### 3. if the operator or trader fails to take corrective action referred to in paragraph 2 or where the non-compliance referred to in paragraph 1 persists , competent authorities shall ensure that the product is withdrawn or recalled , or that its being made available on or exported from the union market is prohibited or restricted. ### 3. if the operator or trader fails to complete the corrective action referred to in paragraph 2 within the period of time specified by the competent authority under paragraph 1 or where the non-compliance referred to in paragraph 1 persists after that period of time ends , competent authorities shall ensure that the relevant commodity or product is withdrawn or recalled , or that its being made available on or exported from the union market is prohibited or restricted.


### fines proportionate to the environmental damage and the value of the relevant commodities or products concerned , calculating the level of such fines in such way as to make sure that they effectively deprive those responsible of the economic benefits derived from their infringements , and gradually increasing the level of such fines for repeated infringements; the maximum amount of such fines shall be at least 4 % of the operators or trader’s annual turnover in the member state or member states concerned; ### fines proportionate to the environmental damage , human rights harm and the value of the relevant commodities or products concerned , calculating the level of such fines in such way as to make sure that they effectively deprive those responsible of the economic benefits derived from their infringements , and gradually increasing the level of such fines for repeated infringements; the maximum amount of such fines shall be at least 4 % of the operators or trader’s annual turnover in the union , calculated in accordance with article 5(1) of council regulation (ec) 139/20041a;


### 2. no later than five years after the entry into force and at least every five years thereafter , the commission shall carry out a general review of this regulation , and shall present a report to the european parliament and the council accompanied , if appropriate , by a legislative proposal. the first of the reports shall include in particular , based on specific studies , an evaluation of: ### 2. no later than five years after the entry into force and at least every three years thereafter , the commission shall carry out a general review of this regulation , and shall present a report to the european parliament and the council accompanied , if appropriate , by a legislative proposal. the first of the reports shall include an evaluation based on specific studies:


### goods as classified in the combined nomenclature set out in annex i to council regulation (eec) no 2658/87 , referred to in article 1 of this regulation68 . ### goods as classified in the combined nomenclature set out in annex i to council regulation (eec) no 2658/87 , referred to as “relevant commodities” in article 1 of this regulation68 .


### 3. country of production and all plots of land of production , including geo-localisation coordinates , latitude and longitude. where a product or commodity contains materials , ingredients or components produced in different plots of land , the geo-location coordinates of all different plots of land shall be included; ### 3. country of production and all plots of land of production , including geo-localisation coordinates , latitude and longitude , and date or time range of production. where a product or commodity contains materials , ingredients or components produced in different plots of land , the geo-location coordinates of all different plots of land shall be included;


### 4. member states shall ensure that the competent authorities have adequate powers and resources to perform the obligations set out in chapter 3 of this regulation. ### 4. member states shall ensure that the competent authorities have adequate powers , functional independence and resources to perform the obligations set out in chapter 3 of this regulation.


### 5. without prejudice to the operators’ obligation to exercise due diligence as set out in article 8 , member states may provide technical and other assistance and guidance to operators , taking into account the situation of smes , in order to facilitate compliance with the requirements of this regulation. ### 5. without prejudice to the operators’ obligation to exercise due diligence as set out in article 8 member states may provide technical and other assistance and guidance to operators , taking into account the situation of smes , in order to facilitate compliance with the requirements of this regulation. such assistance shall be without prejudice to the powers of competent authorities to enforce this regulation.


### 6. member states , may facilitate the exchange and dissemination of relevant information , in particular with a view to assisting operators in assessing risk as set out in article 9 , and on best practices regarding the implementation of this regulation. ### 6. member states shall facilitate the exchange and dissemination of relevant information , in particular with a view to assisting operators in assessing risk as set out in article 9 , and on best practices regarding the implementation of this regulation.


### 7. assistance shall be provided in a manner which does not compromise the independence , legal obligations and responsibilities of competent authorities in enforcing this regulation. ### 7. assistance shall be provided by entities that are functionally and structurally separated from competent authorities , in a manner which does not compromise their independence , legal obligations and responsibilities in enforcing this regulation.


### 1. member states shall lay down rules on penalties applicable to infringements of the provisions of this regulation by operators and traders and shall take all measures necessary to ensure that they are implemented. member states shall notify the commission of those provisions and without delay of any subsequent amendments affecting them. ### 1. member states shall lay down rules on uniform penalties applicable to infringements of the provisions of this regulation by operators and traders and shall take all measures necessary to ensure that they are implemented. member states shall notify the commission of those provisions and without delay of any subsequent amendments affecting them.


### 2. the penalties provided for shall be effective , proportionate and dissuasive. penalties shall include as a minimum: ### 2. the penalties provided for shall be effective , proportionate , dissuasive and uniform across member states. penalties shall include as a minimum:


### cattle ### ex 0102 live cattle ex 0201 meat of cattle , fresh or chilled ex 0202 meat of cattle , frozen ex 0206 10 edible offal of cattle , fresh or chilled ex 0206 22 edible cattle livers , frozen ex 0206 29 edible cattle offal (excluding tongues and livers) , frozen ex 4101 raw hides and skins of cattle (fresh , or salted , dried , limed , pickled or otherwise preserved , but not tanned , parchment-dressed or further prepared) , whether or not dehaired or split ex 4104 tanned or crust hides and skins of cattle , without hair on , whether or not split , but not further prepared ex 4107 leather of cattle , further prepared after tanning or crusting , including parchment-dressed leather , without hair on , whether or not split


### 2. harmonised system code , free-text description , and quantity70 of the relevant commodity or product that is intended to be placed on the union market by the operator; ### 2. harmonised system code , free-text description including the trade name as well as , where applicable , the full scientific name , and quantity70 of the relevant commodity or product that is intended to be placed on or exported from the union market by the operator;


### 2. unless otherwise provided by other eu legislative instruments that lay down requirements regarding sustainability value chain due diligence , operators which are not smes shall , on an annual basis , publicly report as widely as possible , including on the internet , on their due diligence system including on the steps taken by them to implement their obligations as set out in article 8. operators falling also within the scope of other eu legislative instruments that lay down requirements regarding value chain due diligence may fulfil their reporting obligations under this paragraph by including the required information when reporting in the context of other eu legislative instruments. ### 2. unless otherwise provided by other eu legislative instruments that lay down requirements regarding sustainability value chain due diligence , operators which are not smes shall , on an annual basis , publicly report as widely as possible , including on the internet , on their due diligence system including information about the products and commodities placed on the market , the place of production or origin of the commodities , the structure of the supply chain , the potential risks of non-compliance that were detected , and the steps taken to mitigate those risks. operators falling also within the scope of other eu legislative instruments that lay down requirements regarding value chain due diligence may fulfil their reporting obligations under this paragraph by including the required information when reporting in the context of other eu legislative instruments.


### (5) the general objectives of the gsp are to support eradication of poverty in all its forms , in line with agenda 2030 and sustainable development goal 17.12 and to promote the sustainable development agenda , while averting harm to eu industry’s interests. the 2018 gsp mid-term evaluation and the 2021 supporting study for the impact assessment underpinning this regulation concluded that the gsp framework under regulation (eu) no 978/2012 has delivered on these main objectives , which were at the core of the 2012 overhaul of council regulation (ec) no 732/200815. ### (5) the general objectives of the gsp should be to support eradication of poverty in all its forms , in line with agenda 2030 and sustainable development goal 17.12 and to promote the sustainable development agenda. trade relations conducted by the eu and its member states must not undermine , either directly or indirectly , the promotion and protection of human rights and the role of civil society in developing countries. existing arrangements are encouraging increased dependence on the export of raw materials , thereby intensifying the pressure on land and water resources while accelerating deforestation and the reduction of biodiversity.


