The World Trade Organisation (WTO)’s Dispute Settlement Body (DSB) has established a panel at Russia’s second request to determine whether the EU’s CBAM and alleged ETS export subsidy are consistent with the bloc’s WTO commitments, Kallanish notes.
The EU had objected to Russia’s first request for a panel at a DSB meeting in July.
Russia says the CBAM package creates significant trade barriers for covered goods imported into the EU. Russia adds that the EU’s allocation of allowances to certain companies under the Emissions Trading System (ETS) amounts to an export subsidy intended to strengthen the competitiveness of certain domestic industries.
The EU has reiterated that the request “creates an extraordinary situation” whereby the international law compatibility of EU regulation is being assessed at the request of a member waging war against another member in violation of international law. The war is an “existential challenge” for the EU, it adds. As long as it continues, Russia “cannot expect to be able to rely on WTO rules for improved access for its exports” to the bloc, it notes.
The bloc nevertheless says it will participate in the panel proceedings, not because it finds Russia’s actions legitimate but “because of its firm support for the rules-based multilateral trading system”.
The EU is “confident that the Carbon Boder Adjustment Mechanism and free allocation under the European Union Emissions Trading System are WTO-compatible and has, therefore, a strong interest in ensuring an objective assessment of the matter by the panel, consistently with the DSU,” it notes.
The EU will only engage with the panel and not directly with the Russian Federation, it concludes.
Russia initially requested consultations with the EU on the matter in May 2025.
Author: Adam Smith
