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Climate Border Adjustments and WTO Law
Extending the EU Emissions Trading System to Imported Goods and Services
Series: - Nijhoff International Trade Law Series, Volume: 17
Author:
In Climate Border Adjustments and WTO Law, Ulrike Will develops a convincing reform proposal for a climate border adjustment (BA) on imports within the EU Emission Trading System (ETS). The proposed framework offers a realistic approach which would be immune to disputes at the WTO and comply with international climate agreements while remaining economically feasible and straightforward to implement.
The book offers a comprehensive analysis of the WTO cases that might have parallels to the unresolved case of BAs. It provides interpretations of vague legal terms of the applicable WTO agreements and guidance on how to balance between environmentally related and trade liberalising WTO rules. Typified constellations of BAs pave the way for a reform of the EU ETS Directive.
The inclusion of legal findings in the context of economic theory and climate science allows for a meaningful discussion of the functioning of the BA, relevant markets and competitive effects of specific design proposals. The proposed framework also takes into account the prevention of extra-jurisdictional effects.
The book offers a comprehensive analysis of the WTO cases that might have parallels to the unresolved case of BAs. It provides interpretations of vague legal terms of the applicable WTO agreements and guidance on how to balance between environmentally related and trade liberalising WTO rules. Typified constellations of BAs pave the way for a reform of the EU ETS Directive.
The inclusion of legal findings in the context of economic theory and climate science allows for a meaningful discussion of the functioning of the BA, relevant markets and competitive effects of specific design proposals. The proposed framework also takes into account the prevention of extra-jurisdictional effects.
Ulrike Will, Ph.D. (2018) European University Viadrina Frankfurt (Oder), Germany, is a Researcher in the project âIncentives, Fairness and Compliance in International Environmental Agreementsâ (InFairCom) at the Leipzig University of Applied Sciences in Germany.
Acknowledgments List of Abbreviations List of Figures and Tables 1 Introduction 2 The EU Emissions Trading System Leading to Carbon Leakage Effects â2.1 United Framework Convention on Climate Change, Kyoto Protocol and Paris Agreement â2.2 EU Emissions Trading System (ETS) â2.3 Carbon Leakage Effects and Competitive Disadvantages â2.4 Current Approaches to Carbon Leakage in the EU ââ2.4.1 Export Rebates and Carbon Leakage List ââ2.4.2 The Extension of the EU ETS to International Flights ââ2.4.3 Proposal for an Import BA for Cement and Clinker â2.5 Result: The Need for an Import Carbon Leakage Policy 3 Trade Measures to Resolve the Carbon Leakage Problem â3.1 Measures between Trade Liberalisation and Trade Restriction â3.2 Committee on Trade and Environment â3.3 Doha Round and Environmental Goods Agreement â3.4 Unilateral Instruments ââ3.4.1 Import Ban, Quota and Standard ââ3.4.2 Carbon Tariff ââ3.4.3 Border Adjustment (BA) and the Integration into the EU ETS ââ3.4.4 Linking the EU ETS with other ETSs â3.5 Climate-Related Trade Instruments within Preferential Trade Agreements ââ3.5.1 Recognition and Harmonisation of Climate-Related Standards ââ3.5.2 Conditional Tariff Policy ââ3.5.3 A Common Border Adjustment ââ3.5.4 Linking the EU ETS with Other ETSs â3.6 Result: Unilateral BA for the EU ETS 4 Structuring the BA in the WTO Context â4.1 Focus on Imports â4.2 Aims â4.3 Interests â4.4 Effects â4.5 Provoking or Avoiding WTO Disputes? â4.6 The Multiple Legal Nature of ETS, BAs and Certificates â4.7 The Impact of International Climate Agreements on WTO law â4.8 Result: BA on Imports Complementing the EU ETS 5 ETS and BA Restricting Trade in Goods â5.1 Measures at Issue: ETS and BA as Complementary Measures â5.2 Constellations of