Musings From Abroad

South Africa might drag EU to WTO over carbon border charge

Published

7 months ago

May 24, 2024

South Africa’s Trade Minister, Ebrahim Patel, says his country is considering filing a formal protest at the World Trade Organization over the European Union’s “protectionist” carbon border charge on his country.

The steel industry in China and other developing countries have criticized the EU’s proposed carbon border adjustment mechanism (CBAM) which would charge imports of carbon-intensive goods entering Europe, including steel and cement.

The world’s first carbon border charge was introduced by the EU in October, and starting in 2026, imports of steel, cement, aluminium, fertilizer, power, and hydrogen will be subject to fees.

“We believe that the first prize always is to reach an agreement through engagement and negotiation and our door remains open to finding a settlement with the European Union on this matter,” Patel told Reuters.

“Failing everything else, we would be obliged to take the next step which would be to lodge a formal complaint (at the WTO), but we are still continuing discussions to find an amicable solution,” he added.

According to a spokesman for the European Commission, the border fee would allow deductions for any carbon pricing already paid overseas and was created to conform with WTO regulations.

“EU domestic industry pays a carbon price. We need to make sure importers pay an equivalent price, based on the carbon content of their goods, to prevent carbon leakage and help reduce greenhouse gas emissions,” the spokesperson said.

“Carbon leakage” refers to the risk that rather than reducing emissions, European industries would simply move abroad to avoid paying the EU’s domestic carbon price.

Nevertheless, some governments, like South Africa, claim that CBAM will penalize developing countries that find it difficult to obtain the significant sums of money required to lower the CO2 emissions from their sectors. “Instead of recognising differential levels of development, it imposes a one-size fits on all firms across the world,” Patel said.

He stated that South Africa had brought up trade-related climate change measures before the WTO in February and that the country might suffer a great deal economically if CBAM were implemented.

The EU is South Africa’s biggest trade partner, and according to research released in April by the South African Reserve Bank, the present version of CBAM might result in a 4% decline in overall exports to the EU in 2030 (or a 0.02% decline in GDP) when compared to a baseline without CBAM.

Related Topics:carbon border charge EU Featured South Africa WTO

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Musings From Abroad

Swiss company Mercuria partners Zambia’s IDC in new metals trading firm

Published

1 day ago

December 21, 2024

Ifeoluwa Dada

According to a statement released by Swiss commodities trader, Mercuria, on Thursday, it has established a metals trading arm with Zambia, the second-largest producer of copper in Africa.

The trading unit is jointly owned by Mercuria and an arm of Zambia’s Industrial Development Company (IDC), and its purpose is to allow Zambia to engage directly in the minerals trading market.

The joint venture “envisages the establishment of a vehicle to market and trade Zambian copper by mutual leverage,” according to a statement from Cornwell Muleya, the CEO of IDC.

The southern African nation wants to increase copper output to roughly 3 million metric tonnes within the next ten years, and in 2023, it produced roughly 698,000 tonnes of copper, down from 763,000 metric tonnes the year before.

In June, the Zambian government announced that it would establish a minerals trading unit.

Investors including First Quantum Minerals and Barrick Gold are ramping up production, with output set to receive a further boost once Vedanta Resources’ Konkola Copper Mines restart activity.

“Our joint venture with IDC marks a significant milestone for Zambia as it positions itself more strategically in the global minerals market,” Kostas Bintas, Mercuria’s global head of metals and minerals, said in the statement.

Musings From Abroad

Blinken to reveal UN Sudan funding additions

Published

2 days ago

December 20, 2024

Ifeoluwa Dada

Additional financing for humanitarian aid to Sudan and initiatives to strengthen civil society in the nation, where a conflict has killed tens of thousands of people and displaced millions, will be announced by U.S. Secretary of State Antony Blinken at the United Nations on Thursday.

Blinken will make many announcements when he leads a UN Security Council meeting on Sudan on Thursday, which will centre on humanitarian aid and civilian protection, Deputy U.S. Representative to the UN Ned Price told reporters on Wednesday.

According to Price, the announcements would include more money for humanitarian help, initiatives to strengthen civil society, and the return of democracy.

“Sudan, unfortunately, has risked becoming a forgotten conflict,” Price said.

“So part of the reason the secretary … opted to convene a signature event on this very topic is to make sure it remains in the spotlight,” Price said.

For almost 18 months, the paramilitary Rapid Support Forces and Sudan’s army have been engaged in combat, resulting in a severe humanitarian crisis that has forced over 12 million people from their homes and made it difficult for U.N. organisations to provide aid.

A power struggle between the RSF and the Sudanese Armed Forces preceded a planned shift to civilian administration, which sparked the conflict in April 2023.

Although the army declined to join this year’s U.S.-mediated peace negotiations in Geneva, the warring parties did pledge to increase assistance access, which prevented any movement towards a ceasefire.

Price stated that before President Joe Biden’s term ends next month, the United States would keep collaborating with allies to enhance humanitarian access in Sudan and eventually end hostilities.

“We are going to leave nothing on the field in our efforts to work with allies, with partners, with the Sudanese stakeholders themselves, on the issues that matter most – humanitarian access, the provision of humanitarian assistance, ultimately, the process by which we can work to get to a cessation of hostilities, which is most urgently needed,” he said.