CBAM and the SA-EU Trade Agreement (SACEU): What Exporters Need to Know

CBAM and the SA-EU Trade Agreement (SACEU): What Exporters Need to Know

South Africa has a long-standing preferential trade relationship with the EU through the Trade, Development and Cooperation Agreement (TDCA), now superseded by the Southern African Development Community-EU Economic Partnership Agreement (SADC-EU EPA). Many SA exporters assume this relationship provides some protection from CBAM — it does not.

CBAM Applies Regardless of Trade Agreements

EU Regulation 2023/956 establishes CBAM as a universal requirement for all imports of covered goods from non-EU countries. The regulation explicitly states that CBAM applies regardless of existing trade agreements, preferential tariff arrangements, or development cooperation frameworks.

This means:

• ▸SA exporters continue to benefit from preferential tariff rates under the SADC-EU EPA
• ▸SA exporters must also comply with CBAM — the two requirements are independent
• ▸The CBAM cost is in addition to any applicable tariffs (though most SA goods enter the EU at reduced or zero tariff rates under the EPA)

The CBAM Equivalence Exemption

EU Regulation 2023/956 includes a provision for countries to be exempted from CBAM if they have a carbon pricing mechanism that is deemed "equivalent" to the EU ETS. Countries with equivalent carbon pricing would not face CBAM because their exporters are already paying a comparable carbon price domestically.

For South Africa to qualify for this exemption, the SA carbon tax would need to be at a level comparable to the EU ETS price. The current gap is significant:

| Carbon Price | Rate | |-------------|------| | SA Carbon Tax (2026) | R236/tCO₂ ≈ EUR 11.5/tCO₂ | | EU ETS (April 2026) | EUR 65.42/tCO₂ | | Gap | EUR 53.9/tCO₂ |

The SA government has indicated a trajectory toward R1,000/tCO₂ by 2030, which would significantly close this gap. However, full equivalence is unlikely before 2030 at the earliest.

What SA Exporters Should Do

Given that CBAM applies regardless of the trade agreement, SA exporters should:

1. ▸Accept CBAM as a permanent feature of EU market access
2. ▸Factor CBAM costs into export pricing and contract negotiations
3. ▸Invest in decarbonisation to reduce CBAM liability over time
4. ▸Claim the SA carbon tax deduction to reduce net CBAM costs

For a complete CBAM compliance registration pathway, visit the Digital Product Passport Registry.