Annual Value of Export and Trade Surplus or Deficit with European Union and Impact of EU's Carbon Border Adjustment Mechanism on Singapore's Exports
Ministry of Trade and IndustrySpeakers
Summary
This question concerns Singapore's trade with the European Union and the impact of its Carbon Border Adjustment Mechanism (CBAM), as raised by Mr Chua Kheng Wee Louis. Minister for Trade and Industry Gan Kim Yong noted that the CBAM's impact will be limited, as affected products accounted for only 0.08% of average annual domestic exports to the EU between 2016 and 2020. The Minister emphasized that the CBAM should be non-discriminatory, WTO-consistent, and recognize existing carbon mitigation mechanisms like Singapore’s carbon tax. To support businesses, the Government will leverage the EU-Singapore Free Trade Agreement and maintain close communication with EU counterparts regarding the mechanism's implementation. Singapore remains committed to multilateral climate action while ensuring that its international trade and investment relations remain robust.
Transcript
25 Mr Chua Kheng Wee Louis asked the Minister for Trade and Industry for the last five years (a) what is the annual value of exports and trade surplus or deficit with the European Union, of which, what is the annual value and trade surplus or deficit every year for (i) cement (ii) iron and steel (iii) aluminium (iv) fertilisers and (v) electricity; (b) what is the impact of the EU’s Carbon Border Adjustment Mechanism (CBAM) on Singapore’s exports; and (c) what are Singapore’s plans in relation to the CBAM.
Mr Gan Kim Yong: On 14 July 2021, the European Union (EU) released draft legislation for a Carbon Border Adjustment Mechanism (CBAM). The CBAM aims to equalise the price of carbon between EU products and imports for a sub-set of products in five sectors: (i) cement; (ii) iron and steel; (iii) aluminium; (iv) fertilisers; and (v) electricity. During the transitional period from 2023 to 2025, the CBAM will require EU importers of these products to report carbon emissions embedded in their imports. From 2026 onwards, the CBAM will require EU importers to purchase CBAM certificates corresponding to the level of carbon emissions embedded in their imports of affected products.
Based on the list of products in the draft legislation, we expect limited impact on Singapore’s domestic exports to the EU. Between 2016 and 2020, the average annual value of our domestic exports to the EU was around S$19 billion, of which affected products was around 0.08%, or S$14 million.
Singapore is a strong supporter of multilateralism and global climate action. We have been working closely with the EU and other partners at international, regional and bilateral platforms to explore multi-faceted strategies in tackling climate change. At the same time, measures such as the CBAM should be consistent with WTO principles and not raise barriers to international trade. In particular, the CBAM should be applied in a non-discriminatory manner. It should also take into account existing carbon taxation or other mitigation mechanisms implemented by exporting countries.
We will continue to help Singapore-based companies to do more business in the EU by using the EU-Singapore Free Trade Agreement and to navigate issues arising from the EU’s CBAM. MTI will also continue to keep in close contact with our EU counterparts on their implementation of the mechanism and ensure that our trade and investment relations remain strong and robust.