### (6) those objectives remain relevant in the current global context and they are consistent with the analysis and perspective of the recent commission communication trade policy review “an open , sustainable and assertive trade policy”16(‘tpr’). according to the tpr , the union has a “strategic interest to support the enhanced integration into the world economy of vulnerable developing countries” and it “must fully use the strength provided by its openness and the attractiveness of its single market” to support multilateralism and to ensure adherence to universal values. for gsp specifically , the tpr notes its important role in “promoting respect for core human and labour rights” and sets the objective for the gsp “to further increase trading opportunities for developing countries to reduce poverty and create jobs based on international values and principles”. moreover , the scheme should assist beneficiaries in recovering from the covid-19 impact and in re-building their economies in a sustainable manner , including with respect to international human rights , labour , environmental and good governance standards. coherence should be ensured between the gsp and its objectives and the assistance provided to beneficiary countries , in line with union’s policy coherence for development (pcd) , which constitutes a key pillar of union’s efforts to enhance the positive impact and increase effectiveness of development cooperation17. ### (6) those objectives remain relevant in the current global context and they are consistent with the analysis and perspective of the recent commission communication 'trade policy review: an open , sustainable and assertive trade policy'.16 according to the tpr , the union has a “strategic interest to support the enhanced integration into the world economy of vulnerable developing countries” and it “must fully use the strength provided by its openness and the attractiveness of its single market” to support multilateralism and to ensure adherence to universal values. for gsp specifically , the tpr notes its important role in “promoting respect for core human and labour rights” and sets the objective for the gsp “to further increase trading opportunities for developing countries to reduce poverty and create jobs based on international values and principles”. moreover , the scheme should assist beneficiaries in recovering from the covid-19 impact and in re-building their economies in a sustainable manner , including with respect to international human rights , labour , environmental and good governance standards. coherence should be ensured between the gsp and its objectives and the assistance provided to beneficiary countries , in line with union’s policy coherence for development (pcd) , which constitutes a key pillar of union’s efforts to enhance the positive impact and increase effectiveness of development cooperation17. it is a matter of concern that , in a number of countries benefiting from the gsp , no concrete and substantial improvements have been observed in terms of human and social rights and it is even being alleged that gsp-assisted production is encouraging land grabbing and infringements of labour and human rights.


### (8) the scheme should consist of a basic arrangement (‘standard gsp arrangement’) , and two special arrangements , namely the ‘special incentive arrangement for sustainable development and good governance – gsp+’ and the ‘special arrangement for the least-developed countries - eba’. it , therefore , continues the structure of the previous ten years , which is considered a success , as it focuses on the countries most in need and addresses the varying developmental needs of beneficiaries. ### (8) the scheme should consist of a basic arrangement (‘standard gsp arrangement’) , and two special arrangements , namely the ‘special incentive arrangement for sustainable development and good governance – gsp+’ and the ‘special arrangement for the least-developed countries - eba’. it is deplorable that these instruments have become a means of political leverage applied by the european union and its member states to garner the support of third countries for various items on their international agendas. there is no doubt that the european union should promote different trading models based on equality between partners.


### (9) the standard gsp arrangement should be granted to all those developing countries which share a common development need and are in a similar stage of economic development. there is no definition of ‘developing country’ at the level of the wto , and it is left to preference granting countries to determine the list of gsp-eligible developing countries. countries which have successfully completed their transition from centralised to market economies , and are today powerful economies with a strong position in international trade , such as china , hong kong , macao and russia , should not be considered as developing countries in the context of the gsp , and should , therefore , be removed from the list of eligible countries. countries which are classified by the world bank as high-income or upper-middle income countries have per capita income levels allowing them to attain higher levels of diversification without the scheme's tariff preferences. they are at a different stage of economic development and do not , therefore , share the same development , trade and financial needs as lower income or more vulnerable developing countries. in order to prevent unjustified discrimination , they need to be treated differently; therefore , they do not benefit from the standard gsp arrangement. furthermore , the use of tariff preferences provided under the scheme by high-income or upper-middle income countries would increase the competitive pressure on exports from poorer , more vulnerable countries and , therefore , could impose unjustifiable burdens on those more vulnerable developing countries. the standard gsp arrangement should take account of the fact that the development , trade and financial needs are subject to change and ensure that the arrangement remains open if the situation of a country changes. ### (9) the standard gsp arrangement should be granted to all those developing countries which share a common development need , are in a similar stage of economic development and have ratified and started to implement all the international conventions referred to in annex vi. there is no definition of ‘developing country’ at the level of the wto , and it is left to preference granting countries to determine the list of gsp-eligible developing countries. countries which have successfully completed their transition from centralised to market economies , and are today powerful economies with a strong position in international trade , such as china , hong kong , macao and russia , should not be considered as developing countries in the context of the gsp , and should , therefore , be removed from the list of eligible countries. countries which are classified by the world bank as high-income or upper-middle income countries have per capita income levels allowing them to attain higher levels of diversification without the scheme's tariff preferences. they are at a different stage of economic development and do not , therefore , share the same development , trade and financial needs as lower income or more vulnerable developing countries. in order to prevent unjustified discrimination , they need to be treated differently; therefore , they do not benefit from the standard gsp arrangement. furthermore , the use of tariff preferences provided under the scheme by high-income or upper-middle income countries would increase the competitive pressure on exports from poorer , more vulnerable countries and , therefore , could impose unjustifiable burdens on those more vulnerable developing countries. the standard gsp arrangement should take account of the fact that the development , trade and financial needs are subject to change and ensure that the arrangement remains open if the situation of a country changes.


### (11) the special incentive arrangement for sustainable development and good governance (gsp+) is based on the integral concept of sustainable development , as recognised by international conventions and instruments such as the 1986 un declaration on the right to development , the 1992 rio declaration on environment and development , the 1998 international labour organisation (ilo) declaration on fundamental principles and rights at work , the 2000 un millennium declaration , the 2002 johannesburg declaration on sustainable development , the ilo centenary declaration for the future of work of 2019 , the outcome document of the un summit on sustainable development of 2015 "transforming our world: the 2030 agenda for sustainable development" , the un guiding principles on business and human rights , and the paris agreement on climate change under the un framework convention on climate change. consequently , the additional tariff preferences provided for under the special incentive arrangement for sustainable development and good governance should be granted to those developing countries which , due to a lack of diversification , are economically vulnerable , have ratified core international conventions on human and labour rights , climate and environmental protection and good governance , and commit to ensuring the effective implementation thereof. the special incentive arrangement for sustainable development and good governance should help those countries to assume the additional responsibilities resulting from the ratification and effective implementation of these conventions. the list of conventions relevant for gsp should be updated to better reflect the evolution of core international instruments and standards and take a proactive approach to sustainable development in keeping with the sustainable development goals and agenda 203018. in this regard , the following conventions are added: the paris agreement on climate change (2015) – replacing the kyoto protocol; the convention on the rights of persons with disabilities (crpd); the optional protocol to the convention on the rights of the child on the involvement of children in armed conflict (op-crc-ac); ilo convention no 81 on labour inspection; ilo convention no 144 on tripartite consultation; and the un convention against transnational organized crime. ### (11) the special incentive arrangement for sustainable development and good governance (gsp+) is based on the integral concept of sustainable development , as recognised by international conventions and instruments such as the 1986 un declaration on the right to development , the 1992 rio declaration on environment and development , the 1998 international labour organisation (ilo) declaration on fundamental principles and rights at work , the 2000 un millennium declaration , the 2002 johannesburg declaration on sustainable development , the ilo centenary declaration for the future of work of 2019 , the outcome document of the un summit on sustainable development of 2015 "transforming our world: the 2030 agenda for sustainable development" , the un guiding principles on business and human rights , and the paris agreement on climate change under the un framework convention on climate change. consequently , the additional tariff preferences provided for under the special incentive arrangement for sustainable development and good governance should be granted to those developing countries which , due to a lack of diversification , are economically vulnerable , have ratified and started implementing core international conventions on human and labour rights , climate and environmental protection and good governance , and commit to ensuring the effective implementation thereof , including through a public , ambitious and scheduled plan of action , approved in accordance with this regulation. the special incentive arrangement for sustainable development and good governance should help those countries to assume the additional responsibilities resulting from the ratification and effective implementation of these conventions. the list of conventions relevant for gsp should be updated to better reflect the evolution of core international instruments and standards and take a proactive approach to sustainable development in keeping with the sustainable development goals and agenda 203018. in this regard , the following conventions are added: the paris agreement on climate change (2015) – replacing the kyoto protocol; the convention on the rights of persons with disabilities (crpd); the optional protocol to the convention on the rights of the child on the involvement of children in armed conflict (op-crc-ac); ilo convention no 81 on labour inspection; ilo convention no 144 on tripartite consultation; and the un convention against transnational organized crime , ilo convention 169 on indigenous and tribal peoples , the rome statute of the international criminal court and the first optional protocol to the international covenant on civil and political rights.


