Pascal Lami called for Ukrainian steel to be exempted from the CBAM
The European CBAM mechanism should not increase pressure on Ukrainian steelmakers during the war. One of the architects of the mechanism, former WTO Director-General and former EU Trade Commissioner Pascal Lamy, stated that Ukrainian steel should be granted an exemption from the CBAM.
According to a forecast by the Institute for Economic Research and Policy Consulting, Ukraine could lose up to $1.39 billion in exports due to the CBAM in 2026–2027. The bulk of the potential losses—up to $1.24 billion—is attributed to the metallurgical sector.
Lamy noted that the main rationale behind the CBAM is to level the playing field regarding the carbon component of product costs between goods produced within the EU and imports. This is intended to reduce incentives for relocating industry to countries with lower emissions costs.
However, in his view, it is wrong to apply this principle to Ukraine without taking the war into account.
“My position is this: given Ukraine’s situation during the war, Ukrainian steel should still be exempt from the CBAM,” Lami stated.
He attributes the need for such a decision primarily to the need to support the Ukrainian economy amid the war.
“My position on steel is based largely on the reality of the war and the need to help Ukraine during this war. We must not do things that create obstacles for the Ukrainian economy,” he said.
At the same time, Lami noted that CBAM is not the only—or even the biggest—trade challenge for Ukrainian steel. European quotas and import safeguards have a significant impact on the industry.
According to him, the EU steel market has traditionally had strong trade protections. However, the current mechanisms may change over time, and after Ukraine joins the European Union, Ukrainian producers will be operating within the single market.
Currently, a possible special regime for the Ukrainian steel industry is being discussed between the European Commission, the Council of the EU, and the European Parliament.
Lami expects that certain decisions regarding adjustments to the mechanism may emerge within three to six months.
In his view, Brussels should recognize that Ukraine is in an exceptional situation: it is at war, losing production capacity, and at the same time dependent on access to foreign markets. Therefore, EU trade rules should not exacerbate these difficulties but should take the circumstances of the war into account.
Source: Forbes
As a reminder, Russia is destroying Ukraine’s steel industry, thereby eliminating a competitor in the EU market.
The combination of Russian attacks on steel mills, problems with maritime logistics, rising transportation costs, and new EU restrictions could lead to a 30–40% decline in steel production in Ukraine, and iron ore production by approximately 40%.
