{"id":6291,"date":"2025-09-19T23:06:20","date_gmt":"2025-09-19T23:06:20","guid":{"rendered":"https:\/\/artem.zweipro.digital\/?p=6291"},"modified":"2025-09-19T23:06:48","modified_gmt":"2025-09-19T23:06:48","slug":"cbam-and-wto-compliance-why-cbam-cannot-simply-rely-on-default-values","status":"publish","type":"post","link":"https:\/\/artem.zweipro.digital\/de\/cbam-and-wto-compliance-why-cbam-cannot-simply-rely-on-default-values\/","title":{"rendered":"CBAM and WTO Compliance \u2013 Why CBAM Cannot Simply Rely On Default Values"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"

The Carbon Border Adjustment Mechanism (CBAM) is set to enter its next phase in 2026, making CBAM…<\/p>","protected":false},"author":3,"featured_media":6292,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[84],"tags":[90,91],"industry":[63],"class_list":["post-6291","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-events","tag-cbam","tag-cbam-liability","industry-automotive"],"yoast_head":"\nCBAM and WTO Compliance \u2013 Why CBAM Cannot Simply Rely On Default Values - artem.zweipro.digital<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"de_DE\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CBAM and WTO Compliance \u2013 Why CBAM Cannot Simply Rely On Default Values - artem.zweipro.digital\" \/>\n<meta property=\"og:description\" content=\"The Carbon Border Adjustment Mechanism (CBAM) is set to enter its next phase in 2026, making CBAM...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/artem.zweipro.digital\/de\/cbam-and-wto-compliance-why-cbam-cannot-simply-rely-on-default-values\/\" \/>\n<meta property=\"og:site_name\" content=\"artem.zweipro.digital\" \/>\n<meta property=\"article:published_time\" content=\"2025-09-19T23:06:20+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-09-19T23:06:48+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/artem.zweipro.digital\/wp-content\/uploads\/2025\/09\/CBAM-1024x654.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1024\" \/>\n\t<meta property=\"og:image:height\" content=\"654\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Burak Turk\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Verfasst von\" \/>\n\t<meta name=\"twitter:data1\" content=\"Burak Turk\" \/>\n\t<meta name=\"twitter:label2\" content=\"Gesch\u00e4tzte Lesezeit\" \/>\n\t<meta name=\"twitter:data2\" content=\"1\u00a0Minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/artem.zweipro.digital\/cbam-and-wto-compliance-why-cbam-cannot-simply-rely-on-default-values\/\",\"url\":\"https:\/\/artem.zweipro.digital\/cbam-and-wto-compliance-why-cbam-cannot-simply-rely-on-default-values\/\",\"name\":\"CBAM and WTO Compliance \u2013 Why CBAM Cannot Simply Rely On Default Values - 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This would eliminate the need for engaging with non-EU suppliers, worrying about verification, or facing fines if suppliers fail verification. For CBAM and WTO compliance, it would save everyone a significant amount of time, reduce risks, and alleviate unnecessary trouble and concerns.\r\n\r\nIn this article, we explain the CBAM and WTO Compliance and why default values might fail."]},{"post-content-headline":["EU CBAM Regime"],"post-content-text":["<ul>\r\n \t<li>The\u00a0<a href=\"https:\/\/taxation-customs.ec.europa.eu\/carbon-border-adjustment-mechanism_en\">EU Carbon Border Adjustment Mechanism<\/a>\u00a0(CBAM) is set to come into full force on January 1, 2026. Importers of non-EU products within the categories covered by CBAM\u2014namely, cement, aluminium, iron and steel, electricity, and hydrogen\u2014will be required to pay an emissions tax.Unlike import duties, which are calculated as a fixed percentage of the value of goods, EU importers must:\r\n<ol>\r\n \t<li>Declare the embedded emissions of the goods to calculate their CBAM liability.<\/li>\r\n \t<li>Purchase CBAM certificates to offset the calculated liability.<\/li>\r\n<\/ol>\r\nCBAM also requires non-EU producers of these goods to submit an emissions report detailing the CO\u2082 emissions generated during the production process. These reports must be validated by accredited EU verifiers, who are required to personally visit the production installations for certification, as mandated by current regulations.\r\n\r\nIf the report fails verification, the EU importer is subject to fines of up to EUR 50 per underreported ton of CO\u2082.. Conversely, if producers accidentally over-report emissions, the EU importer incurs a higher CBAM liability, resulting in additional costs.<\/li>\r\n<\/ul>"]},{"post-content-headline":["Initial Default Values phased out"],"post-content-text":["<ul>\r\n \t<li>In the initial phase of CBAM, the EU allowed importers to submit declarations using default values. These were phased out by July 2024. Since then, EU importers must engage with suppliers to obtain actual emissions data for their products.\r\n<p data-start=\"523\" data-end=\"812\">During the transitional period, which runs until December 31, 2025, there are no penalties for unverified or incomplete data. Emission reports do not require third-party verification, and no CBAM certificates need to be surrendered. Parties only have a reporting obligation during this time.<\/p>\r\n<p data-start=\"814\" data-end=\"1321\">However, once the transitional period ends, importers will need to significantly enhance their due diligence and data collection efforts to avoid penalties. While the old default values are no longer valid, the EU has proposed new default values for use in the definitive period. These will serve as a fallback option but will be intentionally punitive, designed to encourage the use of real, verified data. Relying on these new default values may lead to higher reported emissions and thus greater CBAM costs.<\/p>\r\n<p data-start=\"1323\" data-end=\"1585\">Understandably, many importers are questioning why the simpler default-value system was replaced with a more demanding process that requires actual emissions data. But the shift reflects the EU\u2019s commitment to environmental accuracy and fairness in global trade.