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22 Jul 2021

Econ Digest

The EU will implement the Carbon Border Adjustment (CBA) in 2023… Thai exporters should speed up adjustments

คะแนนเฉลี่ย
        The EU is preparing to implement a Carbon Border Adjustment Mechanism (CBAM) for goods and services imported from third countries outside the EU. The CBAM is expected to be enforced in January 2023, and will initially impose import taxes on goods from certain sectors with a high risk of carbon leakage. These sectors include minerals, fuels, iron, metals, chemicals, and plastics. Countries that export products with high direct carbon emissions, such as oil, minerals and electricity, are likely to be the first to be affected by the CBAM. Thailand’s exports to the EU account for around 10% of its total exports. However, the export value of minerals, fuels, iron, metals, chemicals and plastics from Thailand to the EU is relatively modest, so it is unlikely to be affected by the CBAM in the initial stage.
        KResearch believes that Thailand’s main exports to the EU, such as electronics and electrical products, will be the first to be indirectly affected by the CBAM measures. This is because these products have high carbon emissions. The export value of these products to the EU accounts for about 40% of Thailand’s total export value to the EU. Agricultural and food products have the second-highest proportion of export value, and may also be affected in the future by environmental measures related to food safety.
        Although compliance with environmental regulations will increase business costs, companies that can adapt first can gain long-term advantages by taking advantage of various government support measures. Going forward, Thailand needs to expand the participation of small businesses and expand the scope of target industries by making it easier and less expensive to participate. For example, the government could support enterprises that wish to participate by providing them with funds to develop and use alternative energy or improve production efficiency. The government could also promote cooperation plans between potential participants and new participants or organize carbon emission reduction activities for operators. This will help businesses prepare for the impact of carbon border controls, as the EU may consider offsetting carbon quantities if the exporting countries have developed emissions trading systems or other measures to mitigate environmental impacts, while also meeting the needs of overall economic sustainability.

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