Navigating an unjust ETS directive

By Joseph Bugeja

Bugeja is the newly appointed Chairman of ATTO which currently represents 80% of operators of tractors and trailers in Malta

The EU’s Emissions Trading System Directive more commonly referred to as the ETS Directive has sparked concerns among importers and exporters in Malta. The challenges of this new EU tax have started surfacing more prominently this month as the directive came into force on the 1st of January of this year.

These concerns are more than legitimate.

Importers and exporters not only have to deal with inflationary costs and COLA increases which already have a bearing on their prices but given that most of their road operations are based in Europe, they will also need to factor in the eventual toll increases and other inflationary increases there.

Therefore, this new environmental tax on shipping will unavoidably lead to further increases in the price of transport of all imports and exports by sea.

Moreover, there also needs to be a recognition of the impact that this tax will have on both Malta Freeport and Valletta Grand Harbour's Ro-Ro operations, two pillars of our economy and fundamental connections for the transportation of essentials.

Another concern is that whilst this tax applies across the EU, really and truly, it mostly impacts countries like Malta which rely solely on maritime connections for their essential imports, exports and economic activity, a fact exacerbated by the recent pandemic. Malta would have been stranded if not for the weekly maritime connections.

Let us not forget that Malta's international trailer operators have always played a vital role in connecting the island to global ports. Currently, Maltese operators are handling an average of 1300 trailers weekly.

In principle, we are not against the ETS Directive. We understand that the maritime sector, just like other sectors, is also a polluter which should be incentivized to start operating with more environmental responsibility. In fact, it is already positive that several forward-looking ship owners and operators have already taken various initiatives to operate vessels with more sustainable engines.

However, what we are saying is that transport operators in Malta cannot be put on the same level as those operators who are not burdened with our geographic and commercial disadvantages. The impact of this Directive is excessively disproportionate when compared to our European peers.

At the EU level, this issue falls under Qualified Majority Voting (QMV) making it a delicate diplomatic matter. As such, there needs to be a structured approach to ensure a level playing field by leveraging Malta's reputable position in international organizations such as the International Maritime Organisation, where Malta, as the largest European Flag and the sixth largest Flag in the world, already enjoys a very high reputation.

The growth and success of Malta’s Flag came from the fact that this sector was never politicized. Therefore, this is how we need to face this new challenge – by not politicising it and by tackling it professionally and pragmatically.

Today, more than ever, all stakeholders in this sector need to put up a united front in addressing the challenges posed by this ETS Directive to ensure an outcome where Malta's unique interests are duly represented.

Secondly, there needs to be due engagement with all those specialized individuals at EU level, including Malta's team of MEPs whilst seeking more collaboration with the International Maritime Organisation.

As the newly appointed Chairman of ATTO, our association will remain committed to helping address the challenges that our country will be facing due to the ETS Directive in fact, we have already started engaging in discussions and making our association’s views known at both local and international levels.

Our collective argument needs to centre around the irrefutable fact that Malta’s particular circumstances are not compatible with a one-size-fits-all policy especially when this matter is of a national interest.

Malta's response to the ETS Directive requires a strategic, non-politicized approach that recognizes the unique challenges faced by our island nation. By fostering a collaborative scenario, we can leverage Malta's influence in international maritime circles and ensure that the impact of the ETS Directive on Malta is mitigated. Protecting Malta’s interests is in the national interest and ultimately in the interests of businesses and Malta’s consumers.