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A Proposal for a Multilateral Border Carbon Adjustment Scheme that is Consistent with International Trade Law if the Trump Administration withdraws from the Paris Agreement

Published on May 22, 2017        Author: 

On the campaign trail, President Trump repeatedly promised to “cancel the Paris Climate Agreement and stop all payments of US tax dollars to UN global warming programs”. He had previously called global warming a “hoax” and a “con” numerous times, and “a concept created by and for the Chinese in order to make US manufacturing non-competitive.” Although Trump quietly dropped his pledge to cancel the Paris Agreement from his 100-day “Contract with the American voter”, and has since said that he “has an open mind” on the Paris Agreement, there remains at present a fierce debate within his administration on whether to withdraw, with no final decision expected before the end of the G-7 summit on May 26 and 27.

The essential thesis of this blog post, which summarizes a longer paper available on SSRN, is that international trade law will permit border carbon adjustments (BCAs) on products from the US, if the Trump Administration withdraws from the Paris Agreement, so long as these schemes are well-designed to avoid the World Trade Organization (WTO) prohibitions on arbitrary or unjustified discrimination and on disguised protectionism, as interpreted by the WTO’s Appellate Body in its US–Shrimp report and US–Shrimp 21.5 decision. This post proposes a multilateral border carbon adjustment scheme (MBCA) that other countries could agree to impose on the US should it withdraw from the Paris Agreement.

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