AEGIS Europe’s Position on the European Commission’s 17 December 2025 CBAM Package

Download PDF

AEGIS Europe’s Position on the European Commission’s 17 December 2025 CBAM Package

On 17 December 2025, the European Commission published a legislative package on CBAM, composed of:

1. a Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2023/956 to strengthen CBAM’s effectiveness (COM(2025) 989) and;

2. a Proposal for a Regulation establishing the Temporary Decarbonization Fund (COM(2025) 990).

The Commission proposed measures aim at closing loopholes to prevent circumvention and strengthen the efficacy of EU's Carbon Border Adjustment Mechanism's (CBAM) for the CBAM definitive phase, which started on 1 January 2026.

Temporary Decarbonisation Fund (TDF) – an imperfect and insufficient interim solution for exports pending structural responses in EU ETS Review

The risk of carbon leakage related to export and the free allocation phase-out - which heightens exposure for export-oriented sectors - are acknowledged. The exposure for export-oriented sectors increases pressure as free allocation declines and CBAM costs materialise. The TDF is supposed to address the competitiveness loss in third-country markets where EU goods might be supplanted by cheaper, more emission-intensive alternatives, potentially increasing global emissions. The TDF should ensure a level playing field for EU exporters affected by CBAM.

The TDF introduces an indirect and time-limited support measure without providing any direct solution to address carbon leakage related to exports, particularly for some goods at high risk of carbon leakage and not covered by ETS. There is, however, no certainty that the Fund will provide sufficient support to address carbon leakage related to exports.

AEGIS Europe therefore recommends:

The Fund should primarily compensate EU exporters of CBAM‑covered goods in order to mitigate the risk of product reshuffling. In a second step, it should support EU downstream exporters using CBAM‑covered inputs that face a significant cost increase due to higher carbon prices of imported precursors. Compensation will have to be brought forward to 2027 and earmarking a clearly defined financial allocation for the most exposed sectors.

The TDF cannot substitute a long-term structural solution for EU export sectors impacted by CBAM. The European Commission should therefore earmark dedicated financial support within the forthcoming EU Multiannual Financial Framework, providing long‑term certainty for EU producers.

This long-term solution needs to be proposed urgently and compensate EU exporters for the increased ETS costs. The raw material cost increase CBAM will generate for importers of CBAM covered goods should also be acknowledged and compensated. Export adjustments must be part of the CBAM design to ensure that European exports do not become uncompetitive on foreign markets. This long-term solution should reflect the free allocation phase out trajectory, maintain decarbonization incentives, and be explicitly linked to export exposure. It should be included in the ETS review proposal which is expected mid-2026. AEGIS Europe proposed a WTO-compatible solution.

A close monitoring of European industry’s performance in EU and third-country markets by the European Commission is necessary to assess, over time, carbon leakage risks, including those related to exports.

Extension to downstream products

The European Commission should consider extending CBAM in a targeted manner to certain downstream sectors to ensure level playing field, as CBAM may shift competitive pressure further down the value chain.

The European Commission should complete the vertical extension to downstream products where this is justified by a high carbon leakage and circumvention profile and supported by a demonstrated technical and economic feasibility, including the availability of a robust methodology for calculating emissions in complex goods.

Extensions should be supported by clear principles and criteria, robust impact assessments across the value chain (upstream and downstream products) and thorough consultations with both directly and indirectly impacted sectors. The scope of the extension must also consider potential distortions and unintended consequences for market dynamics.

Additional anti-circumvention measures

European Commission’s proposals to address circumvention are welcome as a first step but need to be further strengthened to secure CBAM delivers on expectations.

The anti-circumvention measures largely consist of empowering the European Commission and competent authorities to act if circumvention risks are identified. Instead, a clearer political mandate from co-legislators is necessary, with more visibility on the countermeasures, notably via the application of default values.

The European Commission’s definition of “abusive practices” seems too narrow, and the risk of resource shuffling needs to be effectively addressed. The effectiveness of its proposals needs clarification in the CBAM regulation, before it is implemented in secondary legislation.

Both the European Commission and competent authorities must have sufficient resources and capacities to identify circumvention and address it through controls and concrete measures to combat circumvention of these rules are necessary.

Given that CBAM has just entered its definitive period, potential abusive practices remain open-ended and should be regularly assessed by the Commission.

In addition to circumvention practices, CBAM-related cost absorption should also be considered.

We welcome that the CBAM Registry High Level architecture is offering a portal to the user communities including OLAF. However, we are of the opinion that the European Anti-Fraud Office (OLAF) should be more assertive by strengthening its investigative mandate, improving access to real-time data, and empowering it to directly intervene in cross-border fraud cases. As the CBAM has entered its definitive phase, OLAF’s role is critical in detecting circumvention, such as misreporting origin or misclassifying goods to evade carbon costs. In a future revision of CBAM the Regulation should explicitly grant OLAF the power to launch investigations into suspected circumvention on its own initiative, reducing reliance on national authorities to initiate cases.

