A Canadian Border Carbon Adjustment? GATT Compliance and Underexplored Exceptions

Abstract

Canada is one of thirty-one countries covered by a national carbon pricing mechanism. Complementary border carbon adjustment (BCA) on imports is the next step for preventing carbon leakage from these thirty-one jurisdictions. Existing commentary assessing the legitimacy of a BCA under the General Agreement on Tariffs and Trade (GATT) focuses on the European Union (EU) and the United States (US) and favours the more conventionally used exceptions for protecting environment and conserving natural resources through Articles XX(b) and (g). This article contributes to the literature by flagging that Article XX(b) may not be the most promising route for Canada and provides a fresh characterization of Article XX(g). This article further breaks with convention and takes the road less trod by considering the strength of Articles XX(a) public morals, (d) compliance with laws and regulations, (f) national treasures, and XXI security exceptions. It is challenging to fit modern solutions to complex problems into the GATT, but the WTO needs to demonstrate its responsiveness to change in order to maintain relevancy and legitimacy. Afterall, there can be no trade on a dead planet. Border carbon adjustment, WTO, Article XX GATT, Article XXI GATT, Canada, climate change, climate action, carbon pricing