58 2024 TSMA products must ensure the declared carbon pricing coverage adheres to the same reporting period of embedded carbon emissions in the specific product. There is doubt regarding whether the widely recognized principles of “General Most-Favored-Nation Treatment,” “Subsidies and Countervailing Measures Agreement,” and “General Elimination of Non-Tariff Barriers” in international trade can continue to uphold Taiwan’s competitiveness in trade and industrial development. The preface of the EU CBAM regulation reveals that all rules are compatible with and adhere to the general trade rules and environmental issues established by the World Trade Organization (WTO) and the provisions of the General Agreement on Tariffs and Trade (GATT); we can further explore the balancing practice between the EU existing carbon pricing instrument and trade tariff. The EU ETS primarily regulates “industrial sectors” that are energy-intensive, as opposed to regulating the production of specific “products.” For instance, the imported iron and steel industry products under the CBAM exclude many alloy steel products, which does not align with the coverage under the EU ETS. This selective approach of the EU in regulating specific sectors and their associated products may conflict with the trade principles of General Most-Favored-Nation Treatment. The EU also selectively excludes certain products from other sectors under the EU ETS in CBAM legislative explanations, citing reasons like limited impact, insufficient data, or unclear free allowances allocation, indicating that the CBAM does not generally apply to all imported products but emphasizes the EU’s interests. Furthermore, the core principle of the CBAM system is gradually phasing out the free allocation of emission allowances to domestic industries by the EU ETS from existing levels to zero by 2034. According to the spirit of the “Agreement on Subsidies and Countervailing Measures,” there are provisions for deducting costs for the embedded carbon emissions of imported goods against the free allowances allocated by the EU for CBAM-covered “products.” However, since the quantity of allocated free emissions allowances under the EU ETS includes coordinated benchmark calculations from products, heating, processing, and fuels, the EU refuses to disclose the specific details of how to allocate the sectoral annual free emissions allowances and then reallocate to CBAM-covered products that place manufacturers in a disadvantageous position when assessing the response strategies. Several EU trade partner countries, including China and India, intend to raise disputes in the WTO concerning the discrepancies between the CBAM regulations and international trade norms. As a WTO member, Taiwan should logically advocate for the interests
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