Transparency of the CBAM registry

Transparency is essential for ensuring market integrity, stakeholder trust, and effective enforcement. The ETS Registry has demonstrated that clear, accessible, and timely information enhances accountability, reduces the risk of fraud and market manipulation, and supports informed decision-making by industry and policymakers. Given that CBAM will play a critical role in preventing carbon leakage, similar transparency standards are necessary to reinforce the credibility of the EU’s climate policy framework and ensure that CBAM operates as a robust and trusted instrument in the transition to a low-carbon economy.

AEGIS Europe’s key messages on CBAM

·     AEGIS Europe supports a CBAM that is efficient in addressing carbon leakage risks while ensuring a level playing field on both European and foreign markets

·     Simplification attempts are welcome, but not at the expense of effectiveness in preventing carbon leakage. Simplification should not facilitate or lead to circumvention

·     CBAM needs a WTO-compatible export solution for producers of CBAM goods to avoid carbon leakage and the replacement of EU low-carbon products with high-carbon alternatives on global markets

·     Anti-circumvention rules must be strengthened to ensure the effectiveness of the measure and avoid practices such as resource shuffling or cost absorption

·     CBAM alone cannot solve the carbon leakage issue for all sectors, especially ETS sectors it covers with very specific value chains, products, and global trade flows. For these sectors, a stronger carbon leakage protection and additional measures are needed

***

AEGIS Europe is an industry alliance that brings together more than 30 European manufacturing associations representative of the whole value chain, from commodities down to consumer end products. Our members account for more than €500 billion in annual turnover, as well as for millions of jobs across the EU.

AEGIS Europe Letter to President von der Leyen on Trade Defence

Download the DPF

Dear President von der Leyen,

Dear Executive Vice-Presidents of the Commission

Dear Members of the College of Commissioners,

AEGIS Europe is an industry alliance that represents more than 30 European manufacturing associations and companies across entire industrial value chains, from metals and ceramics to transportation industries. Together, our members account for more than €500 billion in annual turnover and millions of direct and indirect jobs across the European Union. European manufacturing is under extreme pressure from state-controlled and export-driven economies, which subsidise enterprises, resulting in global overcapacities flooding world markets. While striving to maintain a competitive edge, European industries in many sectors can no longer endure unfair trade practices resulting from such overseas overcapacities.

As highlighted in the Draghi Report, Europe urgently needs a stronger industrial and trade strategy capable of preserving a competitive manufacturing base and ensuring a level playing field internationally. AEGIS Europe supports the EU’s existing Trade Defence Instruments, which remain essential but must be strengthened. European industries continue to face investigations that are too slow, measures that are too weak, and instruments that are insufficiently adapted to the scale and speed of distortions that evolve, and strategies to avoid EU measures.

AEGIS Europe calls, therefore, for faster and more effective trade defence procedures, as well as the urgent allocation of additional human resources in the trade defence services of DG Trade in order to enhance the speed, effectiveness, and enforcement capacity of investigations. At the same time, AEGIS Europe calls for the urgent establishment of a new EU instrument specifically designed to address overcapacities and their disruptive consequences for European industries and value chains.

This instrument should:

• be available on demand to any industrial sector affected by loss of market share in the EU and export markets due to overcapacities and other trade distortions;

• give competence to the Commission to act;

• allow for a full value-chain approach, hence addressing the impact of unfair practices throughout industrial ecosystems and in anticipation of circumvention or shifts in production;

• as overcapacities and distortions are not limited to one country alone, the instrument must be available for all countries;

• rely on publicly available information and/or market intelligence analyses provided by the industry to trigger investigations

• require respondent countries to demonstrate the absence of overcapacities.

The European Union cannot remain exposed to unfair competition while other global actors continue to deploy increasingly assertive industrial and trade policies. A stronger, more responsive, and more effective EU trade defence toolbox is essential to safeguarding European industry.

Sincerely, Inès Van Lierde Renaud Batier Co-Chairs AEGIS Europe

AEGIS Europe and Plastics Recyclers Europe call for swift and effective actions to secure the future of EU industry

Download the PDF

Brussels, 29 October 2025. As the European Union faces growing global competition, European producers already face several trade challenges, including high production costs (especially energy), global overcapacities, and aggressive third-country industrial policies.

