Juridical Analysis of the Carbon Border Adjustment Mechanism (CBAM): Implications for International Trade and Climate Justice
Keywords:
CBAM, International Trade, Carbon Tax, WTO Law, Environmental Policy, Climate JusticeAbstract
This research analyzes the role of the Carbon Border Adjustment Mechanism (CBAM) as a pivotal instrument in global environmental policy and its complex implications for international trade. The study aims to evaluate the effectiveness of CBAM in preventing 'carbon leakage' and encouraging global climate action, while also examining its compatibility with the principles of fairness and equity under the United Nations Framework Convention on Climate Change (UNFCCC), particularly the principle of Common But Differentiated Responsibilities (CBDR). Furthermore, this paper scrutinizes the potential for trade disputes arising from CBAM under the World Trade Organization (WTO) framework. Using a normative legal research method with statute, conceptual, and case approaches, this study analyzes potential conflicts with core WTO principles, such as the Most-Favoured-Nation (MFN) and National Treatment, as well as possible justifications under GATT Article XX. The analysis also extends to the impact of CBAM on business competition, especially for industries in developing countries. The findings suggest that while CBAM has the potential to drive climate objectives, its unilateral design raises significant concerns regarding trade discrimination, fairness for developing nations, and legal consistency with WTO law, potentially leading to significant international disputes and disrupting global trade dynamics
References
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Journals
Bacchus, J. (2021). The Case for a WTO Climate Waiver. CATO Institute Policy Analysis, (919).
Eicke, L., Weko, S., Apergi, M., & Sharifi, S. (2021). Pulling the Handbrake on Carbon Leakage: The Climate and Trade Policy Merits of the European Union’s Carbon Border Adjustment Mechanism. Climate Policy, 21(10), 1303-1317.
Mehling, M. A., van Asselt, H., Das, K., Droege, S., & Verkuijl, C. (2019). Designing Border Carbon Adjustments for Enhanced Climate Action. American Journal of International Law, 113(3), 433-481.
Pauwelyn, J. (2012). Carbon Leakage and International Trade Law: The WTO-Legality of Border Adjustments and the Quest for a ‘Level Playing Field’. Journal of World Trade, 46(1), 1-46.
Voigt, C. (2008). WTO Law and Climate Change: The Need for a New ‘Grand Compromise’. Carbon & Climate Law Review, 2(4), 305-316.
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