France and Italy are urging the European Union to temporarily exempt fertilisers from its carbon border levy, arguing that the measure risks further straining Europe’s agricultural sector at a time of low crop prices and high input costs.
According to documents seen by Reuters, the two countries are seeking a delay or suspension of the Carbon Border Adjustment Mechanism (CBAM) for fertilisers, which became operational on 1 January. CBAM imposes carbon-related charges on imports of emissions-intensive goods, including steel, cement and fertilisers, to ensure that foreign producers do not gain a competitive advantage over EU manufacturers already subject to carbon pricing.
A draft position paper prepared by France and circulated among other EU member states calls on the European Commission to postpone the application of CBAM to fertilisers. The document argues that such a delay would ease tensions in the arable farming sector and give economic operators time to secure fertiliser supplies for the 2026 harvest year at acceptable levels.
EU to launch carbon border tax despite opposition from trade partners https://t.co/wrVBcvRuW4
— FT Energy (@ftenergy) December 31, 2025
Italy has voiced similar concerns. In a letter to EU Agriculture Commissioner Christophe Hansen, Italian Agriculture Minister Francesco Lollobrigida called for the rapid activation of a suspension clause for fertilisers, citing difficult market conditions and the expected impact of CBAM on prices. Both countries stress that they support the overall objectives of the carbon border levy, but warn that its immediate application to fertilisers could place additional pressure on farmers already affected by higher costs and tariffs on Russian fertiliser imports.
EU agriculture ministers are expected to discuss the issue at a meeting in Brussels, convened in part to address broader trade concerns, including efforts to rally support for a controversial free trade agreement with the Mercosur bloc in South America.
While exempting fertilisers from CBAM could lower costs for European farmers, it may undermine EU fertiliser producers, who were meant to benefit from the mechanism’s protection against cheaper imports from countries with less stringent climate rules.
📣 𝗡𝗲𝘄𝘀 𝗦𝘁𝗼𝗿𝘆: 𝗔𝗺𝗺𝗼𝗻𝗶𝗮 𝗘𝘂𝗿𝗼𝗽𝗲 𝗼𝗽𝗽𝗼𝘀𝗲𝘀 𝘁𝗮𝗿𝗶𝗳𝗳 𝗿𝗲𝗺𝗼𝘃𝗮𝗹, 𝗖𝗕𝗔𝗠 𝘄𝗲𝗮𝗸𝗲𝗻𝗶𝗻𝗴
Industry body Ammonia Europe has denounced the European Commission's proposal to remove most-favoured nation (MFN) import tariffs on ammonia to mitigate… pic.twitter.com/eyWRLeErdT
— Argus Media (@ArgusMedia) January 22, 2026
Also EUDR puts trade relations under strain
The debate over fertilisers forms part of a broader pattern in which EU climate and sustainability regulations are increasingly straining trade relations with partners around the world. In addition to CBAM, the EU’s deforestation regulation (EUDR) has proven particularly contentious.
The EUDR requires exporters of commodities such as cocoa, coffee, soy, palm oil and beef to demonstrate that production did not take place on land deforested after the end of 2020. While the regulation aims to curb global deforestation, it has been criticised by trading partners as administratively burdensome and discriminatory.
The measure has drawn objections from countries including Brazil and the United States, but it has also significantly strained relations with South-East Asian partners such as Malaysia and Indonesia, both major exporters of palm oil. These countries argue that the EU is imposing extensive new bureaucracy despite measurable progress in reducing deforestation, and at a time when the bloc is seeking to diversify its trade partnerships.
Following complaints from European companies, the EU agreed late last year to postpone the regulation’s implementation until the end of December 2026. A review clause, focusing on simplification, is also scheduled to be completed by April 2026.
The United States has already secured a partial exemption for certain products, but Malaysia and Indonesia are seeking similar treatment. Malaysian authorities have expressed particular frustration that the EU classifies the country as “standard risk” rather than “low risk”, despite improvements in forest protection. According to Global Forest Watch, Malaysia lost 0.56% of its remaining primary forest in 2024, compared with 0.87% in Sweden, while NGOs have reported a 13% reduction in deforestation in Malaysia that year.
EU officials have acknowledged growing unease among trading partners. In 2024, Sabine Weyand, the European Commission’s Director-General for Trade, noted that countries in the Global South and emerging economies were increasingly questioning the EU’s use of trade policy to act as a global regulator, asking “who has appointed you world regulator?”
As debates over CBAM and the EUDR continue, the EU faces a delicate balancing act between advancing its climate ambitions, protecting domestic producers, and maintaining stable trade relations with key partners worldwide.
Key issues highlighted in the article include:
1. EUDR Delay and Regulatory Uncertainty – MPOC leaders noted that repeated delays in the EUDR have added confusion for industry players, despite Malaysia’s strong sustainability progress and readiness for compliance.
— Malaysian Palm Oil Council (@mpocHQ) December 22, 2025
Meamwhile, the Financial Times features an analysis on “How the ‘Brussels effect’ backfired”, noting:
“As objections to the deforestation regulation from industry and commodity producing countries grew louder, the European Commission pushed back the deadline for the rules to come into force. Then the EU pushed them back again until December 2026.
“They have over-reached, they went too far in trying to regulate the world,” said Pedro Miguel da Costa e Silva, Brazil’s ambassador to the EU. The repeated postponement of deforestation rules was a “prime example” of Europe’s waning ability to shape the world in its own image, he said.”