INTERNATIONAL LEGAL ASPECTS OF THE RELATIONSHIP OF THE EU CARBON BORDER ADJUSTMENT MECHANISM WITH THE PRINCIPLES OF INTERNATIONAL TRADE

Abstract

The article examines the compliance of the EU Carbon Border Adjustment Mechanism (CBAM), introduced by Regulation (EU) 2023/956, with the core principles of international trade under the GATT 1994.It analyses the relationship between CBAM and the Most-Favoured-Nation treatment (Article I), National Treatment (Article III), freedom of transit (Article V), as well as the transparency and due-process requirements enshrined in Article X. Special attention is given to the risks of discrimination arising from the design and implementation of «Monitoring, Reporting and Verification» procedures (MRV), the use of default values, the criteria for recognising foreign carbon-pricing systems, and access to accredited verifiers. The article assesses the relevance of process and production methods (PPMs) for determining “like products” under Articles I and III of the GATT. Drawing on WTO dispute settlement jurisprudence (European Communities – Asbestos (WT/ DS135/AB/R), European Communities – Seal Products (WT/DS400/AB/R), Brazil – Retreaded Tyres (WT/ DS332/AB/R), European Union – Biodiesel (WT/DS473/AB/R)), it demonstrates that formal regulatory neutrality does not preclude differentiated de facto effects. It is argued that transparency, technological neutrality and procedural consistency within MRV constitute autonomous criteria for assessing CBAM’s lawfulness under Article X. The article further evaluates the application of the two-tier test under Article XX GATT, including the necessity, proportionality and non-arbitrary/non-unjustifiable discrimination requirements. It is emphasised that the outcome of the dispute russia – European Union (CBAM) (WT/DS639/1) will be of systemic importance for determining the international legitimacy of CBAM and for the future evolution of global approaches integrating environmental and trade policies.