The World Trade Organization has agreed to establish a dispute panel at Russia’s request to examine whether the European Union’s carbon border levy complies with global trade rules.
The Dispute Settlement Body accepted the second panel request on Friday. Under WTO procedure, a complaining member can generally secure a panel after an initial request is blocked, moving the case from consultations into adjudication.
Russia argues that the Carbon Border Adjustment Mechanism discriminates against covered imports and creates trade barriers. It also challenges the relationship between the levy and allowances available to some European producers under the EU Emissions Trading System, describing parts of that arrangement as an export subsidy.
The European Union says the mechanism is compatible with WTO law. CBAM is designed to apply a comparable carbon cost to certain imported goods and European production, reducing the risk that emissions-intensive activity moves to jurisdictions with weaker climate rules. Brazil, South Africa and India have also criticised the measure, although Friday’s panel decision concerns Russia’s complaint.
Establishing a panel is procedural; it is not a finding that the EU measure is unlawful. The next steps are selection of panel members, written submissions and hearings before a report is circulated. The EU’s official CBAM page sets out the measure now under challenge.
