Analysts: Carbon border fees can be compatible with WTO rules

Inside U.S. Trade

While World Trade Organization rules do not provide explicitly for carbon-related border fee arrangements such as a carbon border adjustment mechanism, various provisions in those rules should provide enough flexibility to allow for them, analysts argued on Wednesday.

During an event hosted by the Climate Leadership Council, two former WTO Appellate Body members, building on a new CLC report titled “Carbon Import Fees and the WTO,” said that while existing rules offer opportunities for various climate-related efforts, tweaking those rules or launching new negotiations could be even more effective.

The report, written by CLC Vice President for Policy and Research Matt Porterfield, outlines a series of “WTO defenses” for “carbon import fees,” the CLC’s catch-all term for duties imposed at the border based on carbon emissions. Some border tax adjustments – considered “indirect” carbon taxes – “would likely be found permissible under the WTO’s rules on border tax adjustments,” the report’s executive summary says.

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