Carbon Border Adjustment Project To Damage Russia-EU Trade Due To High Prices - Minister

MOSCOW (UrduPoint News / Sputnik - 24th July, 2021) The launch of the carbon border adjustment mechanism (CBAM) developed by the European Commission will significantly alter and in some cases even sever the Russia-EU trade relations, Russian Economic Development Minister Maxim Reshetnikov stated.

Last week, the European Commission published the draft CBAM which is a part of the EU Green Deal aiming to achieve climate neutrality by 2050. The mechanism implies the introduction of carbon prices on the several imports to prevent carbon leakages. The new pricing rules might affect iron, steel, cement, fertilizer, aluminum, and electricity industries.

As part of the G20 ministerial meeting in Naples, Reshetnikov talked to his German counterpart Peter Altmaier on Friday.

At the meeting, Reshetnikov noted that Germany was the most important European partner of Russia, and the draft mechanism held risks for Russian-German cooperation.

"It is obvious, that the mechanism will drastically change, and in some cases, will stop the traditional bilateral trade.

We have already witnessed what impact the introduction of steel and aluminum duties by the US had on the world trade system," the Russian minister said.

Reshetnikov added that the mechanism will lead to rise in prices for the raw material, which will affect the European goods pricing both on the EU market and beyond.

"Germany is an importer of iron products, pipes, and aluminum. According to our most conservative estimate, the annual additional burden on importers of the specified goods will amount to some 150.5 million Euros [$177.2 million] on steel, 60 million euros on pipes, and 423 million euros on aluminum," Reshetnikov said.

Reshetnikov suggested Altmaier look at the initiative from the economic viewpoint and evaluate the possible consequences. The parties agreed to proceed the discussion of the climate policies of the EU.

The European Commission passed a proposal for the CBAM system on July 14, 2021.