<\/p>\r\n<\/li>\r\n<\/ul>"]},{"post-content-headline":["CBAM is designed not to violate WTO rules"],"post-content-text":["<p data-sourcepos=\"9:1-9:333\">In a nutshell, CBAM was designed by the EU with the intention of avoiding any violation of relevant WTO rules. As its name suggests, CBAM is a \u201cborder carbon adjustment measure\u201d that applies to\u00a0<strong>imports<\/strong>, thereby affecting international trade. Consequently, for the mechanism to be valid, it must remain in compliance with WTO law.<\/p>\r\n<p data-sourcepos=\"11:1-11:340\">The EU places significant emphasis on ensuring CBAM\u2019s alignment with WTO law and has repeatedly highlighted this in announcements and official statements. These efforts are further supported by expert opinions and explanatory memoranda. However, it is equally important to shed light on the opposing arguments challenging the EU\u2019s position.<\/p>\r\n\r\n<h3><strong>EU CBAM\u2014How to Characterise It Legally<\/strong><\/h3>\r\nThe battle lines regarding CBAM are drawn at whether to characterise it as an internal regulatory measure or a border measure. If CBAM was the former, it could be allowed if the measure does not discriminate against foreign products according to the national treatment principle (Article III:4 GATT). However, if it were considered a border measure, it could trigger a violation according to Article XI:1 GATT, even if it was not discriminatory. As a completely new policy instrument, CBAM has not yet been tested in any courts or panels.\r\n\r\nIt is the EU\u2019s position that CBAM is an internal measure.\r\n<h3><strong>Arguments for CBAM = border measure<\/strong><\/h3>\r\n<ul>\r\n \t<li>CBAM is a border measure of a fiscal nature, as there is a direct and inextricable link between the amount charged (i.e., the cost of covering the embedded emissions of imports through CBAM certificates) and the volume of emissions embedded in the covered imports.<\/li>\r\n \t<li>The authorised declarant will always bear the burden arising from the obligation to cover emissions embedded in imports. This is because, unlike EUAs\u00a0<a href=\"https:\/\/climate.ec.europa.eu\/eu-action\/eu-emissions-trading-system-eu-ets_en\">(EU ETS certificates)<\/a>, CBAM certificates cannot be freely traded, with only limited sell-back options available to the government. As a result, importers are unable to generate any profit from the CBAM mechanism. This stands in stark contrast to the EU ETS system, which has been explicitly addressed by the European Court of Justice (ECJ Case C-366\/10, Air Transport Association of America and Others v. Secretary of State for Energy and Climate Change).<\/li>\r\n<\/ul>\r\n<h3><strong>Arguments for CBAM = Internal measure<\/strong><\/h3>\r\n<ul>\r\n \t<li>CBAM is an internal measure, as the obligation to purchase CBAM certificates is triggered by an internal event\u2014namely, the EU Emissions Trading System (EU ETS).<\/li>\r\n \t<li>CBAM mirrors the EU ETS to \u201censure an equivalence between the carbon pricing policy applied in the EU\u2019s internal market and the carbon pricing policy applied on imports.\u201d Therefore, CBAM should be considered an extension of the EU ETS.<\/li>\r\n<\/ul>\r\n<h3><strong>National Treatment Principle (NT)<\/strong><\/h3>\r\nIf the EU\u2019s position holds that CBAM is an internal measure, the principle of National Treatment outlined in Article III:4 of GATT must be upheld. This principle requires that imported products receive treatment no less favourable than that afforded to domestic products."]},{"post-content-headline":["Default Values May Violate The National Treatment Principle"],"post-content-text":["The EU has foreseen the use of default values for the carbon footprint in imports \u201cwhen actual emissions cannot be adequately determined,\u201d as well as for electricity imports as a standard method for determining carbon content. In the latest changes proposed by the EU Commission on February 26, they have gone even further by allowing EU declarants to choose between a default value-based submission method\u2014using higher or punitive values for each country\u2014or submissions based on actual emissions. This proposal reflects a trade-off between accuracy and reducing bureaucratic burdens on companies.\r\n\r\nThis approach raises several issues under the National Treatment (NT) obligation.\r\n\r\nRequiring importers to pay CBAM liability based on actual emissions places them on the same footing as domestic EU products subject to the EU ETS. However, determining CBAM liability using default values deviates from the treatment of domestic products. While it could be argued that NT obligations are not violated since importers can choose between submissions based on actual emissions or default values, the reality is more complex. The administrative burden, higher compliance costs, and, most importantly, the increased risk of non-verification leading to fines, as well as the financial risks of volatile EUA prices, may compel importers to opt for the punitive default values for certainty. Consequently, the possibility of a violation of the NT obligation cannot be entirely ruled out.\r\n\r\nIn summary, CBAM is a groundbreaking mechanism designed to externalise the cost of carbon to markets beyond the EU, which is commendable. However, it requires a delicate balance: avoiding retaliatory measures from other markets while establishing effective policy incentives to promote global convergence towards a unified carbon price."]}]},"_links":{"self":[{"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/posts\/6291","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/comments?post=6291"}],"version-history":[{"count":1,"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/posts\/6291\/revisions"}],"predecessor-version":[{"id":6293,"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/posts\/6291\/revisions\/6293"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/media\/6292"}],"wp:attachment":[{"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/media?parent=6291"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/categories?post=6291"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/tags?post=6291"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/artem.zweipro.digital\/de\/wp-json\/wp\/v2\/industry?post=6291"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}