Market performance indicators reveal a decline in competitiveness in the last ten years. This is evident in reduced production across sectors such as steel, silicon, ferroalloys, aluminium, and paper & board. Additionally, exports have dropped significantly in sectors like finished steel, man made fibres, and paper & board. Increased energy prices also play a role, but the real problem is the dumping of excess capacities on the open EU market and the need for new approaches to deal with industrial subsidies in addressing these overcapacities.

We are losing manufacturing jobs at an alarming rate. In AEGIS Europe sectors alone, approximately 34,000 direct jobs have been lost compared to the pre-COVID period. Considering that each direct job loss triggers 3-4 indirect job losses, this amounts to around 100,000 total jobs lost.

Since the 2008-2009 financial crisis, the situation has worsened, with 2.5 million industrial jobs disappearing and numerous plants across Europe shutting down. A wave of closures has been rolling out across the EU, mainly in the automotive sector and energy-intensive industries, but also in green tech sectors such as batteries. These closures are occurring throughout the EU.

Against this backdrop, and a year after the publication of the Draghi Report, AEGIS Europe, together with Plastics Recyclers Europe, calls on the EU to:

1. Strengthen and expedite the use of Trade Defence Instruments (TDIs) to timely protect EU industry from unfair foreign practices:

• Injury Margin: WTO law does not provide for injury margins; thus, the EU has full discretion in determining the calculation method. The current methodology does not account for the volumes of imports or potential volumes. Therefore, factors such as the actual market share of imports and potential market share (due to overcapacities) can be legally used to increase the injury margin.

• Dumping Margin: The normal value in the country of origin is compared to the export price to the EU, subject to a fair comparison. If the export price to the EU reflects a higher price due to social and environmental costs borne in the EU, an adjustment should be made to increase the margin by subtracting these costs from the export price. Both changes do not require an amendment to the basic Anti-Dumping Regulation.

• Small and medium-sized enterprises (SMEs), often the most harmed by unfair trade, are effectively excluded from investigations due to the heavy data-gathering burden. While DG TRADE has set up an SME Helpdesk, it must be empowered to support enterprises in collecting data and completing injury questionnaires. Legally, injury evaluations for SMEs do not have to follow the same standards as those for large enterprises.

• Address energy subsidies: Energy has a big share in the cost of production of key industries in the Union. While EU industries have been affected by an increase of energy costs, notably due to Russian’s invasion of Ukraine, third countries which have subsidised energy have been able to unfairly take market shares from EU industries. Consideration must be given to taking action, both in the WTO and in domestic Anti-Subsidy actions, to counter these massive subsidies which can be considered Specific in that they apply to fossil fuels only.

2. Upgrade the toolbox of EU industries by optimizing old instruments or designing new ones, such as an overcapacities instrument:

• We call for an instrument that: i) must not be limited to the steel sector; ii) is available independent of the Safeguard instrument. Iii) can be triggered by the EU industry, to avoid political interferences. The instrument must allow the imposition of punitive tariffs, or any equivalent measure, at the border, on goods sourced in third countries which have given support directly or indirectly to the rise of economically irrational overcapacities.

3. The Foreign Subsidies Regulation represents an important trade autonomous tool to protect the European Industry’s competitiveness and ensure a level playing field on the Single Market. In recent years, there has been an increasing influx of subsidised bidders from State-owned economic operators from third countries: this unfair situation can lead to a loss of market share and deindustrialisation of the EU, as well as having negative effects on competition in the Single Market. Ahead of the publication of the EC guidelines in 2026, and the deadline for the regulation’s evaluation, we call for key improvements such as:

• Thresholds: The threshold of EUR 250 million for public procurement is high and fails to capture many important projects, for example in the construction or rail supply industries.

• Withdrawing bidders: It should not be permitted, in case of recurrent suspicions of unduly advantageous tenders, that bidders withdrawing from a procedure to avoid redressive measures can again bid in another procedure unless they have proven that they do not benefit from distortive subsidies.

• Nature of bidders: The shareholders’ structure of bidders should be checked and go beyond a mere declaration, in order to avoid participation from State-owned enterprises in bids.

• Reduction of the administrative burden for European companies which are equally concerned by the reporting obligations stemming from the Regulation.

AEGIS Europe Position on the European Commission’s proposal for CBAM simplification

Download PDF

Brussels, 8 May 2025. On February 26th, the European Commission adopted the Omnibus package, a series of proposals to simplify EU rules and boost competitiveness in several legislative fields, among which the Carbon Border Adjustment Mechanism (CBAM). Further to that, the European Commission announced a comprehensive CBAM review for Q3 2025, assessing the feasibility of extending CBAM scope to other EU ETS sectors at risk of carbon leakage, to downstream sectors and to indirect emissions, and to evaluate support for exporters. The steel and metals action plan (March 19) announced that a communication on options for an export adjustment might already be published by the EC in Q2 2025. Another interesting announcement concerns the release of an anti-circumvention strategy in Q4 2025 together with the legislative proposal on the extension of the scope of CBAM.

