Chapter 4: Border adjustment practices in international trade
Following on from the discussion on the climate policy perspective on border adjustment, the book now turns to examine a border carbon adjustment from the perspective of international trade. This chapter begins by clarifying the concept of border adjustment as it is perceived at the WTO, discussing the history and evolution of the border adjustment practices used to accomplish a variety of public policy objectives. It then examines the legal framework established under the WTO Agreement for the application of BAMs. It should be noted that this chapter gives an overview of WTO disciplines that apply to border adjustments in general. The WTO rules that would apply to BAMs that are set based on production methods and that are specifically tied to the carbon footprints of products are discussed in Chapter 5. Border adjustment is generally an acceptable practice at the WTO. Border adjustment is primarily aimed at leveling the playing field for domestic and foreign producers through the extension of domestic regulatory measures to imports or the non-application of domestic measures to national exports.
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