Working Paper
Border adjustment mechanisms

Elements for economic, legal, and political analysis

This paper examines, from a multidisciplinary perspective, plausible hypotheses for implementation of border carbon adjustment mechanisms, seen as a complement to strong environmental regulation. It highlights economic, legal, and political difficulties raised by border carbon adjustments.

After thoroughly reviewing their economic practicability, it analyses these mechanisms from an International Trade Law perspective, particularly vis-à-vis the General Agreement on Tariffs and Trade, sustainable development, and the principle of shared but differentiated responsibilities. It concludes with an assessment of policy-related implications of such mechanisms and outlines, in particular, how border carbon adjustments may be used as an engine of economic and energy transition, for developed and developing countries equally.