Canada has formally identified the European Union’s Carbon Border Adjustment Mechanism (CBAM) as one of three priority trade disputes with Brussels, but discussions produced no agreement changing the existing rules. A Canadian government document published on 30 October, after the EU–Canada summit in Montreal, set out the priorities.
Canadian Prime Minister Mark Carney met European Commission President Ursula von der Leyen and European Council President António Costa at the summit. Canada also called for accelerated discussions on the EU Deforestation Regulation and proposed European pesticide measures. Its stated concern over CBAM is the carbon costs faced by Canadian industrial exporters.
The negotiations are intended to strengthen the transatlantic economic partnership. The summit launched an Alliance for the Future to deepen cooperation in trade, industrial supply chains, critical minerals, energy, financial services and advanced technologies. The European Council said EU–Canada trade in goods and services reached approximately €130 billion in 2025.
Both sides reported progress in addressing trade differences, without announcing a specific agreement on CBAM. The European Union raised concerns about Canadian steel import quotas, taxes affecting certain electric vehicles and domestic procurement preferences.
Carbon costs and evidence for CBAM
The EU carbon border 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.
Having a domestic carbon-pricing system does not automatically determine the deduction available. Canada combines federal and provincial industrial emissions-pricing arrangements, complicating exporters’ efforts to demonstrate 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 EU–Canada discussions have elevated CBAM within trade policy, while existing European compliance obligations remain in force.
Implications for regional exporters and buyers
For exporters from Serbia, Montenegro and the wider Western Balkans, the discussions provide a negotiating precedent but create no new legal entitlement. Governments considering domestic carbon-pricing arrangements face the challenge of establishing payments eligible for recognition and supporting them with credible, independently verifiable evidence.
Canadian producers with lower verified emissions or larger eligible domestic carbon-price deductions could gain a cost advantage over more emissions-intensive competitors. However, no competitive benefit can yet be attributed to the summit negotiations.
European importers, banks and industrial buyers need to incorporate actual emissions, carbon-price deductions and CBAM certificate costs into supply contracts and financial forecasts.