I had commented on the EU CBAM and it's potential challenge under the WTO dispute settlement system here. The other question it raises is setting of standards outside multilateral fora. Since carbon tariffs or penalties on imports based on carbon content are not being negotiated in any multilateral fora, individual countries are going ahead with their own set of rules. While the compatibility to international trade rules is one issue, how these standards ultimately will become global norms is another interesting arena of research. Will these rules, ipso facto, force trade reliant emerging economies to adopt them despite no legal need to do so?
Harvard Law Review has this piece on the reality of carbon tariffs and their impact on trade and how countries would react to them. Though carbon tariffs have an ambiguous status under international law, it argues that it seems to be the only way forward to address the issue of climate change. Pointing towards the indirect benefit carbon tariffs may have on other economies, it states:
As access to large and valuable markets like the United States and the European Union becomes predicated on a showing that comparable climate policies are at work in the exporting state, more and more trade-dependent economies that might not otherwise adopt rigorous climate policies will be compelled to show that they too are complying with the Paris targets, further expanding the body of state practice. These effects may not produce a critical mass of state practice and legal obligation and may not overcome the inertial effects of persistent objectors, but they will almost certainly move the needle in the right direction.
Will the EU CBAM lead to the widespread adoption of carbon tariffs in emerging economies? Will they be challenged in the WTO? Will it lead to re-negotiation of the Paris Climate Agreement commitments? How ultimately are international standards set? My initial moves by large developed economies and inevitable adoption by others or in a more structured multilateral way?
What lessons does this have for internet governance and the rules around it? Who will set the rules for internet governance, digital tax, digital governance, privacy and trade? Will it take a similar route of a few taking the initiative and others following suit?
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