The WTO Dispute Settlement Body has agreed to establish a panel to adjudicate the Russia-EU Carbon Border Adjustment Mechanism (CBAM) dispute, according to reports from Business Standard and Rediff Moneynews. Russia has filed a complaint against the European Union's CBAM package, alleging export subsidy under the EU scheme for trading greenhouse gas emission allowances. The panel establishment was decided during the WTO's meeting in Geneva on 25 September, following Russia's second request that was initially blocked in July this year. As per WTO reports, the dispute settlement body granted Russia's request after the first request was unsuccessful. Eighteen member countries, including Argentina, Brazil, Canada, China, Chinese Taipei, India, Indonesia, Japan, Saudi Arabia, Korea, Malaysia, Norway, Paraguay, Singapore, Switzerland, Thailand, the UK and the US have reserved their third-party rights to participate in the proceedings. The case, DS639: European Union and its Member States — Carbon Border Adjustment Mechanism, has attracted broad interest among WTO members.
India has reserved its third-party rights along with several other countries to participate in the proceedings, as reported by Business Standard and Rediff Moneynews. The participating countries include Argentina, Brazil, Canada, China, Chinese Taipei, India, Indonesia, Japan, Saudi Arabia, South Korea, Malaysia, Norway, Paraguay, Singapore, Switzerland, Thailand, the UK and the US. Third-party status enables India to follow the dispute proceedings without becoming a principal party to the case, allowing the country to monitor proceedings and understand positions of both Russia and the EU. Other delegations wishing to reserve their third-party rights have to do so within the next 10 days after this meeting through a written communication, according to the WTO's DSB. As a third party, India will receive the primary parties' first written submissions and be allowed to present views orally to the panel during the first substantive meeting.
India's third-party status will help the country monitor the dispute proceedings and understand the positions of both Russia and the EU, according to Business Standard and Rediff Moneynews reports. An official stated that this is a constructive step for India as it will allow the country to see what is happening in the dispute. The case is particularly important for India because exporters of carbon-intensive products such as steel and aluminium face additional compliance requirements, including carbon costs and taxes, under the EU's CBAM regime. Indian exporters, especially those in the MSME sector, have expressed concerns over the compliance burden and the additional costs associated with the mechanism. India joins other trading partners including Brazil, South Africa, and other developing economies that have criticized the mechanism, arguing the policy penalizes developing economies and creates trade barriers for covered goods. India has raised the matter with the EU on numerous occasions in various WTO bodies and is also discussing it bilaterally with the bloc.
The dispute centers on Russia's allegations that the Carbon Border Adjustment Mechanism imposes trade barriers on covered goods and acts as an export subsidy under the EU's Emissions Trading System, as reported by WTO and Business Standard. Russia claims the alleged advantage strengthens European competitiveness unfairly and violates international trade rules. The EU's Emissions Trading System allowances act as an export subsidy according to Russia's complaint. Moscow has alleged that CBAM creates significant trade barriers for covered goods imported into the EU and are inconsistent with WTO obligations. Russia argues that the CBAM package creates significant trade barriers for covered goods imported into the EU and that the EU's allocation of allowances to certain companies under the Emissions Trading System amounts to an export subsidy designed to strengthen the competitiveness of some domestic industries. The EU's CBAM, which is being phased in right now, calls for exporters of six identified carbon-intensive products, including steel, aluminium and cement, to pay for the embedded carbon emissions in the form of a levy. Third-party participation will allow India to present its views on WTO issues raised by Russia without becoming a principal party to the dispute, enabling India to maintain its interests while remaining neutral in the formal proceedings between Russia and the EU.
India is actively working with the EU to build domestic capacity for CBAM verification, including recognition of at least 10 Indian verification agencies, with six applications already submitted, according to recent reports. New Delhi is also working on its Carbon Credit Trading Scheme and discussing carbon pricing with the EU. The EU CBAM commenced on January 1, 2026, creating new compliance requirements for Indian exporters. Notably, the India-EU free trade agreement has not granted any concessions to Indian companies on the EU CBAM but only a commitment that any flexibility given to any other country in the future, would be extended to New Delhi. This framework reflects the evolving nature of India-EU trade relations as both sides navigate the complexities of carbon-related trade measures.
