The EU Carbon Border Adjustment Mechanism (CBAM) is an effort by the EU to fight climate change by bolstering cleaner production methods, supporting climate mitigation, and promoting sustainable development.1 It requires importers into the EU to pay a levy on carbon emissions released during the production of their carbon-intensive goods, as if the good were produced under the EU’s Emission Trading System (ETS). As the intersection of international trade and climate issues is center stage in international dialogue, the CBAM emerges at a time of heightened urgency and interest.

The CBAM has already received and is likely to receive more international attention. So, while this Note argues that it is likely compliant with World Trade Organization (WTO) rules pursuant to the national treatment and most favored nation (MFN) treatment obligations, it may nevertheless be challenged under the current WTO regime. This Note offers an analysis of possible defenses under Article XX of the General Agreement on Tariffs and Trade (GATT) but highlights the concerning vulnerabilities of these defenses regarding environmental measures and their urgent need for reform. Instead, this Note proposes that the current rise of the climate-security nexus may present an opportunity for the EU to assert an Article XXI national security defense. International cooperation on trade-related climate policy will be crucial in the coming decades, and acknowledging a climate-security defense by broadening the national security definition could give the WTO the opportunity to facilitate the harmonization of these two fields. Broadening the scope of national security definition may facilitate negotiations among WTO Members toward a general agreement on carbon abatement policies, thereby reducing litigation and appealing into the void—all with positive effects on WTO integrity and buy-in to the Appellate Body. So, while the CBAM has sparked disagreement among WTO Members, it has also created the perfect climate for the WTO to redefine environmental-trade relations and position itself at the forefront of this field for the coming decades.

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