Discrimination â5.3 ETS and BA as Domestic Fiscal Measure ââ5.3.1 BA as a Charge Equivalent to an Indirect Tax ââ5.3.2 ETS and BA as Fiscal Measure ââ5.3.3 BA Not Charging Foreign Products in Excess of Domestic Like Products ââ5.3.4 Taxing Foreign Products Similarly Compared to Competitive EU Products â5.4 BA as Domestic Non-Fiscal Measure â5.5 BA as a Restriction on Market Access â5.6 Different BAs for Different Countries and the Most-Favoured Nation Treatment ââ5.6.1 Advantage ââ5.6.2 Like Products ââ5.6.3 Advantage Accorded Immediately and Unconditionally ââ5.6.4 Exceptions for Developing Countries (Enabling Clause) ââ5.6.5 Exceptions for Preferential Trade Agreements â5.7 How to Avoid Restrictions of Article III GATT â5.8 ETS and BA as Climate Measures under the General Exceptions ââ5.8.1 Climate-Related Concerns the ETS and BA Seek to Protect ââ5.8.2 Regulatory Autonomy for Climate Policy ââ5.8.3 Necessity Test ââ5.8.4 âRelating toâ Requirements ââ5.8.5 Exclusion of Disguised Discrimination ââ5.8.6 Limiting Extra-Jurisdictional Effects â5.9 How to Avoid Restrictions of Article XX GATT â5.10 Notification and Transparency â5.11 Result: BA without Emissions-Based Product Distinctions 6 ETS and BA Implying Technical Regulations or Standards â6.1 Measures at Issue: ETS and BA as Complementary Measures ââ6.1.1 Technical Standards ââ6.1.2 Technical Regulations â6.2 Constellations of Discrimination and Restriction â6.3 Climate-Related Concerns the ETS and BA Seek to Protect â6.4 Necessity Test â6.5 Non-Discrimination of Foreign Products ââ6.5.1 Like Products ââ6.5.2 Treatment No Less Favourable and Exclusion of Disguised Discrimination â6.6 Limiting Extra-Jurisdictional Effects â6.7 Notification and Transparency â6.8 Technical Assistance â6.9 Special and Differential Treatment of Developing Countries â6.10 Result: Product-Based BA Complying with the TBT Agreement 7 ETS and BA Affecting Trade in Services â7.1 Measures at Issue: ETS Alone or ETS and BA as Complementary Measures â7.2 Constellations of Discrimination and Affected Services â7.3 EU Schedule of Commitments in the Relevant Sectors â7.4 Restriction of Environmental Services â7.5 Restriction of Financial Services ââ7.5.1 The EU Schedule and Financial Services ââ7.5.2 Exclusion of Foreign Certificates as Market Access Restriction ââ7.5.3 National Treatment of Foreign Certificates ââ7.5.4 Most-Favoured Nation Treatment of Non-Kyoto Certificates â7.6 Restriction of Aviation Services ââ7.6.1 Chicago Convention Relevant for the EU? ââ7.6.2 Jurisdiction ââ7.6.3 The GATS Annex on Air Transport Services ââ7.6.4 Inclusion of International Flights into the EU ETS Providing Full Market Access? ââ7.6.5 Treating Foreign as Favourably as EU Flights? ââ7.6.6 Comparison between Non-Kyoto States and Kyoto States â7.7 ETS and BA as Climate Measures under the General Exceptions ââ7.7.1 Climate-Related Concerns the ETS and BA Seek to Protect ââ7.7.2 Necessity Test ââ7.7.3 Exclusion of Disguised Discrimination ââ7.7.4 Limiting Extra-Jurisdictional Effects â7.8 Participation of Developing Countries â7.9 Transparency â7.10 Result: Recognition of Foreign Certificates that Contribute to Climate Protection 8 Reform Proposal for an Import BA for the EU ETS â8.1 Emissions-Based Approach: Integration into the EU ETS ââ8.1.1 Measurement, Calculation ââ8.1.2 Necessary Reforms of the EU ETS â8.2 Price-Based Approach: BA Equivalent to the Restriction of the ETS Per Product or Service ââ8.2.1 Measurement, Calculation ââ8.2.2 Necessary Reforms of the EU ETS â8.3 Simplifications and Exemptions ââ8.3.1 Limitation of Sectors ââ8.3.2 Threshold ââ8.3.3 Foreign Climate Policies ââ8.3.4 State of Development â8.4 Use of Revenues from the BA â8.5 Moment of Adjustment â8.6 Result: Price-Based Import BA for the EU ETS 9 Outlook Bibliography Index
Trade lawyers, environmental lawyers, practitioners involved in the reform process of the EU ETS Directive, economists, and political scientists doing interdisciplinary research on climate protection and international trade.