WTO Sets Up a Panel on Russia's Challenge to the EU Carbon Border Tax (CBAM): Why India Joined as a Third Party
The Dispute Settlement Body (DSB) of the World Trade Organization (WTO) set up a panel (a group of trade judges) on 25 September 2026 in Geneva. The panel will examine Russia's complaint against the European Union's Carbon Border Adjustment Mechanism (CBAM). The case is registered as DS639.
India and 17 other WTO members reserved their third-party rights. This means they can follow the case and give their views to the panel without being the main parties. The others are Argentina, Brazil, Canada, China, Chinese Taipei, Indonesia, Japan, Saudi Arabia, South Korea, Malaysia, Norway, Paraguay, Singapore, Switzerland, Thailand, the United Kingdom and the United States.
Russia first asked for talks (called consultations) on 12 May 2025. The EU declined these talks on 22 May 2025. Russia then asked for a panel on 10 July 2026.
Russia argues that CBAM creates trade barriers for imports into the EU and breaks WTO rules. It also argues that the free carbon permits the EU gives some of its own industries under its Emissions Trading System (ETS) work like an export subsidy (government help that makes local goods cheaper to sell abroad).
The EU says CBAM follows WTO rules and is needed to stop "carbon leakage" (factories shifting production to countries with weaker climate rules).
The case matters to India because Indian exporters of carbon-heavy goods such as steel and aluminium now face extra reporting work and carbon costs when they sell to the EU. CBAM entered its full (definitive) phase on 1 January 2026.
Carbon Border Adjustment Mechanism (CBAM): The EU's Carbon Charge on Imports
The Carbon Border Adjustment Mechanism, or CBAM, is a rule of the European Union (EU). It puts a charge on the carbon pollution that was released while making certain goods abroad, when those goods are brought into the EU. In simple words, it is a carbon price at the border. If a steel bar made in another country caused a lot of carbon dioxide emissions, the EU importer of that steel must pay for those emissions, just as an EU steel maker would.
Russia has challenged CBAM at the WTO, saying it blocks trade and gives EU industries an unfair export subsidy through free ETS permits. India has joined as a third party because its steel and aluminium exports to the EU pay the CBAM charge from 2026. The panel's ruling could decide whether carbon border taxes like CBAM are allowed under world trade rules.
WTO Dispute Settlement Mechanism
The WTO dispute settlement mechanism is the system the World Trade Organization uses to settle trade fights between its member countries. When one country feels another country's trade rule breaks WTO agreements, it can file a complaint. A panel of independent experts then studies the case and gives a ruling. It works like a court for world trade, though it is not called a court.
Russia's complaint against CBAM (DS639) reached the panel stage on 25 September 2026, after the EU declined consultations. India used its DSU Article 10 right to join as a third party, so it can present its concerns about CBAM without being a main party. Since neither Russia nor India is in the MPIA and the Appellate Body is not working, any final ruling may face the "appeal into the void" problem.
EU Emissions Trading System (EU ETS)
The EU Emissions Trading System, or EU ETS, is the European Union's carbon market. It sets a limit on how much greenhouse gas big polluters can release in total. Companies must hold a permit, called an allowance, for every tonne of carbon dioxide they emit. They can buy and sell these allowances among themselves, so pollution gets a market price.
Russia's WTO case attacks not only CBAM but also the free EU ETS allowances given to some EU industries, calling them an export subsidy. The panel will therefore look at how the EU ETS and CBAM work together. For India, the outcome matters as it builds its own carbon market, which may one day reduce the CBAM charge on Indian exports.
- WTO panel on Russia's CBAM complaint set up: 25 September 2026 (dispute DS639)
- Russia requested consultations: 12 May 2025; EU declined: 22 May 2025; panel requested: 10 July 2026
- 18 members reserved third-party rights, including India, China, the US, the UK, Japan and Brazil
- Russia's claims: breach of GATT 1994, the SCM (Subsidies) Agreement and the Import Licensing Agreement
- CBAM definitive phase began: 1 January 2026; covers six sectors (iron and steel, aluminium, cement, fertilisers, electricity, hydrogen)
- First CBAM certificate price: €75.36 per tonne CO2 (Q1 2026)
- Third parties: DSU Article 10; WTO Appellate Body non-functional since December 2019