The World Trade Organization and Global Warming Crisis: Analysis on the Carbon Border Adjustment Mechanism of the European Union

Abstract

In 1998, the World Trade Organization (WTO) Appellate Body underscored the importance of the “conservation of endangered species,” specifically sea turtles, equating its value to that of “economic efficiency” as defined by the theory of comparative advantage. It ruled that the United States’ ban on shrimp imports from India, Pakistan, Malaysia, and Thailand, was permissible under Article 20 (g) of the General Agreement on Tariffs and Trade (GATT) due to the exhaustible nature of sea turtles as a natural resource regardless of the inconsistency with Article 11 of the GATT. Consequently, comparing this decision to the European Union’s Carbon Border Adjustment Mechanism (EU-CBAM), it may be concluded that should a dispute arise within the WTO’s dispute settlement framework, the Panel or Appellate Body—acutely aware of the ongoing “global warming crisis”—would likely balance “conserving the Earth’s atmosphere,” which is a universal value on reducing greenhouse gas emissions to prevent a global temperature rise exceeding 2 degrees Celsius by 2050 with “economic efficiency.” This choice will lead to the conclusion that the EU-CBAM should also be justified under Article 20 (g) of the GATT.