International Trade in Carbon Units and Financial Services*

Abstract

Chapter 6 examines whether measures affecting trade in carbon units constitute measures affecting trade in financial services under the GATS Annex on Financial Services and free trade agreements covering financial services. It finds that, although carbon units are unlikely to constitute ‘negotiable instruments’, ‘transferable securities’, or ‘derivative products’, they are nonetheless likely to be covered as ‘financial assets’ or ‘any service of a financial nature’. Importantly, however, it is not the carbon units themselves that would be regulated by the GATS Annex on Financial Services, but rather the commercial activities pertaining to those units. It is conceivable that a measure could prohibit or restrict the carbon unit of a certain nationality but nonetheless leave the supply or trade of permitted carbon units by suppliers of that nationality unrestricted or unaffected.