Internal objections undermine solvency – AND it still reproduces distinctions between members and nonmmbers. LINK!!!!!! We’re blue!

But many of these objections are misplaced. From the big picture point of view, the EU should embrace the economic and political implications of a deep decarbonization strategy that respects both the US’s and EU’s commitment to protecting workers. Reflexive objection to innovative trade and climate strategies will make it more difficult for nations to adopt domestic trade measures without undermining their commitment to workers, drive a wedge between allies jointly committed to decarbonization, and undermine support for the global trading system that has helped spread global peace and prosperity to much of the world over the last 70 years. Providing members of environmental trading clubs preferential treatment over nonmembers is also a well-established practice. The best example is the Montreal Protocol on Substances that Deplete the Ozone Layer–the most successful environmental treaty ever. Article 4 of the Montreal Protocol requires members to ban trade in controlled ozone-depleting substances with nonmembers. Members, however, are subject to an internal compliance process that is more forgiving while still holding out the possibility of trade-related measures for consistent noncompliance. This system gives states an incentive to join the international agreement and work toward the environmental goals it establishes, rather than remain outside the international agreement. In short, distinctions among members and nonmembers create incentives for cooperation over time that can produce greater environmental benefits. At a more granular level, these objections also misunderstand both European trade policy and international trading rules. With respect to the former, the EU has already shown that it is willing to compromise on its application of the most-favored nation principle in the name of addressing climate change. The EU CBAM provides an exemption for non-EU members that either 1) participate in the EU ETS,4 or 2) adopt a carbon trading system and link it to the ETS. Basing CBAM exemptions on whether members join the EU’s ETS either outright or practically both converts the CBAM into a form of climate club and likely violates the most-favored nation obligation. More importantly, though, it is the exact same tactic that the United States has proposed the GASSA use. Both the US GASSA proposal and the EU CBAM would accord preferential treatment to countries that have adopted certain domestic decarbonization policies.