Canada has formally made the European Union’s Carbon Border Adjustment Mechanism (CBAM) one of three priority trade disputes in negotiations with Brussels, while the discussions produced no agreement changing existing CBAM obligations. A Canadian government document published on 30 October, after the EU–Canada summit in Montreal, identified the priorities.
At the summit, Canadian Prime Minister Mark Carney met European Commission President Ursula von der Leyen and European Council President António Costa. Canada also prioritised the EU Deforestation Regulation and proposed European pesticide measures for accelerated discussions. Canada’s stated concern over CBAM is the carbon costs facing its industrial exporters.
Both sides reported progress in addressing trade differences, but no specific change to the mechanism was agreed. The EU raised concerns over Canadian steel import quotas, taxes affecting certain electric vehicles and domestic procurement preferences.
The summit launched an Alliance for the Future to deepen cooperation on trade, industrial supply chains, critical minerals, energy, financial services and advanced technologies. EU–Canada trade in goods and services reached approximately €130 billion in 2025, according to the European Council.
Carbon costs and evidence for CBAM
The EU system is in its first definitive compliance year. Importers of covered goods — steel, aluminium, cement, fertilisers, electricity and hydrogen — must account for embedded emissions. For Canadian metals producers, a central commercial question is whether carbon costs already incurred under domestic emissions-pricing arrangements can reduce the CBAM certificates their European customers must surrender.
Under Article 9 of the EU CBAM Regulation, carbon prices effectively paid on covered emissions in third countries may be recognised, taking account of rebates, compensation and other relevant adjustments. The existence of a domestic carbon-pricing system does not automatically determine the deduction available. Canada’s combination of federal and provincial industrial emissions-pricing arrangements complicates exporters’ efforts to show the actual carbon costs at individual production installations.
European importers need installation-level emissions information, evidence of qualifying carbon payments and documentation linking exported products to the relevant production and pricing arrangements. The negotiations have raised CBAM’s profile in EU–Canada trade policy, but existing European compliance obligations remain in force.
For exporters from Serbia, Montenegro and the wider Western Balkans, the discussions offer a negotiating precedent, not a new legal entitlement. Governments considering domestic carbon pricing face the challenge of establishing payments eligible for recognition and backed by credible, independently verifiable evidence. Canadian producers with lower verified emissions or larger eligible deductions could gain a cost advantage over more emissions-intensive competitors, although no competitive benefit can yet be attributed to the summit negotiations.
European importers, banks and industrial buyers need to factor actual emissions, carbon-price deductions and CBAM certificate costs into supply contracts and financial forecasts.
