Countries around the
world are pressing for ‘environment protection’. This urgency is undeniable as
the world is facing unprecedented challenge of global warming and witnessing
many environmental catastrophes. However, due to the varied geographies and
economies of countries, there seems to be an impasse between the global north
and the global south about responsibility and compensation for loss and damage
brought on by climate change. The global north as a solution to the existing
problem has come up with unilateral environmental measures which can have
far-reaching effects on the trade of developing and least developed countries
(LDCs). In this context, the European Union’s (EU’s) introduction of the Carbon
Border Adjustment Mechanism (CBAM) as part of its ‘fit for 55’ climate policy
package and the EU’s Deforestation Regulation (EUDR) have been introduced which
not only impacts EU’s own domestic industry but has an extra-territorial
application as well. This would further impact the exporters of steel, rubber,
coffee, soy, and other products to the EU. It is undeniable that measures to
protect the environment are a pressing priority, but those measures have to be
applied in accordance with multilateral Agreements such as the General
Agreement on Tariffs and Trade (GATT), 1994. Further, such extra territorial
and unilateral measures should take into account the peculiarities of various
countries. Against this background, the paper will examine how the EU laws,
such as the CBAM and the EUDR, may impact developing nations, particularly
India and the compatibility of those unilateral measures with the relevant
provisions of the GATT 1994.