We welcome the European Commission’s commitment to simplify the CBAM to foster fair trade. While simplification is essential and a step in the right direction, allowing to significantly reduce the administrative burden for declarants – especially SMEs, AEGIS Europe members agree on the ultimate importance of finding a balance between simplification, accuracy and effectiveness of the mechanism in preventing carbon leakage. Moreover, simplification should not facilitate or lead to circumvention, and any effort in this sense should be subject to a comprehensive evaluation. A thorough consultation of the industry, including both CBAM sectors and sectors which might be covered by CBAM, should be conducted.

AEGIS Europe would like to express its position on some of the key proposals outlined in the Omnibus package on CBAM simplification:

• Exemption threshold for small importers at 50 tonnes of CBAM goods per year. This proposal would allow to exempt around 90% of importers from CBAM obligations, while keeping 99% of embedded emissions in the scope, thus reducing administrative burden and maintaining the environmental objective of CBAM. However, as noted above, effective enforcement, for example through establishing robust and comprehensive risk assessment mechanisms, is necessary to prevent circumvention, as economic operators could try and avoid CBAM obligations by artificially importing through multiple entities as subsidiaries, falling below the threshold, or by splitting EORI numbers. Furthermore, the same logic of simplification applied here to importers under the CBAM should apply to EU producing small emitters under the EU ETS (Art. 27 of the ETS Directive) by increasing from 25Kt to 50KtCO2/year the threshold below which EU producers can opt out and be subject to national equivalent measures, thereby decreasing the administrative burden without lowering the decarbonisation ambition and efforts of EU producers.

• Simplification for EU precursors is also welcomed. As AEGIS Europe stated on other occasions, it is important to avoid double reporting for EU ETS installations in order to reduce the administrative burden. However, for legal coherence, the sentiment expressed in Recital (14)1 which creates a derogation for reporting EU-produced precursors should be materialised in an Article. The European Commission should update its existing guidance document to avoid double reporting already during the transitional period.

• Amendment of art. 26 of the CBAM regulation with the inclusion of a paragraph 1(a) stating that competent authorities can, under certain conditions, decrease the amount of the penalty imposed for the failure to surrender a given number of CBAM certificates. AEGIS Europe believes that the proposal creates an uneven playing field and legal uncertainty and inconsistencies across Member States, as the derogation is not predicted under EU ETS. This could open the door for non compliance and failing to follow the conditions set out in art. 16(1) of the EU ETS directive, stating that penalties should be “effective, proportionate and dissuasive”. Finally, CBAM penalties should always be equivalent to ETS penalties.

• Entry into force of CBAM financial obligations in 2027. The kicking in of financial obligations should be maintained in 2026, as its delay undermines the effectiveness of the tool because goods enter the EU market in 2026 without any certainty that declarants will be able to fulfil the surrendering obligation in late 2027.

• Default values for countries where there is not enough available data. The Commission’s proposal suggests using an average of the ten high emitting countries to calculate default values for countries where there is not enough reliable data. Using such a wide sample could result in default values lower than the actual emissions of the country, thus failing to encourage reporting of actual emissions. We recommend the use of a smaller sample, such as the top three-highest emission exporting countries where there is enough reliable data.

Overall, the Omnibus proposal seems to go in the right direction, although there are still further steps that can be taken to strengthen CBAM effectiveness and prevent circumvention while simplifying the system:

• Foreign operators should be able and strongly encouraged to provide their emission data directly through a submission in the CBAM registry. This would enhance the quality of the data as the same operators would be subject to a third-party verifier scrutiny and to the verification of the EU CBAM Authorities. If this cannot be guaranteed, CBAM declarants should use default values. This would allow the simplification of the reporting system of emission data by CBAM declarants, as they would be able to refer to the submissions made by the foreign installation and tie it to the specific imports they have made.

• The same level of transparency of the ETS should apply to CBAM: the information in the CBAM Registry will be confidential, while the EU ETS Registry Regulation provides public access to most of the relevant information included in the registry.

Background

AEGIS Europe supports a CBAM that is efficient in addressing carbon leakage risks while ensuring a level playing field for European and foreign producers. To achieve these goals, we believe it is imperative to assess CBAM effectiveness before any extension of its scope to other goods: this assessment should have as a departing point a consultation of the industry. To do so, it is important to define the assessment criteria which will be used and to conduct a prior, thorough impact assessment by consulting the industries concerned. Moreover, for some ETS sectors with very specific value chains, products, and global trade flows, a CBAM cannot effectively address carbon leakage and reduce emissions. For these sectors a stronger carbon leakage protection is needed.

