ABSTRACT
This chapter examines the consistency of the European Union Emissions Trading System (EU ETS) with relevant rules of the World Trade Organization (WTO). It focuses on the issue of consistency of the EU ETS with General Agreement on Tariffs and Trade (GATT) and its many Annexes. The EU ETS was launched in 2005 as one pillar of the EU's policies for reducing greenhouse (GHG) emissions. The economists and policymakers argues that as to what extent carbon pricing through cap-and-trade schemes is the best policy response to address climate change, and whether such carbon pricing should be accompanied by border tax adjustments. The cap-and-trade' regime in theory might be scrutinised under the disciplines of both the GATT, which focuses on trade in goods, and the General Agreement on Trade in Services (GATS), which focuses on trade in services. There can be no doubt that EU legislation may be applied to aircraft operators when their aircraft are within the territory of EU.
