NEW DELHI: India is among 18 countries, which includes the UK, the US, China and Brazil, to reserve their third-party rights to participate in the proceedings of Russia’s dispute against the EU’s Carbon Border Adjustment Mechanism (CBAM) package at the WTO. Moscow has alleged that CBAM creates significant trade barriers for covered goods imported into the EU and are inconsistent with WTO obligations.
“This will allow India to voice its views on the CBAM levies, which is a big concern to the Indian industry, as third parties receive the primary parties’ first written submissions to the panel and are allowed to present their views orally to the panel during the first substantive meeting,” a source said.
On Friday, the WTO’s dispute settlement body (DSB) agreed to establish a panel to examine the EU’s CBAM package and alleged export subsidy under the EU scheme for trading greenhouse gas emission allowances at the second request of Russia, per the WTO.
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 reserved their third-party rights to participate in the proceedings.
“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,” the WTO’s DSB noted.
While a WTO ruling can’t be enforced through penalties without a functioning Appellate Body, an adverse verdict still carries reputational and diplomatic weight for the losing side.
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.
Indian exporters, especially those in the MSME sector, have expressed concerns over the compliance burden and the additional costs associated with the mechanism.
India has raised the matter with the EU on numerous occasions in various WTO bodies and is also discussing it bilaterally with the bloc. “Well-established principles and rules of both international trade law and international environment law should have been followed in designing the CBAM, including not ignoring the principle of `common but differentiated responsibilities and respective capabilities’,” India’s representative had noted at the WTO council for trade in goods meeting in November last year ahead of the phasing in of CBAM levies from January 2026.
India is now working with the EU to secure recognition for its national accreditation body, National Accreditation Board for Certification Bodies (NABCB), and local verification agencies.
Russia argued at the DSB meeting that the CBAM regime imposes unjustified trade barriers on EU imports and breaches WTO obligations, and that free ETS (emissions trading systems) allowances to select firms in the bloc function as export subsidies propping up domestic competitiveness.
The EU maintained that CBAM and ETS comply with WTO rules.
Source: The Hindu Business Line