### (26) orderly international migration can bring important benefits to the countries of origin and destination of migrants and contribute to their sustainable development needs. increasing coherence between trade , development and migration policies is key to ensure that the benefits of migration accrue mutually to both the origin and destination countries. in this respect , it is essential for both origin and destination countries to address common challenges , such as , stepping up cooperation on readmission of own nationals and their sustainable reintegration in the country of origin , in particular in order to avoid a constant drain in active population in the countries of origin , with the ensuing long-term consequences on development , and to ensure that migrants are treated with dignity. ### deleted


### (27) return , readmission and reintegration are a common challenge for the union and its partners. in particular , every state has the obligation to readmit its own nationals under international customary law , and multilateral international conventions such as the convention on international civil aviation signed in chicago on 7 december 1944. improving sustainable reintegration and capacity building would significantly strengthen the local development in the partner countries. ### deleted


### it gives a binding undertaking to maintain ratification of the relevant conventions and to ensure the effective implementation thereof , accompanied by a plan of action for the effective implementation of the relevant conventions; ### it gives a binding undertaking to maintain ratification of the relevant conventions and to ensure the effective implementation thereof , accompanied by a publicly scheduled plan of action for the effective implementation of the relevant conventions approved by the commission in consultation with the european parliament and civil society at local and international level;


### the commission considers , based on examination of the request , that the requesting country fulfils the conditions laid down in article 9. ### the commission considers , based on examination of the request , including the action plan referred to in article 9(1)(d) and the findings of the human rights assessment , that the requesting country fulfils the conditions laid down in article 9.


### 1. as of the date of the granting of the tariff preferences provided under the special incentive arrangement for sustainable development and good governance , the commission shall , with regard to each of the gsp+ beneficiary countries , keep under review and monitor the status of ratification of the relevant conventions and their effective implementation , as well as the cooperation of the gsp+ beneficiary country with the relevant monitoring bodies. in doing so , the commission shall examine all relevant information , in particular the conclusions and recommendations of the relevant monitoring bodies. ### 1. as of the date of the granting of the tariff preferences provided under the special incentive arrangement for sustainable development and good governance , the commission shall , with regard to each of the gsp+ beneficiary countries , keep under review and monitor the status of ratification of the relevant conventions and their effective implementation , as well as the cooperation of the gsp+ beneficiary country with the relevant monitoring bodies. in doing so , the commission shall examine all relevant information , including the conclusions and recommendations of the relevant monitoring bodies , as well as duly substantiated information submitted by civil society organisations , representatives of trade unions and other relevant stakeholders. information may also be submitted through the one-stop shop , which will be accessible to stakeholders from the union and gsp+ beneficiary countries. the commission shall maintain regular contacts with local and international civil society , through the eeas and delegations for example , to assess the implementation by beneficiary countries of the conventions listed in annex vi.


### 9. where the commission considers that the findings justify temporary withdrawal for the reasons referred to in paragraph 1 of this article , it is empowered to adopt delegated acts , in accordance with article 36 , to amend annex i and annex ii in order to temporarily withdraw the tariff preferences provided under the special incentive arrangement for sustainable development and good governance referred to in article 1(2) , point (b). in adopting the delegated act the commission may , when appropriate , consider the socio-economic effect of the temporary withdrawal of tariff preferences in the beneficiary country. ### 9. where the commission considers that the findings justify temporary withdrawal for the reasons referred to in paragraph 1 of this article , it is empowered to adopt delegated acts , in accordance with article 36 , to amend annex i and annex ii in order to temporarily withdraw the tariff preferences provided under the special incentive arrangement for sustainable development and good governance referred to in article 1(2) , point (b). in adopting the delegated act the commission may , when appropriate , consider the socio-economic effect and the impact on human rights of the temporary withdrawal of tariff preferences in the beneficiary country.


### 1. an eligible country shall benefit from the tariff preferences provided under the special arrangement for the least-developed countries referred to in article 1(2) , point (c) , if that country is identified by the united nations as a least-developed country. ### 1. an eligible country shall benefit from the tariff preferences provided under the special arrangement for the least-developed countries referred to in article 1(2) , point (c) , if that country is identified by the united nations as a least-developed country and whether that country has ratified the conventions listed in annex vi and made a firm commitment to continue to be bound by them.


### serious shortcomings in customs controls on the export or transit of drugs (illicit substances or precursors) , or related to the obligation to readmit the beneficiary country’s own nationals or serious failure to comply with international conventions on antiterrorism or anti-money laundering; ### serious shortcomings in customs controls on the export or transit of drugs (illicit substances or precursors) , or serious failure to comply with international conventions on antiterrorism or anti-money laundering;


### (12) once the existence of a foreign subsidy is established , the commission should assess whether the foreign subsidy distorts the internal market. unlike state aid granted by a member state , foreign subsidies are not generally prohibited. subsidies in the form of export financing may be a cause of particular concern because of their distortive effects. this is not the case if such financing is provided in line with the oecd arrangement on officially supported export credits. the commission should assess on a case-by-case basis whether a foreign subsidy distorts the internal market. ### (12) once the existence of a foreign subsidy is established , the commission should assess whether the foreign subsidy distorts the internal market. unlike state aid granted by a member state , foreign subsidies are not generally prohibited. this asymmetry should prompt the eu to revise its own rules to offer better support to companies through state aid and to help implement an industrial strategy capable of enhancing our economy's potential for job and value creation. subsidies in the form of export financing may be a cause of particular concern because of their distortive effects. this is not the case if such financing is provided in line with the oecd arrangement on officially supported export credits. the commission should assess on a case-by-case basis whether a foreign subsidy distorts the internal market.


### (21) the commission should have the power , on its own initiative , to examine any information on foreign subsidies. to this end , it is necessary to establish a procedure consisting of two steps , namely a preliminary review and an in-depth investigation. ### (21) the commission should have the power , on its own initiative , to examine any information on foreign subsidies. the commission should be able to act on the basis of information received from all relevant sources , particularly member states but also companies , professional associations , local authorities , unions and non-governmental organisations. to this end , it is necessary to establish a procedure consisting of two steps , namely a preliminary review and an in-depth investigation.


