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Global Fastener Forum— Secretary General of EFDA Alexander Kolodzik: Supply Chains Should Work Together to Meet CBAM Challenges
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2024-07-26
Taiwan and Europe have a close trade relationship in fasteners, and when the CBAM measures come into effect, Taiwanese fastener manufacturers will face more complicated regulatory requirements and severe challenges in exporting to Europe in the future. Alexander Kolodzik, Secretary General of European Fastener Distributor Association (EFDA), was invited to analyze the "Impact and Strategies of CBAM on Taiwan's Fastener Trade" to help Taiwan industry better understand the European side's thinking and Taiwan's way of response.
Fastener Manufacturers Play a Key Role in CBAM Reporting
Secretary General Alexander said that CBAM can be broadly divided into two phases, with October 2023 to the end of 2025 being the transition period and the full implementation phase from 2026 onwards. In the first phase, fastener manufacturers play a key role, because from October 2023 onwards, importers of fasteners in Europe will be required to submit to the CBAM Registry, on a quarterly basis, more detailed information on the import of fasteners, including the commodity codes of fasteners being imported, the names and addresses of manufacturers, the names of manufacturing plants, as well as, most importantly, data on direct and indirect carbon emissions, which have to be supplied by the fastener manufacturers in the countries from which the fasteners are being exported. In addition, importers will be required to provide "actual" carbon emissions data from Q3 2024 onwards, and the previous reference default values will no longer apply. As it is considered unlawful and risky to be sanctioned for EU importers failing to submit data on imported fasteners on time, EU importers will not place any order with a supplier who fails to provide emission data for sold fasteners. In the spirit of the legislation on transparency in the supply chain, the disclosure of the source of supply is unavoidable and can only be achieved through the concerted efforts of all of us. EFDA's partners in Taiwan (TIFI, Taiwan Institute of Economic Research or TFTA) and professional consultants are the channels through which you can make inquiries. EFDA also has a working group set up by experts from European fastener distributors to assist the industry in responding to the CBAM and provide suppliers with both Mandarin and English versions of the CBAM regulation briefing notes and reporting templates, as well as a guideline to assist manufacturers in calculating their carbon emissions (which will be published in the near future). When CBAM is formally implemented in 2026, EU importers will be required to pay a fee for carbon emissions per ton of imported fasteners, and the percentage of the levy will increase year by year until 2034. This additional high cost will have a huge impact on the competitiveness of fastener manufacturers.
CBAM Brings Challenges but Also Business Opportunities
The implementation of the regulation in 2026 will certainly have a greater impact on the fastener industry, such as a greater administrative and financial burden for importers and suppliers, and a significant increase in the total cost of production of fasteners. Alexander said that the use of more environmentally friendly steel materials would show lower carbon emission data, and the costs associated with CBAM would also be lower. Reducing carbon emissions from the production of fasteners would create a competitive advantage for individual companies or for an entire exporting country (e.g., Taiwan). Fastener and raw material manufacturers can create these advantages by adopting green energy. Taiwan can create more competitive advantages for itself if it can make more progress in carbon reduction.
Alexander emphasized that businesses and individual countries must strive to meet CBAM's specifications and requirements in order to remain competitive, suggesting that active collaboration with supply chain partners to provide valid data and use green energy is essential to maintain competitiveness. Suppliers in Taiwan can also look to EFDA to help with any challenges arising from CBAM.
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