Downstream scope under EU CBAM proposal
The European Union is working to extend the Carbon Border Adjustment Mechanism (CBAM) beyond primary steel and aluminium to selected finished goods. The proposed downstream list could include fasteners, wire, springs, household articles and other metal-intensive products starting from 2028. The expansion is described as a plan that is not yet law.
The European Commission presented its proposal in December 2025 under legislative file 2025/0419(COD). The Council of the European Union adopted its position in June 2026, and the European Parliament approved first-reading amendments in September. The file is now moving through interinstitutional negotiations.
Carbon leakage concerns across manufacturing stages
The stated policy aim is to prevent carbon leakage from shifting further along the manufacturing value chain. The risk described is that higher costs for imported steel under CBAM could be offset by moving fabrication abroad. Under that scenario, completed components could be exported to the EU without an equivalent carbon adjustment if finished products remain outside the mechanism.
Bringing selected downstream products into CBAM is intended to close that gap by covering additional stages of metal processing. The mechanism would therefore extend beyond earlier coverage limited to primary inputs. This approach targets further movement of production steps outside the carbon border framework.
Potential impact on Serbia and Southeast European exporters
For Serbia and other Southeast European manufacturing hubs, the legislative file could affect how exporters supply the EU market. Exporters of fabricated metal products, fasteners, wire, components and machinery parts may shift from being indirectly affected by steel and aluminium costs to supplying goods directly covered by CBAM.
The European Commission’s latest technical Q&A highlights compliance complexity for covered transformation activities. It notes that steel and aluminium transformation processes are subject to detailed system boundaries. It also states that precursor emissions may require weighted-average calculations and that supplier-specific emissions values depend on evidence that relevant input materials were used in production.
Carbon data preparation and contractual requirements
Downstream manufacturers are advised not to wait for changes to customs classifications before building carbon data systems. Procurement records, enterprise resource planning (ERP) systems, warehouse traceability, metering and supplier contracts may need to support carbon information linked to production batches and input materials.
EU buyers could introduce these requirements before the proposed implementation date. Long-term sourcing contracts signed in 2027 may allocate future CBAM costs and request emissions data even if the expanded scope applies only in 2028. This timing would affect how supplier information is collected for future reporting needs.
Traceability expectations for exporters of metal-intensive goods
The proposed expansion is expected to create a distinction between suppliers treating downstream CBAM mainly as a future cost and those approaching it as part of product and supply-chain traceability. For manufacturers exporting metal-intensive goods to the EU, preparing emissions data and documenting precursor use are identified as key operational elements.
Aligning contractual requirements with emerging CBAM obligations could become increasingly important before final legislation takes effect. This includes ensuring that supplier documentation supports emissions-related reporting tied to covered production processes.