The consequences of the introduction of the CBAM mechanism for Ukraine can be critical, so it is important that the European Commission makes exceptions and protects Ukrainian exporters from significant financial losses. However, to do this, the Ukrainian government must submit to the commission an appropriate proposal, which is not currently available, S&P Global writes in an article.
According to the corporation's estimates, the introduction of the CBAM mechanism may affect 17-20% of Ukrainian exports to the EU, as the country supplies significant volumes of cement, fertilizers, aluminum, cast iron, steel billets and long steel."In order to grant an exception for Ukraine, the European Commission needs to propose an amendment to art. 30.7 of the Regulation, which provides exceptions for unpredictable, exceptional and unprovoked events affecting the economic infrastructure of third countries subject to CBAM. Ukraine meets all the criteria for granting an exception, because war is an unforeseen, exceptional and unprovoked event. It is beyond the control of a third country to which CBAM is applied, and has devastating consequences for the economic and industrial infrastructure of the affected country," S&P Global points out.
Analysts report that informal negotiations between the Ukrainian authorities and the European Commission took place during 2024-2025. It was expected that the commission would propose a special mechanism for applying CBAM for imports from Ukraine. However, there is no confirmation yet that this process has begun. The Ukrainian authorities also did not provide comments on the current status of the appeal to the EU on this issue.
"CBAM can lead to large economic losses for Ukraine – studies estimate GDP losses in the range of 4.8–6.3% over the next few years. In gross terms, losses could reach $1.44 billion, and exports of goods subject to CBAM could decrease by 65.7% by 2034," S&P Global noted.
