The WTO permissibility of border trade measures in climate change mitigation

Abstract: The purpose of this thesis is to examine the permissibility of border trade measures undertaken with a climate change rationale under the current regulatory environment of the WTO. Three interconnected angles regarding such permissibility have been examined. An overview was made of the current WTO regulation with regards to its potential impact on climate motivated border measures. This section found that WTO law in several cases leave potential room for approval for border measures undertaken with an environmental purpose such as climate change. However, it was also found that considerable uncertainty still remained regarding hard application of many of these rules. The very sizable difference in scale between previous WTO case law with environmental aspects when compared to the potentially enormous trade impact of permissible climate border measures also made caution necessary when drawing conclusions from them. Article XX of the GATT stating the general exceptions in that agreement was examined in some detail due to its potentially great importance in establishing the permissibility of any border measure undertaken with a climate change purpose. Though contingent on several crucial factors such as integrity of purpose, implementational details, the exact nature of potential discriminatory effect and WTO jurisprudence, it was found that Article XX recourse for climate motivated border measures can not be discounted ex ante. Building on the knowledge gained in the first chapter, the second chapter seeks to examine the permissibility of some of the most popularly discussed border climate measures when confronted with WTO law. They were overall found to be problematic to square with WTO regulation in any clear sense. Border tax adjustments is arguably found to be the front-runner for permissibility although it may encounter serious problems due to the nefariously complex process of trying to measure ‘upstream’ carbon which may become necessary to implement a fair adjustment. The last chapter, building on the previous two, is a response to the likelihood that the ultimate permissibility of climate border measures will come to rely on future policy developments. Thus, a number of the most likely WTO policy options with regards to determining permissibility are briefly examined with preference for a multilaterally crafted agreement.