India, 17 others reserve rights to join Russia’s CBAM dispute with EU as third party at WTO
The WTO Dispute Settlement Body agreed, at a Geneva meeting, to set up a panel to examine a dispute filed by Russia against the European Union over its Carbon Border Adjustment Mechanism (CBAM)
India, along with 17 other members — Argentina, Brazil, Canada, China, Chinese Taipei, Indonesia, Japan, Saudi Arabia, South Korea, Malaysia, Norway, Paraguay, Singapore, Switzerland, Thailand, the UK and the US — reserved third-party rights in the dispute
Third-party status allows a WTO member to present its views to the panel and receive submissions without becoming a principal party to the case
Russia's complaint argues that CBAM and the EU's Emissions Trading Scheme are inconsistent with WTO rules and function as a disguised trade restriction and an export subsidy
WTO Dispute Settlement — Third-Party Rights (DSU Article 10)
Article 10 of the WTO's Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) allows any member with a "substantial interest" in a dispute to notify the Dispute Settlement Body (DSB) and be recognised as a third party. This lets non-parties monitor and influence proceedings that could affect their own trade interests without bearing the cost or exposure of being a named respondent or complainant.
Key Details
- Third parties receive the disputing parties' first written submissions and may present oral views at the panel's first substantive meeting
- A panel may, at its discretion, extend additional participation rights to third parties in specific cases
- Only actual parties to a dispute (not third parties) may appeal a panel report to the Appellate Body, though third parties with notified interest can still make submissions at the appellate stage
- A third party retains the separate right to invoke normal dispute settlement procedures if it believes the same measure nullifies or impairs benefits owed to it
India's reservation of third-party rights lets it track and shape the panel's interpretation of CBAM's WTO-compatibility — a precedent directly relevant to India's own carbon-intensive exports — without formally litigating against the EU.
EU Carbon Border Adjustment Mechanism (CBAM)
CBAM is the EU's mechanism to price the carbon embedded in select imports at a level equivalent to the carbon price paid by EU producers under the EU Emissions Trading System (ETS), aimed at preventing "carbon leakage." It operated in a transitional, reporting-only phase from October 2023, and entered its definitive phase on 1 January 2026, under which importers must buy CBAM certificates corresponding to embedded emissions.
Although this specific WTO panel was requested by Russia, its ruling on whether CBAM violates GATT and Subsidies and Countervailing Measures (SCM) Agreement provisions will shape the legal terrain for India's own concerns about the mechanism's impact on its steel and aluminium exporters.
GATT 1994 and the WTO Subsidies Framework
Russia's complaint invokes multiple WTO instruments: the General Agreement on Tariffs and Trade (GATT) 1994 (particularly non-discrimination and market-access obligations), the Agreement on Import Licensing Procedures, and the Agreement on Subsidies and Countervailing Measures (SCM Agreement). It also cites the WTO accession protocols of Bulgaria, Croatia, Estonia, Latvia and Lithuania.
Key Details
- GATT Article I (Most-Favoured-Nation treatment) and Article III (National Treatment) are the standard non-discrimination benchmarks invoked against border-adjustment measures
- The SCM Agreement prohibits subsidies contingent on export performance ("export subsidies"); Russia alleges free emission allowances under the EU ETS function as such a subsidy
- A WTO panel's findings are not binding precedent for other disputes but are highly persuasive given the doctrine of "cogency" applied by subsequent panels
- The EU had earlier rejected Russia's request for consultations, citing the diplomatic fallout of the Russia-Ukraine conflict, before the DSB proceeded to establish a panel
The panel's eventual findings on whether CBAM's design (levying charges based on embedded carbon rather than product origin) breaches non-discrimination rules will be closely watched by all third parties, including India, since it tests whether carbon border taxes of this kind can survive WTO scrutiny.
- Russia filed its initial WTO complaint against CBAM in May 2025; the panel-establishment request was taken up by the DSB in 2026
- 18 WTO members (including India) have reserved third-party rights in the dispute
- CBAM's definitive phase began 1 January 2026; certificate sales for 2026 imports begin February 2027
- CBAM covers iron and steel, cement, aluminium, fertilisers, hydrogen and electricity
- India's steel exports to the EU have fallen by more than a third and aluminium exports by double digits since CBAM's cost exposure began