Border tax adjustments and the WTO Law compatibility of ETS/CBAM export rebates: Aut Simul Stabunt, Aut Simul Cadent

The European Parliament’s June 2022 proposed amendments on the inclusion of export rebates under the ETS/CBAM raise a number of questions. This paper focuses on the question of the WTO law compatibility of this proposal, following a specific analytical approach and enquiring into the potential categorisation of the ETS/CBAM as adjustable product taxes or charges. The analysis cuts across relevant provisions in the GATT 1994 and the SCMA, and addresses five questions in turn. To begin with, the paper enquires whether the CBAM would qualify as a (i) charge; (ii) equivalent to an internal tax or charge; (iii) that is imposed on products; (iv) consistently with Article III:2 GATT. It suggests that all of these questions may be answered in the negative; this would make ETS/CBAM export rebates WTO law incompatible. If all of these questions except the fourth were answered positively, the BTA and export rebates may still be ‘saved’ under Article XX GATT and the Chapeau thereof; this would also ‘save’ ETS/CBAM export rebates. However, this is unlikely to occur. The structure, design and practical application of the CBAM are rather difficult to reconcile with the Chapeau requirements. Against this backdrop, the paper concludes that ETS/CBAM export rebates are unlikely to be WTO law compatible