CBAM: Toward a Significant Expansion of Its Scope and Strengthened Anti-Circumvention Rules
The Carbon Border Adjustment Mechanism (CBAM), a cornerstone of the European Union’s decarbonization strategy, continues to evolve. As part of its review, the European Parliament has recently adopted a series of amendments that demonstrate a clear commitment to enhancing the mechanism’s effectiveness and closing loopholes.
These proposals come at a time when the EU is seeking to ensure that its climate ambitions are not undermined by shifts in production or trade strategies designed to evade carbon pricing.
An expansion of the scope to include downstream goods
One of the most significant changes involves expanding the scope of the CBAM to cover certain downstream processed products containing significant amounts of steel or aluminum. This specifically targets products such as fasteners, wires, springs, and certain household articles.
This expansion addresses a growing concern among European institutions: residual “carbon leakage.” Indeed, while raw materials subject to the CBAM are taxed upon import, there remains a risk that these same materials will be processed outside the EU before being reintroduced into the European market as finished or semi-finished products.
The objective is therefore to preserve the integrity of the mechanism by preventing intermediate processing from neutralizing the intended effects of the CBAM.
A stronger role for e-commerce platforms
The European Parliament has also examined the implications of extending the CBAM to goods intended for end consumers.
This development raises the issue of equal treatment between importers established in the EU and digital platforms facilitating distance sales from third countries.
To address this risk of distortion of competition, it is proposed that these platforms—which are already set to be considered importers under the future Union Customs Code—may also obtain the status of authorized CBAM declarants.
This measure reflects a broader commitment to adapting customs and environmental rules to new models of international commerce, which are largely driven by the digitization of trade.
A significant tightening of anti-circumvention rules
Beyond expanding the scope of application, the European Parliament intends to strengthen the tools for detecting and penalizing circumvention practices.
Several measures are thus being considered:
• lowering the thresholds by which certain changes to a particular good would qualify as circumvention;
• introducing an approach modeled on existing anti-dumping mechanisms, targeting artificial arrangements set up without any real economic, commercial, or operational justification;
• applying the true country of origin’s default values where a pattern of circumvention is established.
These proposals reflect a heightened focus on the structuring of international trade flows. The goal is not so much to penalize legitimate business choices as it is to identify practices whose sole purpose is to circumvent the obligations arising from the CBAM.
The creation of a temporary fund to support the transition
The European Parliament also proposes the establishment of a temporary decarbonization fund.
This mechanism would be designed to support European operators facing the additional costs associated with the transition to a low-carbon economy. It would thus complement the CBAM by combining economic incentives with the EU’s goal of industrial competitiveness.
What are the implications for operators?
For European importers, these developments could have a significant impact on compliance processes.
The expansion of the CBAM’s scope and the strengthening of anti-circumvention controls will require increased vigilance regarding:
• product classification and categorization;
• determining origin;
• supply chain traceability;
• collecting and validating carbon data;
• assessing the reporting and financial obligations associated with the CBAM.
As the system matures, issues related to data governance, flow documentation, and regulatory foresight are becoming key strategic elements for companies operating internationally.
What’s next?
The European Parliament’s adoption of these amendments marks an important step, but the legislative process is not yet complete. Negotiations must now begin with the Council of the European Union to reach a final text.
The coming months will therefore be crucial for defining the CBAM’s future architecture and assessing the scope of the new obligations that may be imposed on economic actors.