Secondly, anti-circumvention rules must be strengthened to ensure the effectiveness of the measure and avoid practices such as resource shuffling which allows the exporting third country producers to only export to the EU products with lower carbon footprint while deviating more carbon-intensive products to other markets, or cost absorption, where producers could absorb partially or totally the cost of the CBAM by reducing the price of the products at the EU border and/or by spreading the levy across his entire production. The risk of circumvention must be monitored at customs level, and the authorisation process for CBAM declarants should ensure that they are sufficiently skilled to detect this. Effective enforcement of the new proposed exemption threshold for small importers at 50 tonnes of CBAM goods per year as introduced by the Omnibus package is necessary to prevent circumvention, as economic operators could try to avoid CBAM obligations by artificially importing through multiple entities falling below the threshold.

Finally, AEGIS Europe has been advocating for the adoption of an export adjustment for several years: CBAM needs a WTO-compatible export solution for CBAM sectors to avoid carbon leakage and the replacement of EU low-carbon products with high-carbon alternatives on global markets. European producers already face several challenges in export market, including high production costs (especially energy costs), global overcapacities, and aggressive industrial and trade policies by third-country competitors. An ERCST report stressed that failing to adequately address export issue could lead to a diminished competitiveness, suboptimal capacity utilization, reduced profitability, and eventual plant closures, further exacerbating the financial pressure within the sectors concerned and impacting substantial investment decisions in the near future. We are pleased to see that the need to support EU exporters is gaining increasing prominence in the European Commission’s legislative agenda and industrial discussions, and we eagerly wait for the presentation of the EC’s proposals to solve the exports loophole in CBAM coming in Q2 2025.

***

AEGIS Europe is an industry alliance that brings together more than 30 European manufacturing associations representative of the whole value chain, from commodities down to consumer end products. Our Members account for more than €500 billion in annual turnover, as well as for millions of jobs across the EU.

AEGIS Europe reacts on the ERCST Report “Solutions for exports of EU CBAM-covered goods”

Download PDF

AEGIS Europe reacts on the ERCST Report “Solutions for exports of EU CBAM-covered goods”and asks for an effective export solution, strengthened anti-circumvention measures and thorough industry consultation

Bruxelles, 8 May 2025. AEGIS Europe welcomes the recent publication of the ERCST Report “Solutions for exports of EU CBAM-covered goods” on March 25th. The report provides an in-depth analysis of the main proposals to address exports related carbon leakage that were advanced over the years, and we are glad that AEGIS Europe’s legal study for a WTO-compatible export adjustment has been included in the analysis.

AEGIS Europe has been advocating for the adoption of an export adjustment for several years: CBAM needs a WTO-compatible export solution for CBAM sectors to avoid carbon leakage and the replacement of EU low-carbon products with high-carbon alternatives on global markets, in a context where European producers already face several challenges in the export market, including high production costs (especially energy costs), global overcapacities, and aggressive industrial and trade policies by third-country competitors.

Furthermore, anti-circumvention rules must be strengthened to ensure the effectiveness of the measure and avoid practices such as resource shuffling which allows the exporting to the EU only products with lower carbon footprint while deviating other products to other markets, or cost absorption, where producers could absorb partially or totally the cost of the CBAM by reducing the price of the products at the EU border and/or by spreading the levy across his entire production. The risk of circumvention must be monitored at customs level, and the authorisation process for CBAM declarants should ensure that they are sufficiently skilled to detect this. Effective enforcement of the new exemption threshold for small importers at 50 tonnes of CBAM goods per year as introduced by the Omnibus package is necessary to prevent circumvention, as economic operators could try and avoid CBAM obligations by artificially importing through multiple entities falling below the threshold.

AEGIS Europe supports a CBAM that is efficient in addressing carbon leakage risks while ensuring a level playing field on both European and foreign. To achieve these goals, we believe it is imperative to assess CBAM effectiveness before any extension of its scope to downstream products: this assessment should have as a departing point a consultation of the industry. To do so, it is important to define the assessment criteria which will be used and to conduct a prior thorough impact assessment by consulting the industries concerned. Moreover, for some ETS sectors with very specific value chains, products, and global trade flows, a CBAM cannot effectively address carbon leakage and reduce emissions. For these sectors a stronger carbon leakage protection is needed.

Finally, AEGIS Europe members agree on the ultimate importance of finding a balance between simplification, accuracy and effectiveness of the mechanism in preventing carbon leakage. Moreover, simplification should not facilitate or lead to circumvention, and any effort in this sense should be subject to a comprehensive evaluation. A thorough consultation of the industry, including both CBAM sectors and sectors which might be covered by CBAM, should be conducted, keeping in mind that CBAM alone cannot solve the carbon leakage issue for all sectors, and further measures are needed to achieve decarbonisation.

