The EU’s carbon border adjustment mechanism: theoretical dimensions, implementation challenges and WTO compliance

Purpose This research examines the European Union’s Carbon Border Adjustment Mechanism (CBAM) through the lenses of international relations theory and international trade law. It analyzes the CBAM’s potential conflicts with World Trade Organization (WTO) rules, particularly concerning the Most Favored Nation (and National Treatment principles. This study aims to provide a comprehensive understanding of the CBAM’s implications for global trade, climate change mitigation and the future of international environmental governance. Design/methodology/approach This research uses a mixed-methods approach. It combines qualitative analysis of theoretical frameworks (realism, liberalism and constructivism) with a legal analysis of WTO rules and case law. The study also incorporates quantitative data on global trade flows and carbon emissions to support the analysis. Findings The findings suggest that while it may promote environmental goals, the CBAM also risks trade disputes and could exacerbate inequalities between developed and developing countries. Originality/value It examines the CBAM’s potential conflicts with WTO rules in detail, drawing on relevant case law and legal precedents. It explores the challenges faced by countries affected by the CBAM and discusses potential strategies for addressing these challenges.