9 June 2022
BCAs will likely need to account for foreign climate regimes by reducing charges on imports based on carbon payments made in the country of export, to ensure exporters aren’t paying twice for the same emissions. [...] Most-Favoured Nation Treatment The GATT requires a country imposing taxes or regulatory charges on imports to treat the products of all exporting countries as favourably as it treats the goods from its most favoured nation. [...] While BCA charges that vary based on the embedded carbon content of imports from different countries may be challenged based on some historical jurisprudence, we believe they should be defensible under a purposive application of the MFN obligation because the combination of the charges imposed in the home jurisdiction plus the BCA would be the same for all exporting countries. [...] The Article XX Exceptions BCAs that do not meet national treatment or MFN treatment requirements might be defended using general exceptions in GATT Article XX: measures “necessary for the protection of human, animal or plant life or health,” or “relating to the conservation of exhaustible natural resources.” The implementation of the measure must not operate in a way that unfairly restricts intern. [...] For example, if adjustments for home-country carbon pricing were found to contravene the MFN obligation, they would be good candidates for an exception because consideration of home-country carbon costs would be consistent with the objective of reducing carbon emissions globally.