Analysis of the Legitimacy of Carbon Border Adjustment Mechanisms and China's Legal Response
DOI:
https://doi.org/10.54097/jczf7r42Keywords:
CBAM, climate governance, WTO regulations, Chinese strategy.Abstract
Carbon Border Adjustment Mechanism (CBAM) (has been established as the world's inaugural climate-related trade regulatory measure. The imposition of levies on carbon-intensive products entering the European Union (EU) market is intended to prevent carbon leakage and serve as a complementary scheme to the EU Emissions Trading System, thereby ensuring a level competitive playing field between domestic and foreign enterprises. However, it has been alleged that this practice may potentially contravene legal principles. The present paper employs a dual-pronged approach of literature review and legal text analysis to elucidate the conflicts between CBAM and the ‘common area principle’ in climate governance, as well as its inconsistencies with World Trade Organization (WTO) and most-favored-nation (MNF) treatment principles. The proposal sets out China’s response strategies from both domestic and international perspectives. Internally, the strategy involves refining the legal framework for carbon markets and exploring the potential for domestic carbon tax legislation. Externally, it advocates for the effective utilization of the WTO dispute settlement mechanism to safeguard the legitimate rights of export enterprises. The objective of this paper is to furnish a reference point for China's response to CBAM.
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