### (21) the commission should have the power , on its own initiative , to examine any information on foreign subsidies. to this end , it is necessary to establish a procedure consisting of two steps , namely a preliminary review and an in-depth investigation. ### (21) the commission should have the power , on its own initiative , to examine any information on foreign subsidies or any other non-financial benefit from a third country , whether this consists of standards or practices of a specific or general nature , that results in the same effect as a subsidy. to this end , it is necessary to establish a procedure consisting of two steps , namely a preliminary review and an in-depth investigation.


### (26) the commission should have appropriate instruments to ensure the effectiveness of commitments and redressive measures. if the undertaking concerned does not comply with a decision with commitments , a decision imposing redressive measures , or a decision ordering interim measures , the commission should have the power to impose fines and periodic penalty payments. ### (26) the commission should have appropriate instruments to ensure the effectiveness of commitments and redressive measures. if the undertaking concerned does not comply with a decision with commitments , a decision imposing redressive measures , or a decision ordering interim measures , the commission should have the power to impose fines and periodic penalty payments of a value high enough to put a stop to the potential or actual distortion of the internal market , so that they have a deterrent effect.


### (36) foreign subsidies that enable an undertaking to submit a tender which is unduly advantageous in relation to the works , supplies or services concerned should be deemed to actually or potentially create a distortion in a public procurement procedure. those distortions should therefore be assessed on the basis of the non-exhaustive set of indicators described in recitals 13 and 14 as well as the notion of unduly advantageous tender. the indicators should allow to determine how the foreign subsidy distorts competition by improving the competitive position of an undertaking and enabling it to submit an unduly advantageous tender. the opportunity should be given to undertakings to justify that the tender is not unduly advantageous , including by adducing the elements referred to in article 69(2) of directive 2014/24/eu. the prohibition of the award should only apply where the advantageous nature of the tender benefiting from foreign subsidies cannot be justified , the tender would be awarded the contract and the undertaking submitting the tender did not offer commitments considered appropriate and sufficient to fully and effectively remove the distortion. ### (36) foreign subsidies and all other non-financial measures with an equivalent effect that enable an undertaking to submit a tender which is unduly advantageous in relation to the works , supplies or services concerned should be deemed to actually or potentially create a distortion in a public procurement procedure. those distortions should therefore be assessed on the basis of the non-exhaustive set of indicators described in recitals 13 and 14 as well as the notion of unduly advantageous tender. the indicators should allow to determine how the foreign subsidy distorts competition by improving the competitive position of an undertaking and enabling it to submit an unduly advantageous tender. the opportunity should be given to undertakings to justify that the tender is not unduly advantageous , including by adducing the elements referred to in article 69(2) of directive 2014/24/eu. the prohibition of the award should only apply where the advantageous nature of the tender benefiting from foreign subsidies cannot be justified , the tender would be awarded the contract and the undertaking submitting the tender did not offer commitments considered appropriate and sufficient to fully and effectively remove the distortion.


### (1) for the purpose of this regulation , a foreign subsidy shall be deemed to exist where a third country provides a financial contribution which confers a benefit to an undertaking engaging in an economic activity in the internal market and which is limited , in law or in fact , to an individual undertaking or industry or to several undertakings or industries. ### (1) for the purpose of this regulation , a foreign subsidy or any other measure with an equivalent effect shall be deemed to exist where a third country provides a financial or non-financial contribution which confers a benefit to an undertaking engaging in an economic activity in the internal market and which is limited , in law or in fact , to an individual undertaking or industry or to several undertakings or industries.


### (2) a foreign subsidy is unlikely to distort the internal market if its total amount is below eur 5 million over any consecutive period of three fiscal years. ### deleted


### (1) to remedy the distortion on the internal market actually or potentially caused by a foreign subsidy , the commission may impose redressive measures. the undertaking concerned may also offer commitments. ### (1) to remedy the distortion on the internal market actually or potentially caused by a foreign subsidy , the commission may impose redressive measures. the undertaking concerned may also offer tangible and verifiable commitments to put an end as quickly as possible to the potential or actual distortion caused by a subsidy or other benefit with an equivalent effect.


### the commission may on its own initiative examine information from any source regarding alleged distortive foreign subsidies. ### 1. the commission may on its own initiative examine information from any source regarding alleged distortive foreign subsidies.


### the commission may take interim measures , where: ### the commission or the member state to which a referral is made by the commission pursuant to article 7(2) and (3) may take interim measures , where:


### (1) there are indications that a financial contribution constitutes a foreign subsidy and distorts the internal market; and ### (1) there are indications that a financial contribution constitutes a foreign subsidy and distorts the internal market; or


### (1) the commission may require an undertaking concerned to provide all necessary information. ### (1) the commission or the member state to which a referral is made by the commission pursuant to article 7(2) and (3) may require an undertaking concerned to provide all necessary information.


### (2) fines imposed in the cases referred to in paragraph 1 shall not exceed 1 % of the aggregate turnover of the undertaking or association of undertakings concerned in the preceding business year. ### (2) fines imposed in the cases referred to in paragraph 1 shall not exceed 10 % of the aggregate turnover of the undertaking or association of undertakings concerned in the preceding business year.


### (3) periodic penalty payments imposed in the cases referred to in paragraph 1 shall not exceed 5% of the average daily aggregate turnover of the undertaking or association of undertakings concerned in the preceding business year for each working day of delay , calculated from the date established in the decision , until it submits complete and correct information as requested by the commission. ### (3) periodic penalty payments imposed in the cases referred to in paragraph 1 shall not exceed 15% of the average daily aggregate turnover of the undertaking or association of undertakings concerned in the preceding business year for each working day of delay , calculated from the date established in the decision , until it submits complete and correct information as requested by the commission.


### the undertakings concerned received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than eur 50 million. ### the undertakings concerned received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than eur 25 million.


### the joint venture itself or one of its parent undertakings is established in the union and generates an aggregate turnover in the union of at least eur 500 million; and ### the joint venture itself or one of its parent undertakings is established in the union and generates an aggregate turnover in the union of at least eur 100 million; and


### the joint venture itself and its parent undertakings received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than eur 50 million. ### the joint venture itself and its parent undertakings received from third countries an aggregate financial contribution in the three calendar years prior to notification of more than eur 25 million.


### (2) for the purpose of article 28 , a notifiable foreign financial contribution in an eu public procurement procedure shall be deemed to arise where the estimated value of that public procurement is equal or greater than eur 250 million. ### (2) for the purpose of article 28 , a notifiable foreign financial contribution in an eu public procurement procedure shall be deemed to arise where the estimated value of that public procurement is equal or greater than eur 100 million.


### (2) the obligation to notify foreign financial contributions under this paragraph shall extend to economic operators , groups of economic operators referred to in article 26(2) of directive 2014/23/eu , article 19(2) of directive 2014/24/eu and article 37(2) of directive 2014/25/eu , main subcontractors and main suppliers. a subcontractor or supplier shall be deemed to be main where their participation ensures key elements of the contract performance and in any case where the economic share of their contribution exceeds 30% of the estimated value of the contract. ### (2) the obligation to notify foreign financial contributions under this paragraph shall extend to economic operators , groups of economic operators referred to in article 26(2) of directive 2014/23/eu , article 19(2) of directive 2014/24/eu and article 37(2) of directive 2014/25/eu , main subcontractors and main suppliers. a subcontractor or supplier shall be deemed to be main where their participation ensures key elements of the contract performance and in any case where the economic share of their contribution exceeds 20% of the estimated value of the contract.


