4 The EU Emission Trading Scheme as Applied to Aviation: Extraterritorial measure justified under gatt Article XX

An example of a unilateral policy measure is the Emission Trading Scheme (ETS) developed by the European Union in light of its obligations under the Kyoto Protocol. This chapter analyses the implications of the extra-territorial nature of the Aviation Directive and its consistency under WTO rules. It concludes that the EU measure is a unilateral extra-territorial measure that will face difficulties in dealing with its justification under GATT rules since: (1) while previous Article XX(b) cases concerned clear and direct health hazards, the relation between Article XX(b) purpose and climate change may not be that clear and direct; (2) it is not entirely certain that atmospheric carbon levels can be characterized as exhaustible or even a resource in terms of Article XX(g); and (3) the contribution that carbon tariffs would make to climate change mitigation is quite unclear, due to scientific uncertainty in respect to global warming and its effects. Keywords: Article XX(b); Article XX(g); aviation directive; Emission Trading Scheme (ETS); European Union; GATT; Kyoto Protocol; WTO rules