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Opinion | EU must rethink its carbon border tax to sidestep potential legal problems
- The scheme would lead to different prices within the EU for the same or similar products, potentially flouting the WTO principle of non-discrimination
- Any major legal problem may well place a stigma on the project, and provide the best weapon to critics and foot-dragging countries to derail it
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Why you can trust SCMP
The European Union has unveiled an ambitious proposal to tackle the global climate crisis. Most notable in Brussels’ forward-looking climate package is a scheme to impose, from 2026, an extra charge on imports manufactured abroad under decarbonisation standards that fall below the EU’s.
This Carbon Border Adjustment Mechanism is the first concrete plan to apply real trade teeth to greenhouse gas emissions.
Given the urgency of coping with global climate change, the EU’s move is both timely and laudable. Climate change poses a global threat that requires swift joint action on all fronts. A trade restriction measure at the border by a major market such as the EU would be all the more effective in getting “slow” countries to fall in line.
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The only thing is the legal issue: is this novel scheme compatible with trade norms, most notably the WTO agreements?
02:27
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One might say that if the direction is correct, legal problems should not stand in the way. This is wrong, or at least naive. Any major legal problem may well stigmatise the project, and provide the best weapon to critics and foot-dragging countries to derail it.
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