"We need to gain a structure that can integrate with the European economy"

TÇÜD Secretary General Veysel Yayan shared his evaluations about the Carbon Border Adjustment Mechanism (CBAM) at the "Carbon Border Adjustment Mechanism and Its Effects on the Ferrous-Non-Ferrous Metals Industry" meeting held by the Aegean Ferrous and Non-Ferrous Metals Exporters Association (EIB).

Expressing that the CBAM may be considered as carbon border adjustment tax, Yayan said the purpose of this mechanism as "preventing carbon leakage and protecting the competitiveness of the producer sectors in Europe". At this point, he stated that Turkey's major problem is that while Europe has been preparing for this mechanism for years, the legislation cannot even be seen in Turkey yet. Saying, "We need the public administration to speed up a bit here and furthermore, we need some additional time from our interlocutors," Yayan stated that we are not alone and that India, China, South Korea and partly Japan will also make statements against the process. Indicating that "in addition to the aims of protecting human health and the environment at a high level, it is to increase the competitiveness and the chance of developing innovations of manufacturers in Europe", Yayan continued: "I do not want to give the impression that I am completely against this process, we will be seeking the ways to be completely part of it. We look forward to some positive responses from our own organizations, our own government and the EU commission to facilitate this. This is a process that starts in 2023 and comes into effect in January 2026 and ends free emissions from 2026 to 2030. Korea has a request to extend the deadline for the adoption of the system they implement. India has the same demand. We may have similar requests."

"When we look at the situation regarding the share of countries in the CBAM sectors, we see that Turkey's share towards the EU is 11 percent. Our steel sector has a difference from other CBAM sectors; it experienced a decrease of around 25 percent in its exports in 2022. In the first four or five months of 2023, this decline continues by over 40 percent. The starting period caused by this negativity can be an advantage for us. It may be regarded as we would not face too many sanctions because we do not have much export volume. However, it is necessary to admit from the beginning that it will not be a rational approach to think about staying out of this." Stating that the USA is working on a similar carbon border tax mechanism, and that some other countries have complementary practices, he said, "More than 50 percent of our market will face a situation where this mechanism is being actively operated in some way, so not being in this system is a serious problem. On the contrary, I think that integration with this system will give us a priority.” He underlined that there will be a structure in which those who prefer to fight instead of adapting to this system will be left out.

Yayan continued his words as follows: "With the advantages of being close to the EU, we must work to be a part of that economy. We know that the EU sees Turkey as a serious alternative in terms of hydrogen supply, but we must ensure this unity with the EU in order to evaluate this as well. Turkey is among the countries that will be most affected by the CBAM.

Addressing the steps to be taken on this issue, he emphasized the importance of "the relevant units of the state should put the issues in a framework where the EU will be closer to an agreement, their expectations should be met to a certain extent and a civil business relationship should be established", while also noting that the steel industry will be among the sectors most affected by the potential CBAM costs as of 2032, he advised that instead of paying these costs, we should establish our own system and gain a structure that can integrate with the European economy. Saying that Turkey has entered a difficult period of an obligation to realize this adaptation in a short period of 2-3 years which the Europeans have accomplished in 15-20 years, Yayan listed what can be done in this regard as follows: "We must ensure that the problems we will face in this process are understood by our interlocutors and that they will give some flexibility. On the other hand, the climate law must be put into effect as soon as possible and the ETS must be established and the details must be determined. After its establishment, the problems arising from the implementation should be identified and necessary revisions should be made. We have to take the EU's experience in this matter from the beginning and realize them without experiencing the same ones.”

Mentioning that Turkey experienced a cumulative decrease of over 33 percent in production, 13 percent last year and 20 percent this year, Yayan underlined the seriousness of the situation, "There was a 25 percent decrease in exports last year and 40 percent this year. This is a huge contraction, an extraordinary loss for Türkiye. We need to get ahead of this."