AEGIS Europe is an industry alliance that brings together more than 25 European manufacturing associations representative of the whole value chain, from commodities down to consumer end products. Our Members account for more than €500 billion in annual turnover, as well as for millions of jobs across the EU.

AEGIS Europe calls for balanced FTAs to ensure fair competition and Industry Competitiveness

Download PDF

Brussels, April 2025. As the European Union is engaging in negotiations for the conclusion of several Free Trade Agreements (FTAs), AEGIS Europe emphasizes the need for an ambitious approach that prioritizes the European Industry’s strategic interests, based on the principles of fairness, transparency, and reciprocity. While FTAs can be valuable tools to foster economic growth and international cooperation, trade openness must be carefully balanced by ensuring the design of agreements that are able to uphold Europe's economic security, sustainability commitments and reciprocity.

The current energy price crisis and massive—subsidized—overcapacities, combined with unfair pricing strategies that have a permanently disruptive impact on the market, cannot be ignored. Fairness, based on the principle of reciprocity, should therefore be the central principle guiding FTA negotiations.

The EU must ensure a tailored tariff liberalization approach distinguishing between sectors where domestic industries face unfair global competition and those where the EU currently lacks adequate domestic capacity. Unwarranted tariff reductions can undermine industries vital to the EU's strategic autonomy, such as ceramics, steel and glass to name few, and generate dangerous dependencies, particularly when it comes to critical raw materials such as aluminium, silicon and base metals. Sectors already injured by increasing unfair imports of foreign goods manufactured with poor social and environmental standards should therefore be excluded from any trade liberalization scope.

With regard to Trade Defence Instruments (TDI), AEGIS Europe has experienced a lack of procedural transparency in third countries’ investigations, including those with whom FTAs have been signed or are currently under negotiations. It is therefore essential to ensure the continued right of the EU to undertake trade defence investigations against unfair trade and to ensure agreement by all third countries on WTO compliance in their investigations.

Additionally, any public procurement chapter in new FTAs must be approached with caution, to avoid undermining the enforcement possibilities under the International Procurement Instrument and the ability to exclude bidders from countries not complying with fair access obligations.

During trade agreement negotiations, it has also come to our attention that the EU may relax its Rules of Origin (RoO). On the contrary, FTAs must include strict RoO designed in collaboration with EU stakeholders, particularly when FTA negotiations involve countries with lower environmental and governance standards than those of the EU or are profiting from neighboring countries state-induced market distortions. The respect of this principle will prevent the circumvention of our standards and boost investments exclusively in sustainable value chains.

Along the same lines, FTAs should incorporate binding commitments on environmental protection, social standards, and climate goals, reflecting the EU's Green Deal objectives. AEGIS Europe advocates for a progressive mirror clause aligned with ILO conventions and environmental targets, upholding European production standards as a benchmark. Sustainability chapters must include clear provisions on child and forced labor, full compliance with the Carbon Border Adjustment Mechanism (CBAM), and adherence to WTO principles.

In the attached Annex I, AEGIS Europe has gathered the comments of its members regarding the ongoing EU-India FTA negotiations, as an example of the many hurdles that must be overcome to ensure a fair and balanced approach.

To conclude, the European Commission must ensure that all future trade agreements are based on the principles of reciprocity, transparency and fairness. The EU cannot afford to compromise on economic security, environmental goals, or fair competition. AEGIS Europe therefore welcomes the various trade recommendations displayed in the Clean Industrial Deal, which overall align with efforts to preserve Europe’s economic security and resilience.

***

AEGIS Europe is an industry alliance that brings together more than 25 European manufacturing associations representative of the whole value chain, from commodities down to consumer end products. Our Members account for more than €500 billion in annual turnover, as well as for millions of jobs across the EU.

Annex I: EU-India Free Trade Agreement

The EU-India FTA exemplifies the challenges of ensuring fair and reciprocal market conditions. While India benefits from significant tariff-free access to the EU market, most European exports to India remain restricted due to high import duties, complex regulatory barriers, untransparent customs procedures, and burdensome certification requirements such as Quality Control Orders (QCOs). The EU must insist on greater transparency and regulatory harmonization to prevent these measures from serving as disguised trade barriers.

