Leveling the Playing Field: The International Legality of Carbon Tariffs in the EU

Abstract

In the absence of any robust international agreements to combat climate change, some countries undertake climate change policy unilaterally. One such example is the European Union’s emissions trading system, a government program that sets the quantity of authorized carbon emissions in the EU. This system, however, places the EU’s energy-intensive industries at a competitive disadvantage compared to foreign firms without similar environmental restrictions. In order to level the playing field, some have proposed carbon border taxes or “carbon tariffs.” This Note assesses the legality of these proposed carbon tariffs under the General Agreement on Tariffs and Trade, part of the World Trade Organization. Because such tariffs will likely violate the main text of the GATT, this Note examines whether Article XX exceptions may apply to permit carbon tariffs. The Note concludes that despite the importance of climate change mitigation and the recent liberalization of WTO jurisprudence, Article XX should not be interpreted so broadly as to permit the introduction of carbon tariffs in the EU.