EU CARBON BORDER ADJUSTMENT MECHANISM: OPPORTUNITIES AND CHALLENGES

Abstract

The European Union plans to introduce a levy on greenhouse gases emitted during the production of goods and services that will be imported into the Single Market. The European Commission presented the Carbon Border Adjustment Mechanism (CBAM) in July 2021. Respect of the principle of the most-favorite nation and the principle of national treatment are crucial for its WTO compliance. The introduced measures must not represent arbitrary or unjustifiable discrimination. The CBAM should ensure a level playing field in the EU Single Market and protect the products and services of European companies from unfair competition from imported products and services for which no or lower level of levy has been paid on greenhouse gas emissions. Proper implementation of this mechanism will contribute to reducing greenhouse gas emissions and will also stimulate the development and introduction of new cleaner technologies globally. The European Union, through the CBAM intends to encourage other countries to introduce mechanisms similar to those contained in the European Green Deal.