. The use of default values ​​will not be available for the entire duration of the transition period. Given the short deadline for understanding and implementing CBAM-compliant reporting, consideration should be given to expanding the use of defaults throughout the transition phase to facilitate reporting.

The ICC has invited DG TAXUD to engage in dialogue to address these concerns. The organization also highlights the risk that the CBAM will create an uneven playing field for international trade, which will not only affect the competitiveness of European companies but also pose long-term risks to the integrity of the internal market.

Retaliation by non-EU countries could lead to greater trade barriers. Moreover, other countries are beginning to develop their own CBAMs using a different methodology, which according to the ICC serves not only climate objectives but also protectionist interests.

As a reminder, the Italian Parliament has approved a proposal requiring the government to cooperate with the European institutions to revise certain aspects of the CBAM.