This article examines the problematic interaction between two branches of public international law, namely, international environmental law and trade law, focusing on the growing tension between environmental commitments and the current World Trade Organization ("WTO") subsidy framework in the context of the green transition. It analyzes whether the existing WTO system was designed to accommodate and is capable of supporting comprehensive green subsidies that are increasingly adopted by states as part of their green industrial policies. Using a doctrinal, jurisprudential, and policy-based analysis of WTO subsidy rules, the article finds that the current WTO framework provides limited legal space and significant legal uncertainty for large-scale green subsidies. It further observes that this misalignment unfolds at a time when the WTO Dispute Settlement Body, which would normally provide multilateral remedies, remains dysfunctional due to the absence of a functioning Appellate Body. In this context, unilateral measures, i.e., countervailing duties ("CVDs"), are increasingly seen as the primary recourse, further intensifying trade tensions and potentially leading to an undesirable green CVD war. This article contributes to the literature by illustrating how the interaction between green industrial policies, WTO subsidy disciplines, and trade remedies generates new forms of conflict within the multilateral trading system, with significant implications for both environmental policy objectives and the stability of international trade relations.
Mustafa Durmuş (Tue,) studied this question.