The International Law Reading of the EU Carbon Border Adjustment Mechanism (CBAM)

The EU Carbon Border Adjustment Mechanism (CBAM), established by Regulation (EU) 2023/956 of 10 May 2023, aims to realise the EU climate ambition and leadership primarily by preventing the risk of carbon leakage in furtherance of the goals of the Paris Agreement of 12 December 2015. This also entails promoting decarbonisation in third countries, including in newly industrialized countries that may be still categorized as developing. This article provides an assessment of the legality of the CBAM under international law, namely pursuant to international trade law, especially the law of the World Trade Organization (WTO), and international environmental law, notably under the international climate change regime (ICCR). This article highlights that the CBAM, while being overall WTO compatible, fails to adequately address the principle of common but differentiated responsibilities (CBDR) that is cardinal within the ICCR. In this respect, the introduction of differential treatment in favour of least developed countries (LDCs) would strengthen the legitimacy of the European climate ambition and leadership.