China has insisted that the European Union’s (EU) carbon border adjustment mechanism (CBAM) is not compliant with global trading rules. It has asked the EU to justify its incoming carbon border tax at the World Trade Organization (WTO). This move suggests that China may challenge the law at Geneva’s trade courts.
According to China, environmental objectives should be consistent with the fundamental principles and basic rules of the WTO.
As part of China’s proposal at the WTO, the EU will have to defend its measure, including:
- Defend the legality of the measure
- Explain its environmental objectives
- Justify the consistency of the measure with WTO rules and its impact on developing members.
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