EU’s CBAM Downstream Extension and Anti-Circumvention Amendments: the Road to Trilogue

The European Union’s Carbon Border Adjustment Mechanism ("CBAM") is currently entering a critical phase of its legislative refinement.

• On 17 December 2025, the European Commission ("Commission") proposed amendments to the CBAM Regulation aiming at extending the CBAM to downstream goods and strengthening anti-circumvention measures (the “Commission Proposal”).
• On 12 June 2026, the Council of the European Union ("Council") agreed its general approach, setting out the Member States' common political view on the Commission Proposal ("Council Mandate").
• On 15 September 2026, the European Parliament adopted its mandate in plenary session ("Parliament Mandate").

With all three institutions having now established their positions, trilogue negotiations are underway at technical level, and the first political trilogue is scheduled for 20 October 2026. This Legal Update sets out the key elements of each institution's position and the principal points of divergence.

1. The Commission's Proposal

The Commission Proposal is the second initiative to amend the CBAM Regulation following the adoption of Regulation (EU) 2025/2083 on 8 October 2025, which introduced a number of key simplifications to the CBAM framework.

The Commission Proposal pursues three main objectives:

• Extension of the CBAM to downstream goods: The CBAM would be expanded to cover approximately 180 downstream product types, predominantly steel and aluminium-intensive goods such as screws, bolts, wire, tubes, and metal furniture. This addresses the risk that non-EU manufacturers process basic CBAM goods into semi-finished or finished products for export to the European Union without triggering CBAM obligations.
• Anti-circumvention measures: A new definition of "abusive practices" would be added to the CBAM Regulation to cover practices pursued by any actor for the purpose of gaining a benefit by unduly avoiding, wholly or partially, the CBAM financial liability and thereby undermining the mechanism’s effectiveness. A new form of circumvention is also defined: artificially adjusting supply chains to make goods benefit from lower default emission values.
• Temporary removal of goods from the CBAM scope: A new Article 27a would empower the Commission, where the inclusion of a good in the CBAM Regulation causes severe harm to the internal market due to "serious and unforeseen circumstances" related to the impact on the prices of goods, to adopt delegated acts removing that good from the CBAM until those circumstances have passed.

2. The Council's Mandate

The Council Mandate builds on the Commission Proposal but includes several modifications, notably refining the anti-circumvention framework and elaborating the temporary exemption mechanism under Article 27a. The key elements of the Council's position are as follows:

• Scope extension: The Council slightly extended the list of downstream goods to about 200 product types.
• Abusive practices: The Council narrowed the definition of "abusive practices" by limiting the persons who can commit them. The Commission Proposal refers to any "actor," while the Council Mandate refers only to "an operator, importer or an authorised CBAM declarant". The Council also added specific rules on “harmful resource shuffling”. This is where producers controlling several sites with materially different emission intensities purposefully export the cleanest proportion of their output to the EU without engaging in any structural decarbonisation strategy for the rest of their production, while not being exposed to a carbon price comparable to that in the EU. For high-risk goods and origins, the CBAM declarant must show that no harmful resource shuffling took place.
• New circumvention practice: The Commission Proposal treats as circumvention any "artificially adjusting the supply chains to make the goods benefit from lower default values". The Council limits this to one practice: "changing the country or territory where the goods underwent their last, substantial, economically justified production step for the sole purpose of making these goods benefit from lower default values."
• Temporary exemption procedure under Article 27a: The Council retained Article 27a but substantially reworked it:
  • Instead of removing goods from the scope of the CBAM until the circumstances have passed, the Commission may temporarily exempt specific goods from CBAM obligations where serious and unforeseen circumstances severely harm the internal market. Objective criteria apply: a sustained price increase of more than 50% (in constant prices, excluding CBAM liability) for import-dependent goods, observed over at least six months.
  • Exemptions apply for one calendar year (maximum two years under the same circumstances).
• Pre-consumer scrap: Like the Commission, the Council counts pre-consumer aluminium and steel scrap as precursors when calculating embedded emissions. Post-consumer scrap stays excluded.
• Outermost regions: Member States may request a temporary exemption for cement imports into an outermost region facing exceptional circumstances, such as a natural disaster. For Mayotte and Réunion, it may also cover heavy construction materials. The goods must be for local use only. The Commission decides within six months and must refuse if there is a substantial risk of circumvention.
• Common CBAM area: Like the Commission, the Council plans a common CBAM area with the EFTA States once the CBAM is incorporated into the EEA Agreement.