### (2) the commission shall carry out a preliminary review no later than 60 days after it received the notification. ### (2) the commission shall carry out a preliminary review no later than 90 days after it received the notification.


### (1) the commission is empowered to adopt delegated acts for the purposes of: ### deleted


### the acquired undertaking or at least one of the merging undertakings is established in the union and generates an aggregate turnover in the union of at least eur 500 million; and ### the acquired undertaking or at least one of the merging undertakings is established in the union and generates an aggregate turnover in the union of at least eur 100 million; and


### (1) the commission has , in its communication on the european green deal31 , set out a new growth strategy that aims to transform the union into a fair and prosperous society , with a modern , resource-efficient and competitive economy , where there are no net emissions (emissions after deduction of removals) of greenhouse gases (‘ghg emissions’) in 2050 and where economic growth is decoupled from resource use. the european green deal also aims to protect , conserve and enhance the eu’s natural capital , and protect the health and well-being of citizens from environment-related risks and impacts. at the same time , that transformation must be just and inclusive , leaving no one behind. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32 the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition. ### (1) the commission has , in its communication on the european green deal31 , set out a new strategy as a first step in the transformation of the union into an environmentally sustainable , carbon-neutral , toxic-free and fully circular economy within the limits of the planet by 2050 at the latest. the european green deal also aims to strengthen global efforts to implement the one health approach , which recognises the intrinsic link between human health , animal health and a healthy and resilient nature , and to contribute to the achievement of the objectives of the paris agreement and the convention on biological diversity , as well as the united nations sustainable development goals. at the same time , that transformation must effectively guarantee the right of all to dignified and recognised work in a society of solidarity. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32 the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition.


### (1) the commission has , in its communication on the european green deal31 , set out a new growth strategy that aims to transform the union into a fair and prosperous society , with a modern , resource-efficient and competitive economy , where there are no net emissions (emissions after deduction of removals) of greenhouse gases (‘ghg emissions’) in 2050 and where economic growth is decoupled from resource use. the european green deal also aims to protect , conserve and enhance the eu’s natural capital , and protect the health and well-being of citizens from environment-related risks and impacts. at the same time , that transformation must be just and inclusive , leaving no one behind. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32 the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition. ### (1) the commission has , in its communication on the european green deal31 , set out a new strategy as a first step in the transformation of the union into a environmentally sustainable , carbon-neutral , toxic-free and fully circular economy by 2050 at the latest. the european green deal also aims to strengthen global efforts to implement the one health approach which recognizes the intrinsic link between human health , animal health and healthy and resilient ecosystems , and to contribute to the achievement of the objectives paris agreement and the convention on biological diversity , as well as the united nations sustainable development goals. at the same time , that transformation must be just and inclusive , leaving no one behind. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32 the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition.


### (1) the commission has , in its communication on the european green deal31 , set out a new growth strategy that aims to transform the union into a fair and prosperous society , with a modern , resource-efficient and competitive economy , where there are no net emissions (emissions after deduction of removals) of greenhouse gases (‘ghg emissions’) in 2050 and where economic growth is decoupled from resource use. the european green deal also aims to protect , conserve and enhance the eu’s natural capital , and protect the health and well-being of citizens from environment-related risks and impacts. at the same time , that transformation must be just and inclusive , leaving no one behind. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition. ### (1) the commission has , in its communication on the european green deal31 , set out a new strategy as a first step in the transformation of the union into an environmentally sustainable , carbon-neutral , toxic-free and fully circular economy within the limits of the planet by 2050 at the latest. the european green deal also aims to strengthen global efforts to implement the one health approach , which recognises the intrinsic link between human health , animal health and a healthy and resilient nature , and to contribute to the achievement of the objectives of the paris agreement and the convention on biological diversity , as well as the united nations sustainable development goals. at the same time , that transformation must effectively guarantee the right of all to dignified and recognised work in a society of solidarity. the commission also announced in its eu action plan: towards zero pollution for air , water and soil32the promotion of relevant instruments and incentives to better implement the polluter pays principle as set out in article 191(2) of the treaty on the functioning of the european union (‘tfeu’) and thus complete the phasing out of ‘pollution for free’ with a view to maximising synergies between decarbonisation and the zero pollution ambition.


### (8) as long as a significant number of the union’s international partners have policy approaches that do not result in the same level of climate ambition , there is a risk of carbon leakage. carbon leakage occurs if , for reasons of costs related to climate policies , businesses in certain industry sectors or subsectors were to transfer production to other countries or imports from those countries would replace equivalent but less ghg emissions intensive products. that could lead to an increase in their total emissions globally , thus jeopardising the reduction of ghg emissions that is urgently needed if the world is to keep the global average temperature to well below 2 °c above pre-industrial levels. ### (8) the union’s contribution to greenhouse gas emissions is not limited to emissions generated within its territory , but also includes emissions associated with its international trade. the latter consist of emissions from international transport , exported emissions and imported emissions. emissions exported from the union are accounted for in the nationally determined contribution of the european union and its member states under the paris agreement. by contrast , emissions from international transport and imported emissions are not yet subject to a reduction strategy. reductions of emissions in the union as part of its contribution under the paris agreement must not lead to an increase in global emissions through the relocation of emissions associated with the union’s final demand.


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’ and of the union's response to the climate emergency. that mechanism is to serve as an essential element of the eu toolbox to prevent further environmental harm from and meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition.


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) in order to ensure that the union’s imported emissions contribute as little as possible to global warming and that the eu cannot be suspected of reducing its territorial emissions through increased use of imports – thus placing the burden of mitigation on its trading partners – imported emissions need to decrease. by creating a framework contributing to that objective , the carbon border adjustment mechanism (‘cbam’) is to serve as an essential element of the eu toolbox to ensure its compliance with the paris agreement.


### (9) the initiative for a carbon border adjustment mechanism (‘cbam’) is a part of the ‘fit for 55 package’. that mechanism is to serve as an essential element of the eu toolbox to meet the objective of a climate-neutral union by 2050 in line with the paris agreement by addressing risks of carbon leakage resulting from the increased union climate ambition. ### (9) in order to ensure that the union's imported emissions contribute as little as possible to global warming and that the eu cannot be suspected of reducing its territorial emissions through increased use of imports — thus placing the burden of mitigation on its trading partners — imported emissions need to decrease. through the creation of a legal framework that contributes to this objective , the carbon border adjustment mechanism (‘cbam’) is to serve as an essential element of the toolbox available to the union to ensure its compliance with the paris agreement.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , between 2008 and 2019 , industrial sectors received more free allowances (37 million tonnes of co2 equivalent) than needed to cover their emissions , allowing them to sell their excess free allowances and make additional profits totalling around eur 1.6 billion. moreover , between 2008 and 2019 , these sectors generated additional benefits worth eur 3 billion from international offsets , and between eur 26 and eur 46 billion through the partial passing on of the opportunity costs of free allowances in product prices. in addition , in its 2020 audit report , the european court of auditors found that the transitional free allocation of allowances under the eu ets between 2013 and 2018 was not well enough targeted to encourage the reduction of greenhouse gas emissions. free allocation under the eu ets has therefore been clearly contrary to the polluter pays principle enshrined in article 191 tfeu.


### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , free allocation under the eu ets weakens the price signal that the system provides for the installations receiving it compared to full auctioning and thus affects the incentives for investment into further abatement of emissions. ### (10) existing mechanisms to address the risk of carbon leakage in sectors or sub-sectors at risk of carbon leakage are the transitional free allocation of eu ets allowances and financial measures to compensate for indirect emission costs incurred from ghg emission costs passed on in electricity prices respectively laid down in articles 10a(6) and 10b of directive 2003/87/ec. however , between 2008 and 2019 , industrial sectors received more free allowances (37 million tonnes of co2 equivalent) than needed to cover their emissions , allowing them to sell their excess free allowances and make additional profits totalling around eur 1.6 billion. moreover , between 2008 and 2019 , these sectors generated additional benefits worth eur 3billion from international offsets , and between eur 26 and eur 46 billion through the partial passing on of the opportunity costs of free allowances in product prices. in addition , in its 2020 audit report , the european court of auditors found that the transitional free allocation of allowances under the eu ets between 2013 and 2018 was not well enough targeted to encourage the reduction of greenhouse gas emissions. free allocation under the eu ets has therefore been clearly contrary to the polluter pays principle enshrined in article 191 tfeu.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to replace these existing mechanisms by addressing the potential risk of carbon leakage in a different way. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out as rapidly as possible.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to replace these existing mechanisms by addressing potential risks of carbon leakage in a different way. to ensure a swift change from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out as rapidly as possible.


### (11) the cbam seeks to replace these existing mechanisms by addressing the risk of carbon leakage in a different way , namely by ensuring equivalent carbon pricing for imports and domestic products. to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out. the combined and transitional application of eu ets allowances allocated free of charge and of the cbam should in no case result in more favourable treatment for union goods compared to goods imported into the customs territory of the union. ### (11) the cbam seeks to replace these existing mechanisms by addressing the potential risk of carbon leakage in a different way to ensure a gradual transition from the current system of free allowances to the cbam , the cbam should be progressively phased in while free allowances in sectors covered by the cbam are phased out as rapidly as possible.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to promote the reduction of the union’s imported emissions , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to promote the reduction of the union's imported emissions and ensuring the polluter-pays principle is applied to covered sectors , this regulation does this by encouraging the reduction of ghg emissions related to the production processes of covered producers in the eu and from third countries , including through circular economy solutions , so that less emissions per unit of output are generated.


### (12) while the objective of the cbam is to prevent the risk of carbon leakage , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated. ### (12) while the objective of the cbam is to promote the reduction of the union's imported emissions , this regulation would also encourage the use of more ghg emissions-efficient technologies by producers from third countries , so that less emissions per unit of output are generated.


### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. ### (13) as an instrument to reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs at least equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate and environmental protection measure which should support increased ambition on the union’s part on climate mitigation.


### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. ### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate and environmental protection measure which should support the reduction of emissions in the union in line with the european green deal and regulation (eu) 2021/1119.


### (13) as an instrument to prevent carbon leakage and reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate measure which should prevent the risk of carbon leakage and support the union’s increased ambition on climate mitigation , while ensuring wto compatibility. ### (13) as an instrument to reduce ghg emissions the cbam should ensure that imported products are subject to a regulatory system that applies carbon costs at least equivalent to the ones that otherwise would have been borne under the eu ets. the cbam is a climate and environmental protection measure which should support the union’s increased ambition on climate mitigation , while ensuring wto compatibility.


### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transition period and upon further assessment , as well to indirect emissions , mirroring the scope of the eu ets. ### (17) the ghg emissions to be regulated by the cbam should correspond initially to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transition period and upon further assessment , as well to indirect emissions , so as to best reflect the carbon footprints of different productions.


### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transition period and upon further assessment , as well to indirect emissions , mirroring the scope of the eu ets. ### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , so as to best reflect the carbon footprint of different productions.


### (17) the ghg emissions to be regulated by the cbam should correspond to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transition period and upon further assessment , as well to indirect emissions , mirroring the scope of the eu ets. ### (17) the ghg emissions to be regulated by the cbam should correspond initially to those ghg emissions covered by annex i to the eu ets in directive 2003/87/ec , namely carbon dioxide (‘co2’) as well as , where relevant , nitrous oxide (‘n2o’) and perfluorocarbons (‘pfcs’). the cbam should initially apply to direct emissions of those ghg from the production of goods up to the time of import into the customs territory of the union , and after the end of a transition period and upon further assessment , as well to indirect emissions , so as to best reflect the carbon footprint of different productions.


### (28) whilst the ultimate objective of the cbam is a broad product coverage , it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842. ### (28) whilst the ultimate objective of the cbam is a broad product coverage , it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a potential risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842.


### (28) whilst the ultimate objective of the cbam is a broad product coverage , it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842 . ### (28) whilst the ultimate objective of the cbam is a broad product coverage , and complete and swift replacement of the free allocation of allowances. it would be prudent to start with a selected number of sectors with relatively homogeneous products where there is a potential risk of carbon leakage. union sectors deemed at risk of carbon leakage are listed in commission delegated decision 2019/70842 .


### (29) the goods under this regulation should be selected after a careful analysis of their relevance in terms of cumulated ghg emissions and risk of carbon leakage in the corresponding eu ets sectors while limiting complexity and administrative burden. in particular , the actual selection should take into account basic materials and basic products covered by the eu ets with the objective of ensuring that imports of energy intensive products into the union are on equal footing with eu products in terms of eu ets carbon pricing , and to mitigate risks of carbon leakage. other relevant criteria to narrow the selection should be: firstly , relevance of sectors in terms of emissions , namely whether the sector is one of the largest aggregate emitters of ghg emissions; secondly , sector’s exposure to significant risk of carbon leakage , as defined pursuant to directive 2003/87/ec; thirdly , the need to balance broad coverage in terms of ghg emissions while limiting complexity and administrative effort. ### (29) the goods under this regulation should be selected after a careful analysis of their relevance in terms of cumulated ghg emissions and risk of carbon leakage in the corresponding eu ets sectors while limiting complexity and administrative burden. in particular , the actual selection should take into account basic materials and basic products covered by the eu ets with the objective of ensuring that imports of energy intensive products into the union are on equal footing with eu products in terms of eu ets carbon pricing , and to mitigate risks of carbon leakage. other relevant criteria to narrow the selection should be: firstly , relevance of sectors in terms of emissions , namely whether the sector is one of the largest aggregate emitters of ghg emissions; secondly , sector’s exposure to significant risk of carbon leakage , as defined pursuant to directive 2003/87/ec; thirdly , the need to balance broad coverage in terms of ghg emissions while limiting complexity and the need to minimize excessive administrative burden.


### (29) the goods under this regulation should be selected after a careful analysis of their relevance in terms of cumulated ghg emissions and risk of carbon leakage in the corresponding eu ets sectors while limiting complexity and administrative burden. in particular , the actual selection should take into account basic materials and basic products covered by the eu ets with the objective of ensuring that imports of energy intensive products into the union are on equal footing with eu products in terms of eu ets carbon pricing , and to mitigate risks of carbon leakage. other relevant criteria to narrow the selection should be: firstly , relevance of sectors in terms of emissions , namely whether the sector is one of the largest aggregate emitters of ghg emissions; secondly , sector’s exposure to significant risk of carbon leakage , as defined pursuant to directive 2003/87/ec; thirdly , the need to balance broad coverage in terms of ghg emissions while limiting complexity and administrative effort. ### (29) the goods under this regulation should be selected after a careful analysis of their relevance in terms of cumulative ghg emissions and risk of carbon leakage in the corresponding eu ets sectors while limiting complexity and administrative burden , and taking into consideration alternative approaches consistent with the polluter-pays principle to address the objectives of this regulation. . in particular , the actual selection should take into account basic materials and basic products covered by the eu ets with the objective of ensuring that imports of energy intensive products into the union are on equal footing with eu products in terms of eu ets carbon pricing , and to mitigate risks of carbon leakage.


