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WTO Compatibility of Border Tax Adjustments as a Means for Promoting Environmental Protection

Rike U. Krämer

elni Review 2010, Issue 2,  pp. 53-58. https://doi.org/10.46850/elni.2010.007

Even before the United Nations Climate Change Conference in Copenhagen – also known as the 15th Conference of the Parties (COP 15) – failed, a climate protection instrument other than a legally-binding international agreement had been discussed at regional and national level: border tax adjustments (hereafter BTA). Lacking an international agreement, BTAs have been regarded as another option for creating a level playing field between states with an ambitious climate protection regime and states without such regulations. Not only did drafts for a US climate law provide the opportunity for establishing BTAs (not yet enacted) such measures were also discussed within the European Union.
Yet, some concerns have been recently expressed about BTAs. Apart from practical questions (e.g. measuring the carbon impact and the tax tariff) legal questions concerning BTAs have been raised, especially the legality of BTAs under World Trade Organisation (WTO) law. While not dealing with the specificities of the applicability of BTAs in greater detail, this article aims to provide a broad overview of the potential of BTAs to promote environmental protection and their compatibility with WTO law. In order to do so, the rationale behind BTAs and the mechanism of achieving a level playing field with this instrument are examined, a definition of BTAs is provided and the question of the legality of BTAs under WTO law is addressed in a general context.

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