Review On Border Carbon Adjustments Under Climate Change

In order to set a post-2012 emission reduction target, in the area of climate change, an individual party requires others to make comparable commitments. The climate change negotiation has been queered by the European Union and the United States, which have, in the recent past, made attempts to include certain unilateral trade measures in their domestic climate change regimes. The developed countries resorts to border carbon adjustments on imports from developing countries not implementing comparable GHGs emissions reduction policies on the grounds of addressing the risk of "carbon leakage" and competitiveness losing. Because they fears that climate change commitments in one part of the world only would put industries in that part, especially the energy and carbon-intensive ones, at a disadvantage in the international marketplace, for some developing countries, are not bound by mitigation commitments. Furthermore, according to the developed countries, rapid increases in emissions from large developing countries may offset the emission reduction efforts by the industrialized countries. In keeping with the above arguments, law makers in both the US and the EU have proposed introduction of BCAs in order to obviate the disadvantages. It is widely argued by developing countries that such BCAs on imports would be akin to protectionism in the guise of preventing global warming. Concerns have emerged among the so-called 'major-emitting developing countries'(such as, China and India), who are the main target of such measures, that these measures could act as a discriminatory market access barrier. Hence, it is apprehended by them that the proposals to impose such BCAs may act as an effective threat to induce them to undertake binding emission reduction commitments in the ongoing climate negotiations. Another issue pertaining to such BCAs is whether they could be compatible with the WTO commitments of the countries introducing such measures. Against this backdrop, this paper focuses on legal and economic aspects of the BCAs stemming from emissions reduction policies, intending to provide some points in this debate from a Chinese perspective.