Green Walls Or Green Pretexts? Examining The WTO Compatibility Of The EU Carbon Border Adjustment Mechanism
- IJLLR Journal
- Mar 16
- 1 min read
Ipsa Mittal, National Law Institute University, Bhopal
Saesha Gehani, National Law Institute University, Bhopal
Jiya Dixit, National Law Institute University, Bhopal
ABSTRACT
The European Union’s Carbon Border Adjustment Mechanism (hereinafter referred to as “CBAM”), established by Regulation (EU) 2023/956, imposes a carbon price on certain imports equivalent to the cost borne by European producers under the EU Emissions Trading System. Proponents characterise the measure as a necessary instrument for preventing carbon leakage and preserving the integrity of unilateral climate policy. Critics, particularly from developing economies, contend that the CBAM is a sophisticated form of disguised protectionism dressed in the language of environmental responsibility. This article examines the WTO compatibility of the CBAM through three analytical lenses: the Most-Favoured-Nation and National Treatment obligations under the General Agreement on Tariffs and Trade 1994; the environmental exceptions available under Article XX of the GATT; and the prohibition on export subsidies under the Agreement on Subsidies and Countervailing Measures. The article argues that while the CBAM is defensible as a border tax adjustment and enjoys a plausible route to justification under Article XX(b) and (g), the mechanism’s differential treatment of exporting nations introduces a structurally significant vulnerability under the chapeau of Article XX. The asymmetric treatment of developing countries, combined with the opacity of the equivalence determination process, risks transforming a legitimate environmental instrument into unjustifiable discrimination.
