Analysis Of The Legitimacy Of The European Union Carbon Border Adjustment Mechanism Under The WTO Legal System

On April 18,2023,the long-brewing EU Carbon Border Regulation Mechanism(Carbon border adjustment mechanism,CBAM)bill was passed by the European Parliament,so that the world’s first carbon border regulation mechanism can be truly implemented after being approved by the Council of the European Union.CBAM is a climate strategy to deal with the carbon leakage problem explored by the EU based on the consideration of real national interests and climate governance responsibilities.By raising the cost of carbon emission reduction outside the EU and matching the cost within the EU,it will weaken the motivation of EU enterprises to move out.CBAM has both climate policy and trade measures.China is the second largest trading partner of the EU,and the landing of CBAM is bound to cause considerable impact and shock to China.Therefore,exploring the legitimacy of CBAM according to WTO rules is of great significance to guarantee the competitiveness of Chinese enterprises in the EU market and even in the international market.In addition to the introduction and conclusion,this paper includes four parts:The first part characterized the CBAM.As for the nature of CBAM,there are four propositions in the academic community,namely,"tariff","border regulation tax","domestic cost" and "domestic regulation".By comparing the characteristics of CBAM with customs duty and border adjustment tax,it is found that although CBAM overlaps with domestic regulations,all the above four are in conflict with CBAM.Based on this,CBAM can be defined as a domestic regulation.The second part analyzes whether CBAM fits with the non-discrimination principle.First,the CBAM does not violate the principle of national treatment.There are three reasons.CBAM is a domestic regulation.High carbon products and low carbon products can be defined as the same products,and imported products are not subject to discriminatory treatment.Second,CBATM violates the most-favored-nation treatment principle.The exemption granted to some countries,not unconditional to other countries,is prohibited by the most-favored-nation treatment principle.The second part analyzes whether CBAM fits with the principle of national treatment and most-favored nation treatment.The key to answering this question is whether the high carbon product and the low carbon product are the same product,because the premise that the disputed product is the same product is the application of the above two clauses.Given that carbon emissions will not have any impact on the product itself,and a single factor does not have sufficient proof,it cannot be denied that high carbon products and low carbon products are the same based on the single factor of consumers’ taste and habits.In terms of the relationship between CBM and the principle of national treatment,article 3.4 does not violate the principle of national treatment in controversial measures.In terms of the relationship between CBATM and the most-favored-nation treatment principle,the CBAM does not apply to countries and regions that meet specific conditions,so it does not meet the "unconditional" and "equal treatment" required by the most-favored-nation treatment principle,which constitutes a violation of the most-favoured-nation treatment principle.The third part analyzes whether CBAM can obtain legitimacy according to the general exception clause of Article 20.First of all,CBAM can be regarded as the protection of "natural resources,as well as the life and health of humans,plants and animals" in the EU,and there are sufficient links to support "extraterritorial jurisdiction",so CBAM meets the requirements of "extraterritorial nature".Secondly,CBAM is not only related to the protection of depleted natural resources,but is necessary for the protection of the life and health of humans,animals and plants,but also implemented together with the EU carbon emission trading system,so CBAM meets the requirements of Article 20(b)and(g).However,because the mechanism design of CBAM does not consider the respective capacity of each country,this leads to CBAM to constitute discrimination between countries with different conditions.In addition,CBAM gives immunity to some countries,which also leads to CBAM to constitute discrimination between countries with the same conditions.Therefore,CBAM does not meet the preface part of the general exception clause and cannot confirm the legality of CBAM.The fourth part discusses the challenges and response of CBAM to China.The implementation of CBATM will restrict China’s carbon pricing initiative and have an impact on China’s export trade.However,in the early stage of landing,the adverse effects of CBAM in the field of export trade were mostly concentrated in individual industries such as steel and aluminum.In this regard,China should pay attention to narrowing the gap between carbon pricing in China and Europe to mitigate the impact of CBATM on trade.In addition,they should actively resort to WTO rules to question the legality of CBAM.Not only the WTO rules,but also the WTO rules.In a word,This paper starts with a qualitative approach of CBAM,Then explore the consistency of CBAM and WTO rules from three dimensions: the principle of national treatment,the principle of most-favored nation treatment and article 20 general exception clauses: 1.CBAM belongs to domestic regulations;2.The judgment of a single factor,rejected in the WTO dispute settlement practice,It provides a basis for high carbon products and low carbon products to be characterized as the same products,It is possible for this article to discuss the consistency of CBAM and WTO rules in the context of the non-discrimination principle and the exception clause;3.CBAM constitutes "arbitrary or unreasonable discrimination" in the section of Ordinance 20,There is no legitimacy under the WTO rules.