3. The European Parliament Mandate

The Parliament Mandate goes significantly further than both the Commission Proposal and the Council Mandate in several key respects, setting the stage for intensive trilogue negotiations. Key elements of the Parliament’s position include:

• Scope extension: The Parliament extends the CBAM to 457 downstream product types, compared with approximately 180 in the Commission Proposal and approximately 200 in the Council Mandate. It also lowers the single mass-based threshold for aluminium products from 50 tonnes to 5 tonnes of net mass, which brings more importers into the CBAM.
• Scrap:
  • Aluminium: All aluminium waste and scrap, including post-consumer scrap, counts as a precursor. A single default value would apply to all unwrought aluminium, whatever its scrap content.
  • Steel: Emissions from pre-consumer steel scrap must be reported, but do not count towards embedded emissions.
• Deletion of Article 27a: The Parliament deletes the temporary exemption under Article 27a. In its place, new Article 30(8a) applies where unforeseeable, exceptional and unprovoked circumstances cause severe harm to the internal market through price disturbances, including where the inclusion of a good under the CBAM materially contributes to those disturbances. In that case, the Commission must redirect, for a limited period, the CBAM revenues from the goods concerned to the affected sectors.
• Anti-circumvention:
  • Slight modification: Circumvention also covers goods that are slightly modified or slightly processed so that they fall outside the CBAM, unless the modification alters their essential characteristics.
  • Supply-chain adjustments: An artificial supply-chain adjustment is circumvention only where its sole purpose is to avoid CBAM obligations and it has no economic, commercial, operational or sustainability-related justification.
  • "Resource shuffling": Any reorganisation of production, sales or supply chain patterns that redirects existing lower-emission goods to the EU while shifting higher-emission goods elsewhere, without creating new verifiable low-carbon capacity and without any net reduction in greenhouse gas emissions at producer level in the country of origin.
  • High-risk goods and countries: The Commission identifies high-risk combinations using objective criteria. These cover low-carbon capacity compared with export volumes, climate ambition, compliance with market economy rules, and the spread of emission intensities. For those combinations, country-level default values apply from the outset. The Commission reassesses at least once a year whether default values are still justified.
• Online platforms: Platforms designated as importers for distance sales under the reformed Union Customs Code must assume authorised CBAM declarant status and declare all CBAM goods facilitated over the year. Artificial transaction-splitting to stay below the de minimis threshold triggers retroactive liability.
• Outermost regions: On a duly reasoned request of the Member State concerned, a temporary, product-specific derogation of four years (renewable) would be available for goods imported into any outermost region, subject to conditions: the CBAM must entail disproportionate socio-economic impacts, there must be no viable alternative supply from the European Union in the short term, and the goods cannot subsequently be introduced into the wider EU customs territory. Goods later moved to the mainland without substantial processing would become subject to CBAM obligations.
• Least-developed countries (LDCs) and international cooperation: Simplified reporting rules would apply for least-developed countries, supported by a technical assistance framework for developing countries. Trade agreements may not exempt declarants from CBAM obligations unless they provide for EU ETS linking.
• Future scope reviews: The Commission is called on to assess the potential extension of the CBAM to additional goods at risk of carbon leakage, specifically including chemicals and petrochemicals, as well as the possibility of redirecting CBAM revenues to affected sectors.

