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The EU Carbon Border Adjustment Mechanism and WTO Law - Is the EU’s CBAM compatible with WTO regulations?

Ismayilzada, Fuad LU (2025) HARN60 20251
Department of Business Law
Abstract
The Carbon Border Adjustment Mechanism, introduced by Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (hereinafter ‘CBAM’), represents one of the major steps of the European Union (hereinafter ‘EU’) to combat carbon leakage. Since CBAM is currently in its transitional phase till December 31, 2025, the implications are still debatable. Nevertheless, many countries have already expressed concerns about the potential “protectionist” nature of CBAM.
During the transitional period of CBAM, importers of specific goods — including iron, steel, cement, fertilizers, aluminium, hydrogen, and electricity — are required to report the embedded greenhouse gas... (More)
The Carbon Border Adjustment Mechanism, introduced by Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (hereinafter ‘CBAM’), represents one of the major steps of the European Union (hereinafter ‘EU’) to combat carbon leakage. Since CBAM is currently in its transitional phase till December 31, 2025, the implications are still debatable. Nevertheless, many countries have already expressed concerns about the potential “protectionist” nature of CBAM.
During the transitional period of CBAM, importers of specific goods — including iron, steel, cement, fertilizers, aluminium, hydrogen, and electricity — are required to report the embedded greenhouse gas emissions (hereinafter GHG) associated with their imports. After all, CBAM will apply in its definitive regime from 2026.
Mainly, the writing of this thesis is inspired by the ongoing “European Green Deal” (hereinafter Green Deal), which aims to reduce net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. The Green Deal, which was first presented in 2020, established the foundation for a series of measures aimed at making the EU climate-neutral by 2050. CBAM, as a main component of this agenda, is designed to equalize the carbon cost between domestic products subject to the EU Emissions Trading System and imports from third countries that may not impose similar carbon pricing mechanisms.
The compatibility of CBAM with the World Trade Organization's (hereinafter WTO) legal framework is a vast area of research. The author in this thesis examines whether CBAM is a discriminatory trade measure that violates fundamental WTO principles, such as Most Favored Nation (hereinafter MFN) and National Treatment (hereinafter NT) under the General Agreement on Tariffs and Trade (hereinafter GATT) 1994.
Overall, this thesis is structured into three main parts: first, an overview of the legal nature and framework of both CBAM and the WTO; second, a comparative analysis of CBAM in light of WTO provisions; and third, an exploration of the possible legal ways for challenging CBAM.
The thesis additionally examines the legal remedies available to non-EU countries that desire to contest CBAM, including the analysis of the WTO Dispute Settlement Body. (Less)
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author
Ismayilzada, Fuad LU
supervisor
organization
course
HARN60 20251
year
type
H1 - Master's Degree (One Year)
subject
keywords
CBAM, WTO law, BTA, GATT 1994, EU Climate Policy, CBDR
language
English
id
9192073
date added to LUP
2025-06-05 10:48:13
date last changed
2025-06-05 10:48:13
@misc{9192073,
  abstract     = {{The Carbon Border Adjustment Mechanism, introduced by Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (hereinafter ‘CBAM’), represents one of the major steps of the European Union (hereinafter ‘EU’) to combat carbon leakage. Since CBAM is currently in its transitional phase till December 31, 2025, the implications are still debatable. Nevertheless, many countries have already expressed concerns about the potential “protectionist” nature of CBAM. 
During the transitional period of CBAM, importers of specific goods — including iron, steel, cement, fertilizers, aluminium, hydrogen, and electricity — are required to report the embedded greenhouse gas emissions (hereinafter GHG) associated with their imports. After all, CBAM will apply in its definitive regime from 2026.
Mainly, the writing of this thesis is inspired by the ongoing “European Green Deal” (hereinafter Green Deal), which aims to reduce net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. The Green Deal, which was first presented in 2020, established the foundation for a series of measures aimed at making the EU climate-neutral by 2050. CBAM, as a main component of this agenda, is designed to equalize the carbon cost between domestic products subject to the EU Emissions Trading System and imports from third countries that may not impose similar carbon pricing mechanisms.
The compatibility of CBAM with the World Trade Organization's (hereinafter WTO) legal framework is a vast area of research. The author in this thesis examines whether CBAM is a discriminatory trade measure that violates fundamental WTO principles, such as Most Favored Nation (hereinafter MFN) and National Treatment (hereinafter NT) under the General Agreement on Tariffs and Trade (hereinafter GATT) 1994.
Overall, this thesis is structured into three main parts: first, an overview of the legal nature and framework of both CBAM and the WTO; second, a comparative analysis of CBAM in light of WTO provisions; and third, an exploration of the possible legal ways for challenging CBAM. 
The thesis additionally examines the legal remedies available to non-EU countries that desire to contest CBAM, including the analysis of the WTO Dispute Settlement Body.}},
  author       = {{Ismayilzada, Fuad}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The EU Carbon Border Adjustment Mechanism and WTO Law - Is the EU’s CBAM compatible with WTO regulations?}},
  year         = {{2025}},
}