Since the Canada-Renewable Energy/FIT Program (2013) dispute at the World Trade Organization (WTO), it has become almost conventional wisdom in the scholarship that a clash exists between international climate change mitigation goals and WTO law, with a growing consensus (if not anxiety) that WTO subsidy rules ought to be reformed in order to safeguard 'policy space' for government support to renewable energy. It is contended here that, in several ways, such a call for reform has been misconceived and needs to be recalibrated. This is mainly because the case for reform has been seldom evaluated in light of State practice beyond that particular WTO dispute, nor informed by an in-depth assessment of how different clean energy subsidies will fare under existing WTO subsidy disciplines. Our aim here is to fill this gap in the existing literature. In particular, our analysis shows that the main problem is neither feed-in tariffs per se, nor the multilateral disputes that have been brought before the WTO dispute settlement bodies. For this reason, we argue that the applicability of Article XX GATT to the Agreement on Subsidies and Countervailing Measures (SCM Agreement), which has been often suggested in academic writings, is not the solution towards ensuring greater supportiveness between international trade and climate change regimes. In fact, such an avenue will provide no legal shelter for those climatefriendly energy subsidies that have actually been at a higher risk under current WTO rules (i.e. through unilateral remedial action). Conversely, the other common proposal of introducing a specific exemption into the SCM Agreement for certain 'good' renewable energy subsidies appears most effective from a mutual supportiveness perspective, but faces considerable political and practical hurdles at the present junction.
The European Union (EU) is contemplating the adoption of a carbon border adjustment mechanism (CBAM), which would extend its domestic carbon price to emissions that are produced outside its borders but are embodied into its imports of carbon-intensive commodities. In doing so, the EU is testing the boundaries of permissible unilateral action at the interface of international climate and trade law. However, the question of whether the proposed CBAM is compatible with these two multilateral legal regimes is yet to be addressed in an integrated manner. This article seeks to fill this gap in the scholarship and makes two main arguments. First, the CBAM as presently designed does not respect the principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDRRC) and needs to be adjusted through two forms of differential treatment: a full exemption for least-developed countries and Small Island Developing States and the use of CBAM-generated revenue to support decarbonisation efforts in other affected developing countries. Secondly, this CBDRRC-based differentiation should be permissible under WTO law on the grounds that it does not amount to discrimination between countries where the same conditions prevail.
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