Wouldn’t it be convenient if EU importers could simply use a default value for each country of origin to calculate their CBAM liability? This would eliminate the need to engage with non-EU suppliers, worry about verification, or face fines if suppliers fail to verify. For CBAM and WTO compliance, it would save everyone a significant amount of time, reduce risks, and alleviate unnecessary trouble and concerns.

In diesem Artikel erläutern wir die CBAM- und WTO-Konformität und warum Standardwerte möglicherweise nicht eingehalten werden.

• Die EU-Mechanismus zur Anpassung der Kohlenstoffgrenzwerte (CBAM) is set to come into full force on January 1, 2026. Importers of non-EU products within the categories covered by CBAM—namely, cement, aluminium, iron and steel, electricity, and hydrogen—will 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:
  1. Declare the embedded emissions of the goods to calculate their CBAM liability.
  2. Purchase CBAM certificates to offset the calculated liability.

  CBAM also requires non-EU producers of these goods to submit an emissions report detailing the CO₂ 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.

  If the report fails verification, the EU importer is subject to fines of up to EUR 50 per underreported ton of CO₂.. Conversely, if producers accidentally over-report emissions, the EU importer incurs a higher CBAM liability, resulting in additional costs.

• 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.

  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.

  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 While the old default values are no longer valid, the EU has proposed new default values for use in the definitive period.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.

  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’s commitment to environmental accuracy and fairness in global trade.

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 “border carbon adjustment measure” that applies to imports, thereby affecting international trade. Consequently, for the mechanism to be valid, it must remain in compliance with WTO law.

The EU places significant emphasis on ensuring CBAM’s 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’s position.

EU CBAM—How to Characterise It Legally

The 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.

It is the EU’s position that CBAM is an internal measure.

Arguments for CBAM = border measure

• 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.
• The authorised declarant will always bear the burden arising from the obligation to cover emissions embedded in imports. This is because, unlike EUAs (EU ETS certificates), 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).

Arguments for CBAM = Internal measure

• CBAM is an internal measure, as the obligation to purchase CBAM certificates is triggered by an internal event—namely, the EU Emissions Trading System (EU ETS).
• CBAM mirrors the EU ETS to “ensure an equivalence between the carbon pricing policy applied in the EU’s internal market and the carbon pricing policy applied on imports.” Therefore, CBAM should be considered an extension of the EU ETS.

National Treatment Principle (NT)

If the EU’s 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.

The EU has foreseen the use of default values for the carbon footprint in imports “when actual emissions cannot be adequately determined,” 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—using higher or punitive values for each country—or submissions based on actual emissions. This proposal reflects a trade-off between accuracy and reducing bureaucratic burdens on companies.

This approach raises several issues under the National Treatment (NT) obligation.

Requiring 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.

In 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.