From a sustainability dimension, India falls short of European standards, with significant challenges in environmental protection, social welfare, and labour rights. India's reliance on carbon-intensive production methods poses a risk of carbon leakage and weakens the competitiveness of EU firms, which continue to face high energy costs. For instance, Indian metal producers rely almost entirely on coal-fired plants, which generate about 80% of the country's electricity, resulting in significantly higher carbon emissions compared to their European counterparts. Furthermore, as highlighted in the European Commission’s Trade Sustainability Impact Assessment (SIA), India’s excessive water usage, chemical pollution, and labour abuses linked to many of its manufacturing activities cannot be overlooked. Without binding climate provisions and higher sustainability standards, increased access to Indian products will undermine the EU’s decarbonization efforts and the ability of EU producers to compete in the internal market.

Moreover, India’s extensive state subsidies, particularly in the metals, textiles, ceramics and sugar sectors, extend along the whole value-chain and contribute to global trade distortions, requiring stricter scrutiny in the FTA negotiations. According to the OECD, India could add up to 36,4 million tonnes of coal-based steel capacity by 2026. By way of reference, India exported 2,8 million tonnes of finished steel products to the EU in 2023, becoming the second largest source of EU steel imports. Furthermore, India maintains a series of export subsidies and import tariff relief on products such as cast iron products and PET. The European paper and board sector also faces significant trade imbalances, with EU exports to India amounting to just 3% of total EU shipments – half the volume exported to China – despite India’s paper consumption per capita being 15 times lower than in Europe and its market growing by 47% between 2010 and 2021.

India’s aluminium industry is significantly larger than the EU’s, producing 4.1 million tonnes of primary aluminium in 2023 – four times the EU’s output and accounting for 6% of global production. Its largest smelter alone produces nearly twice as much as all eight operational EU smelters combined. Since 2019, EU imports from India have surged by 244%, with the majority consisting of aluminium ingots. Additionally, India’s aluminium industry is expanding both upstream, leveraging competitive access to raw materials, and downstream, leading to a sharp rise in imports of semi finished products.

Similarly, India has quickly become the second largest producer and exporter of ceramic tiles at global level, behind China, as well as the first source of extra-EU imports of ceramic tiles in the Union, with an astonishing 138% increase in imports in five years despite antidumping duties in place since 2023. High overcapacities coupled with low internal demand and ongoing trade defence investigations in several States are likely to boost imports of Indian aluminium and ceramic goods into the EU, which cannot be facilitated further by any trade liberalization.

There is also evidence of dumping in respect to many products originating in India including the dumping of titanium dioxide (TiO2) following the coming into force of anti-dumping measures against China. This is also observed in the case of manhole covers. We urge that India's TDIs be applied in full compliance with WTO rules to ensure a level playing field. Transparency in procedures, access to all non-confidential information, sufficient time to provide comments, and consideration of the public interest are key when conducting investigations.

Finally, India’s reliance on export restrictions for domestic price control, dependence on Russian raw materials and energy supplies, and aggressive use of TDIs – especially anti-dumping measures, making it the top user of such tools at the WTO2 – create further concerns about fair competition and potential abuse of international trade rules. This is further exemplified by India’s behaviour in the India – Tariffs on ICT Goods WTO dispute, and the EU should effectively use the Enforcement Regulation to protect its industries and uphold the rules-based international trade system.

Ensuring that EU exporters have access to transparent procedures and a non-discriminatory trade framework, as well as reciprocity of environmental and social commitments, must be key priorities in the negotiations.

AEGIS Europe’s calls for more decisive action following the Clean Industrial Deal

Download the PDF

Brussels, 27 February 2025. The European Commission released its much-awaited Clean Industrial Deal, honoring the pledge outlined in the Commission’s 2024-2029 Guidelines to introduce a new deal within the first 100 days of President von der Leyen’s second term.

Confronted with soaring energy costs, global overcapacities and unfair trade practices, the European Union must be acting boldly and rapidly to address these pressing issues, as highlighted by the Draghi report. The plan devised by the Commission must ensure that the EU’s industrial competitiveness and quality jobs are not sacrificed while pursuing sustainability goals.

For these reasons, AEGIS Europe highly appreciates the acknowledgement from the European Commission that public procurement policies are a powerful instrument to support jobs and value creation in the EU. For years, the Alliance has been advocating key reforms in the EU public procurement framework to ensure that European public investments and associated tenders widen the application of non-price criteria as well as European value and preference.

It will therefore be key that the revision of the public procurement framework, expected in 2026, enforces these criteria and enshrines provisions on third country bidders as per the ruling of the Court of Justice of the European Union on the Case-652/22 (Kolin case).

Finally, given the aggressive export strategies enacted by certain foreign competitors, we believe that a ‘made-in Europe’ approach, as mentioned by Executive Vice-President Séjourné, should become a cornerstone of the new Commission’s agenda.