### (33) similar technical constraints apply to refinery products , for which it is not possible to unambiguously assign ghg emissions to individual output products. at the same time , the relevant benchmark in the eu ets does not directly relate to specific products , such as gasoline , diesel or kerosene , but to all refinery output. ### deleted


### (50) a transitional period should apply during the period 2023 until 2025. a cbam without financial adjustment should apply , with the objective to facilitate a smooth roll out of the mechanism hence reducing the risk of disruptive impacts on trade. declarants should have to report on a quarterly basis the actual embedded emissions in goods imported during the transitional period , detailing direct and indirect emissions as well as any carbon price paid abroad. ### (50) a transitional period should apply for two years , during the period from 1 january 2023 until 31 december 2024. a cbam without financial adjustment should apply , with the objective to facilitate a smooth roll out of the mechanism hence reducing the risk of disruptive impacts on trade. declarants should have to report on a quarterly basis the actual embedded emissions in goods imported during the transitional period , detailing direct and indirect emissions as well as any carbon price paid abroad.


### (51) to facilitate and ensure a proper functioning of the cbam , the commission should provide support to the competent authorities responsible for the application of this regulation in carrying out their obligations. ### (51) to facilitate and ensure a proper functioning of the cbam , the commission should provide support to the competent authorities responsible for the application of this regulation in carrying out their obligations and monitor their work in order to ensure transparency.


### (51) to facilitate and ensure a proper functioning of the cbam , the commission should provide support to the competent authorities responsible for the application of this regulation in carrying out their obligations. ### deleted


### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47. ### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to extend the scope to indirect emissions , as well as to other goods and services that are imported into the eu , including agricultural products , to introduce carbon content requirements for imported products for distribution , consumption or use on the eu market , and to develop methods of calculating embedded emissions based on the environmental footprint methods47.


### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to possibly extend the scope to indirect emissions , as well as to other goods and services at risk of carbon leakage , and to develop methods of calculating embedded emissions based on the environmental footprint methods47 . ### (52) the commission should evaluate the application of this regulation before the end of the transitional period and report to the european parliament and the council. the report of the commission should in particular focus on possibilities to enhance climate actions towards the objective of a climate neutral union by 2050. the commission should , as part of that evaluation , initiate collection of information necessary to extend the scope to methane emissions , to indirect emissions , as well as to other energy intensive goods and services that are imported into the union , to introduce generalized carbon content requirements for imported products for distribution , consumption or use on the eu market and to develop methods of calculating embedded emissions based on the environmental footprint methods47 .


### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. moreover , the union should support less developed countries with the necessary technical assistance in order to facilitate their adaptation to the new obligations established by this regulation. ### (55) given the different roles played in global environmental degradation , and in line with the principle of common but differentiated responsibility for protecting the environment and promoting sustainable development , the eu has a duty to cooperate with low and middle-income countries to help them to implement green industrial policies. moreover , the union should help to improve less developed countries’ access to the best techniques available in order to facilitate their adaptation to the new obligations established by this regulation.


### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. moreover , the union should support less developed countries with the necessary technical assistance in order to facilitate their adaptation to the new obligations established by this regulation. ### (55) given the different roles played in global environmental degradation , and in line with the principle of common but differentiated responsibility for protecting the environment and promoting sustainable development , the eu has a duty to cooperate with low and middle-income countries to help them implement green industrial policies. moreover , the union should support less developed countries in accessing the best techniques available in order to facilitate their adaptation to the new obligations established by this regulation.


### (55) as the cbam aims to encourage cleaner production processes , the eu stands ready to work with low and middle-income countries towards the de-carbonisation of their manufacturing industries. moreover , the union should support less developed countries with the necessary technical assistance in order to facilitate their adaptation to the new obligations established by this regulation. ### (55) given the different roles played in global environmental degradation , and in line with the principle of common but differentiated responsibility for protecting the environment and promoting sustainable development , the eu has a duty to cooperate with low and middle-income countries to help them to implement green industrial policies. moreover , the union should help to improve less developed countries' access to the best techniques available in order to facilitate their adaptation to the new obligations established by this regulation.


### (61) the financial interests of the union should be protected through proportionate measures throughout the expenditure cycle , including the prevention , detection and investigation of irregularities , the recovery of funds lost , wrongly paid or incorrectly used and , where appropriate , administrative and financial penalties. ### (61) the financial interests of the union should be protected through proportionate measures throughout the expenditure cycle , including the prevention , detection and investigation of irregularities and lack of transparency , the recovery of funds lost , wrongly paid or incorrectly used and , where appropriate , administrative and financial penalties.


### 3. the mechanism will progressively become an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge in accordance with article 10a of that directive. ### 3. the mechanism is an alternative to the mechanisms established under directive 2003/87/ec to prevent the risk of carbon leakage , notably the allocation of allowances free of charge and compensation of indirect emission costs in accordance with article 10a of that directive.


### 1. any declarant shall , prior to importing goods as referred to in article 2 , apply to the competent authority at the place where it is established , for an authorisation to import those goods into the customs territory of the union. ### 1. any declarant shall , prior to importing goods as referred to in article 2 , apply to the cbam authority at the place where it is established , for an authorisation to import those goods into the customs territory of the union.


### 6. the commission is empowered to adopt implementing acts concerning detailed rules regarding the elements of the calculation methods set out in annex iii , including determining system boundaries of production processes , emission factors , installation-specific values of actual emissions and default values and their respective application to individual goods as well as laying down methods to ensure the reliability of data on the basis of which the default values shall be determined , including the level of detail and the verification of the data. where necessary , those acts shall provide that the default values can be adapted to particular areas , regions or countries to take into account specific objective factors such as geography , natural resources , market conditions , prevailing energy sources , or industrial processes. the implementing acts shall build upon existing legislation for the verification of emissions and activity data for installations covered by directive 2003/87/ec , in particular implementing regulation (eu) no 2018/2067. ### 6. the commission is empowered to adopt implementing acts regarding the elements of the calculation methods set out in annex iii , including determining system boundaries of production processes , emission factors , installation-specific values of actual emissions and default values and their respective application to individual goods as well as laying down methods to ensure the reliability of data on the basis of which the default values shall be determined , including the level of detail and the verification of the data. where necessary , those acts shall provide that the default values can be adapted to particular areas , regions or countries to take into account specific objective factors such as geography , natural resources , market conditions , prevailing energy sources , or industrial processes. the implementing acts shall build upon existing legislation for the verification of emissions and activity data for installations covered by directive 2003/87/ec , in particular implementing regulation (eu) no 2018/2067.


### iii competent authorities ### the cbam authority


### competent authorities ### the cbam authority


### 2. member states shall require that competent authorities exchange any information that is essential or relevant to the exercise of their functions and duties. ### deleted


### 2. member states shall require that competent authorities exchange any information that is essential or relevant to the exercise of their functions and duties. ### 2. in performing its obligations under this regulation , the cbam authority shall ensure that the union-wide greenhouse gas emissions embedded in the union's importation are irreversibly and progressively reduced , and that the target , and sub-targets , laid out in article 2a are achieved.