The following table summarises the principal areas of divergence between the three institutions:

	Commission Proposal	Council Mandate	Parliament Mandate
Downstream products	≈180 product types	≈200 product types	≈453 product types
Article 27a / temporary exemption from the CBAM	Temporary removal of goods from the CBAM scope in case of serious and unforeseen circumstances	Reworked into temporary exemption where serious and unforeseen circumstances severely harm the internal market	Deleted entirely and replaced by CBAM revenue redirection to sectors concerned by exceptional circumstances
"Abusive practices" definition	Practices pursued by any actor for the purpose of gaining a benefit by unduly avoiding, wholly or partially, the CBAM financial liability	Narrowed to operators/importers/declarants only; "gaining an undue benefit by avoiding" CBAM liability	Same as Commission (any actor, "unduly avoiding" CBAM liability); but explicitly adds that abusive practices include resource shuffling
Resource shuffling	Not explicitly defined	"Harmful resource shuffling" = exporting cleanest output to EU without structural decarbonisation plan (actors controlling multiple sites with different emission intensities)	"Resource shuffling" = redirecting lower-emission goods to EU while shifting higher-emission goods elsewhere, without new low-carbon capacity or net emissions reduction
Aluminium de minimis	General 50-tonne threshold	General 50-tonne threshold	Specific 5-tonne threshold
Pre-consumer steel scrap	Precursor (in calculation)	Precursor (in calculation)	Report only (not in calculation)
Post-consumer aluminium scrap	Excluded	Excluded	Included
Online platforms	Not addressed	Not addressed	New obligations (must assume authorised CBAM declarant status)
Outermost regions	Not addressed	Limited (cements in outermost regions; heavy construction materials in Mayotte/Réunion; exceptional circumstances only)	Broader (four-year renewable derogation, all outermost regions)
Supply chain circumvention	Artificial adjustment to benefit from lower default values	Change of country of last substantial production step, sole purpose justification	Sole purpose of avoiding CBAM, no economic justification; "slight processing" also covered

4. Next Steps

Following the European Parliament's adoption of its mandate on 15 September 2026, inter-institutional negotiations are now on an accelerated timeline. Technical meetings to prepare for the trilogue began on 28 September 2026 at the European Parliament. The first formal trilogue is scheduled for 20 October 2026 during the European Parliament’s plenary session in Strasbourg, with a second and final trilogue provisionally scheduled for 30 November 2026. This compressed timetable signals the co-legislators’ ambition to reach a political agreement on the CBAM amendment before the end of 2026.

In parallel with this legislative work, the Commission continues to publish implementation guidance for the current CBAM framework (which entered its definitive phase on 1 January 2026). Recent publications include:

• 27 May 2026: An updated FAQ document on the CBAM.
• 14 August 2026: Ten guidance documents for non-EU operators, covering CBAM concepts and the compliance cycle (Guidance No. 1), practical implementation steps (Guidance No. 2), emissions calculation methodology (Guidance No. 3), free allocation adjustment (Guidance No. 4), and six sector-specific guides for cement, hydrogen, fertilisers, iron and steel, aluminium, and electricity (Guidance Nos. 5a–5f).
• 21 August 2026: The CBAM Registry User Manual for the Declarants Portal.
• 24 August 2026: The CBAM Verification and Accreditation Guidance.
• 25 August 2026: The CBAM Registry Access Request Procedure for the Accredited Verifiers, explaining how accredited verifiers obtain access to the CBAM Registry via EU Login and EU Access and register in the O3CI Portal.
• 27 August 2026: The CBAM Registry User Manual for Accredited Verifiers and Operators of Third Country Installations.

5. How Mayer Brown Can Help

Mayer Brown closely monitors the implementation of the EU CBAM and the ongoing trilogue negotiations on its extension to downstream goods and its anti-circumvention framework, and maintains close contacts with the European Commission and national competent authorities. Our CBAM team advises EU importers and non-EU producers on all aspects of CBAM compliance, including the interpretation of CBAM provisions, emissions data collection and verification, reporting and registration requirements, and supply-chain structuring, and assists stakeholders in engaging with the EU institutions and Member States to shape the final design of the amended CBAM.