AEGIS Europe welcomes the Commission’s commitment to identify viable solutions to support exporters, as part of the comprehensive CBAM review foreseen for Q3 2025. However, the document does not sufficiently recognize the importance of an export adjustment within the mechanism, nor does it outline practical solutions for its design. Evidence suggests that discontinuing Emissions Trading System (ETS) free allowances without a viable export solution will increase carbon costs for EU companies and overall global CO₂ emissions, creating unprecedented risks for jobs and investment, and jeopardizing the goals of the EU Green Deal. AEGIS Europe calls for the introduction of a WTO compatible export adjustment to ensure a level playing field in export markets, safeguard EU competitiveness, and effectively prevent carbon leakage. Industrial policy alone will not suffice to guarantee the success of European industry.

A more assertive application of the EU Trade Defense Instruments (TDIs) is essential to counteract rising industrial overcapacities from foreign competitors—now extending beyond China. AEGIS Europe has been advocating for years the need for an instrument specifically designed to address global overcapacities. Therefore, we fully endorse the Commission’s commitment to sharpening existing trade defence tools, speeding up proceedings and designing additional instruments, including adjusted tariffs to the maximum levels as necessary, relying notably on exceptions for environmental protection. However, these positive steps require additional human resources within the EC and a clear implementation timeline—both absent from the adopted document—raising serious concerns about the Commission’s commitment to concrete action.

Finally, AEGIS Europe calls for a comprehensive EU’s industrial strategy: no sector should be excluded. Supporting energy intensive industries – alongside clean technologies – is a step in the right direction, as the Competitiveness Compass recognized them as the “backbone of the European manufacturing industry.” An inclusive approach in the implementation of the Clean Industrial Deal—combining fair trade policies, decisive external action and a robust industrial strategy across the entire value chain—is essential to securing Europe’s industrial future in an increasingly uneven global playing field.

***

AEGIS Europe is an industry alliance that brings together more than 30 European manufacturing associations representative of the whole value chain, from commodities down to consumer end products. Our Members account for more than €500 billion in annual turnover, as well as for millions of jobs across the EU.

AEGIS Europe urges the EU to act against excessive non-market capacities threatening EU manufacturing

AEGIS Europe urges the EU to act against excessive non-market capacities threatening EU manufacturing (PDF)

Brussels, 19 June 2024 – AEGIS Europe, an alliance representing over 20 key EU manufacturing sectors, urges immediate action from the European Union to address the critical and unprecedented threat posed by economically irrational excess production capacities, especially from China and other emerging economies. This trend is particularly alarming as most of the AEGIS Europe’s members are seriously impacted, while they are essential to achieve the EU Green Deal and ensure our economic security. This issue was acknowledged by world leaders in their conclusions of the G7 (Italy, 13-15 June 2024).

While AEGIS Europe welcomes the recognition of the need to have an appropriate and effective toolkit, we believe that engaging in diplomatic discussions with the countries contributing to overcapacities worldwide is, by far, not sufficient. Since the situation has worsened dramatically over the last years, the Union industry needs effective and immediate measures, as a matter of urgency. The build-up of economically irrational excess production capacities in various industries2 is causing global market disruptions due to unsustainably low prices, undermining the EU’s competitiveness.

In China, the economy is strategically planned to dominate globally important sectors, such as steel and aluminium, posing a systemic risk to the EU’s economic future. Other countries are instead fuelled by the desire to have national champions and new production facilities focused on exports, often built with Chinese state-backed subsidies.

While the United States has reacted timely by introducing the Inflation Reduction Act to support their domestic industries and imposing tariffs on key imports such as steel and aluminium, but also on electric vehicles, solar cells, and lithium batteries for EVs, “The EU’s response lacks the urgency and effectiveness needed to protect its manufacturing sectors from massive overcapacities that are flooding the markets and dragging global and/or regional prices down”, commented Inès Van Lierde, co-chair of AEGIS Europe. “As traditional trade defence instruments can deal only partially with this situation, an immediate and robust EU action plan is urgently needed to restore a level playing field and facilitate future investments in the EU.

The upcoming entry into force of the countervailing duties on Chinese EV is a step in the right direction, but not sufficient to tackle the systemic issue of worldwide overcapacities”, she continued. AEGIS Europe urges therefore the adoption of necessary legislation to allow the imposition of punitive tariffs or equivalent measures at the border on goods from countries supporting (directly or indirectly) these excess capacities.

Furthermore, AEGIS Europe suggests a relaxation of injury requirements in trade defence investigations for the affected sectors and emphasises the need for the inclusion of provisions in EU Free Trade Agreements allowing the Union to counteract. “The European manufacturing stands at a crossroads: immediate and decisive action is required to give relief to an EU industry that is already suffering. Without such measures, we risk compromising our economic security and the future of the EU’s industrial base”, concluded Renaud Batier, co-chair of the Alliance.