### 1. the competent authority may review the cbam declaration within the period ending with the fourth year after the year in which the declaration should have been submitted. the review may consist in verifying the information provided in the cbam declaration on the basis of the information communicated by the customs authorities in accordance with article 25(2) and any other relevant evidence , and on the basis of any audit deemed necessary , including at the premises of the authorised declarant. ### 1. the cbam authority may review the cbam declaration within the period ending with the fourth year after the year in which the declaration should have been submitted. the review may consist in verifying the information provided in the cbam declaration on the basis of the information communicated by the customs authorities in accordance with article 25a(2) and any other relevant evidence , and on the basis of any audit deemed necessary , including at the premises of the authorised declarant.


### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods. ### deleted


### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to indirect emissions and goods other than those listed in annex i , and develop methods of calculating embedded emissions based on environmental footprint methods. ### 1. the commission shall collect the information necessary with a view to extending the scope of this regulation to sectors and goods other than those listed in annex i , such as downstream products using goods covered by this regulation , and to develop methods of calculating embedded emissions based on environmental footprint methods.


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation , accompanied by a legislative proposal. in line with the assessment of the arrangements , the legislative proposal shall extend the scope of embedded emissions to indirect emissions and to goods at risk of carbon leakage other than those already covered by this regulation , listed by commission delegated decision 2019/708. the legislative proposal shall also extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage. lastly , the legislative proposal shall introduce carbon content requirements for products imported for distribution , consumption or use on the eu market.


### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation. the report shall contain , in particular , the assessment of the possibilities to further extend the scope of embedded emissions to indirect emissions and to other goods at risk of carbon leakage than those already covered by this regulation , as well as an assessment of the governance system. it shall also contain the assessment of the possibility to further extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage in the future. ### 2. before the end of the transitional period , the commission shall present a report to the european parliament and the council on the application of this regulation , accompanied by a legislative proposal. in line with the assessment of the arrangements , the legislative proposal shall extend the scope of embedded emissions to methane emissions , to indirect emissions and to goods at risk of carbon leakage other than those already covered by this regulation , listed by commission delegated decision 2019/708. the legislative proposal shall also extend the scope to embedded emissions of transportation services as well as to goods further down the value chain and services that may be subject to the risk of carbon leakage. lastly , the legislative proposal shall introduce carbon content requirements for products imported for distribution , consumption or use on the eu market.


### ix coordination with free allocation of allowances under the eu ets ### ix coordination with free allocation of allowances under the eu ets during the transitional period until their abolition.


### ix coordination with free allocation of allowances under the eu ets ### coordination with free allocation of allowances under the eu ets during the transitional period until their abolition


### 1. the cbam certificates to be surrendered in accordance with article 22 shall be adjusted to reflect the extent to which eu ets allowances are allocated free of charge in accordance with article 10a of directive 2003/87/ec to installations producing , within the union , the goods listed in annex i. ### 1. the cbam certificates to be surrendered in accordance with article 22 shall be adjusted to reflect the extent to which eu ets allowances are allocated free of charge in accordance with article 10a of directive 2003/87/ec to installations producing , within the union , the goods listed in annex i , during the transitional period until the abolition of free allocation by 2030 at the latest.


### 1. the cbam certificates to be surrendered in accordance with article 22 shall be adjusted to reflect the extent to which eu ets allowances are allocated free of charge in accordance with article 10a of directive 2003/87/ec to installations producing , within the union , the goods listed in annex i. ### 1. no free allocation shall be given in relation to the production within the union of products listed in annex i as from the date of application of the cbam , as provided in article 36(3).


### articles 32 to 34 shall apply until 31 december 2025. ### articles 32 to 34 shall apply until 31 december 2024.


### article 35 shall apply until 28 february 2026. ### article 35 shall apply until 28 february 2025.


### articles 5 and 17 shall apply from 1 september 2025. ### articles 5 and 17 shall apply from 1 september 2024.


### articles 4 , 6 , 7 , 8 , 9 , 14 , 15 , 16 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 and 31 shall apply from 1 january 2026. ### articles 4 , 6 , 7 , 8 , 9 , 14 , 15 , 16 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 and 31 shall apply from 1 january 2025.


### accounts in the national registries ### accounts in the cbam registry


### 1. the competent authority shall assign to each authorised declarant a unique cbam account number. ### 1. the cbam authority shall assign to each authorised declarant a unique cbam account number.


### 4. if the authorised declarant has ceased its economic activity or its authorisation was revoked , the competent authority shall close the account of that declarant. ### 4. if the authorised declarant has ceased its economic activity or its authorisation was revoked , the cbam authority shall close the account of that declarant.


### 1. the competent authority shall authorise a declarant who submits an application for authorisation in accordance with article 5(1) , if the following conditions are fulfilled: ### 1. the cbam authority shall authorise a declarant who submits an application for authorisation in accordance with article 5(1) , if the following conditions are fulfilled:


### 2. where the competent authority finds that the conditions listed in paragraph 1 are not fulfilled , or where the applicant has failed to provide the information listed in article 5(3) , the authorisation of the declarant shall be refused. ### 2. where the cbam authority finds that the conditions listed in paragraph 1 are not fulfilled , or where the applicant has failed to provide the information listed in article 5(3) , the authorisation of the declarant shall be refused.


### 3. if the competent authority refuses to authorise a declarant , the declarant requesting the authorisation may , prior to an appeal , object to the relevant authority under national law , who shall either instruct the national administrator to open the account or uphold the refusal in a reasoned decision , subject to requirements of national law that pursue a legitimate objective compatible with this regulation and are proportionate. ### 3. if the cbam authority refuses to authorise a declarant , the declarant requesting the authorisation may , prior to an appeal , object to the relevant authority under national law , who shall either instruct the national administrator to open the account or uphold the refusal in a reasoned decision , subject to requirements of national law that pursue a legitimate objective compatible with this regulation and are proportionate.


### 4. a decision of the competent authority authorising a declarant shall contain the following information ### 4. a decision of the cbam authority authorising a declarant shall contain the following information


### 6. the competent authority shall require the provision of a guarantee in order to authorise a declarant in accordance with paragraph 1 , if the declarant was not established throughout the two financial years that precede the year when the application in accordance with article 5(1) was submitted. ### 6. the cbam authority shall require the provision of a guarantee in order to authorise a declarant in accordance with paragraph 1 , if the declarant was not established throughout the two financial years that precede the year when the application in accordance with article 5(1) was submitted.


### the competent authority shall fix the amount of such guarantee at the maximum amount , as estimated by the competent authority , of the value of the cbam certificates that the authorised declarant have to surrender , in accordance with article 22. ### the cbam authority shall fix the amount of such guarantee at the maximum amount , as estimated by the cbam authority , of the value of the cbam certificates that the authorised declarant have to surrender , in accordance with article 22.


### 7. the guarantee shall be provided as a bank guarantee , payable at first demand , by a financial institution operating in the union or by another form of guarantee which provides equivalent assurance. where the competent authority establishes that the guarantee provided does not ensure , or is no longer certain or sufficient to ensure the amount of cbam obligations , it shall require the authorised declarant either to provide an additional guarantee or to replace the initial guarantee with a new guarantee , according to its choice. ### 7. the guarantee shall be provided as a bank guarantee , payable at first demand , by a financial institution operating in the union or by another form of guarantee which provides equivalent assurance. where the cbam authority establishes that the guarantee provided does not ensure , or is no longer certain or sufficient to ensure the amount of cbam obligations , it shall require the authorised declarant either to provide an additional guarantee or to replace the initial guarantee with a new guarantee , according to its choice.