WTO Panel to Review EU Carbon Border Mechanism; Appellate
Body Reform Stalled Again
The Dispute Settlement Body (DSB) agreed at its meeting on 25 September to
a request from the Russian Federation for the establishment of a panel to review
the European Union's Carbon Border Adjustment Mechanism (CBAM) Package and alleged
export subsidy under the EU scheme for trading greenhouse gas emission allowances.
EU
CBAM Dispute
·
Russias
request approved: WTO Dispute Settlement Body (DSB) established
a panel to review EUs Carbon Border Adjustment Mechanism (CBAM)
and alleged export
subsidy under Emissions Trading System (ETS).
·
Russia claims CBAM creates trade barriers;
ETS allowances act as subsidies.
·
EU rejects claims, insists CBAM & ETS
comply with WTO rules.
·
Third-party
rights reserved by 18 members including India, US, China,
Japan, UK.
TürkiyeChina
Dispute
·
Panel report on Türkiyes measures concerning
electric
vehicles from China delayed until 27 Oct 2026
at joint request of both parties.
Appellate
Body Deadlock
·
Colombia
(on behalf of 130 members) again proposed starting AB appointments
100th
attempt.
·
US
opposed, citing unresolved concerns with dispute settlement reforms.
·
Over 20 members reiterated support for restoring
AB; urged participation in MPIA (Cambodia joined recently).
Dispute
Settlement Reform
·
First information session
held on 25 Sept: covered DS system history, dispute trends, and reform processes
post MC12 & MC13.
Surveillance
Reports
·
US
presented updates on disputes involving steel, copyright, washers, and anti-dumping
with China.
·
EU
reported on palm oil and biotech disputes.
·
Indonesia
reported on horticultural import disputes.
Next
Meeting
·
DSB
to meet again on 27 Oct 2026.
[ABS News Service/26.09.2026]
The Russian Federation submitted
its second request for the establishment of a dispute panel to determine whether
the European Union's CBAM and alleged export subsidy under the EU scheme for trading
greenhouse gas emission allowances are consistent with the EU's WTO commitments.
The EU had objected to Russia's first request for a panel at a DSB meeting on 24
July.
Russia said the CBAM package
creates significant trade barriers for covered goods imported into the EU. Russia
added that the EU's allocation of allowances to certain companies under the Emissions
Trading System (ETS) amounts to an export subsidy intended to strengthen the competitiveness
of certain domestic industries.
The EU said it was extraordinary
that Russia - which the EU said continues to "wage its war of aggression against
Ukraine" - is seeking to rely on international law to improve access for exports
into the EU market. The EU said it would take part in the proceedings, not to legitimize
Russia's actions, but to reaffirm the EU's strong support for the rules-based multilateral
trading system. It also expressed confidence that both the CBAM and the ETS are
consistent with WTO rules.
The DSB agreed to the establishment
of the panel.
Argentina, Brazil, Canada, China,
India, Indonesia, Japan, the Kingdom of Saudi Arabia, the Republic of Korea, Malaysia,
Norway, Paraguay, Singapore, Switzerland, Chinese Taipei, Thailand, the United Kingdom
and the United States reserved their third-party rights to participate in the proceedings.
China and Türkiye said they sought
to continue engagement with each other for a resolution of this dispute. They requested
additional time for the DSB to consider for adoption the panel report circulated
on 28 July 2026 in the case initiated by China regarding measures adopted by Türkiye
concerning electric vehicles and certain other types of vehicles originating in
China.
The parties asked that the DSB
further delay consideration of the panel report until 27 October 2026.
The DSB agreed to the request.
Colombia, speaking on behalf
of 130 members, introduced for the 100th time the group's proposal to start the
selection processes for filling vacancies on the Appellate Body (AB). The extensive
number of members submitting the proposal reflects a common interest in the functioning
of the Appellate Body and, more generally, in the functioning of the WTO's dispute
settlement system, Colombia said.
The United States said that it
does not support the proposed decision. The US reiterated that it has set out its
fundamental concerns on WTO dispute settlement and that the proposal does not address
those concerns. The US stated that, despite efforts by the US and other members
in recent years to identify suitable reforms, there remains a wide divergence in
views among members regarding the necessary changes.
Over 20 members then took the
floor and reiterated their support for the joint proposal and for the urgent need
to restore a fully functioning dispute settlement system. Several of the members
that took the floor encouraged others to consider taking part in the Multi-Party
Interim Appeal Arbitration Arrangement (MPIA), which provides the possibility of
resorting to arbitration under Article 25 of the Dispute Settlement Understanding
(DSU) in case of an appeal in disputes between any two or more participating members.
Several members welcomed Cambodia as the newest member to join the MPIA.
Colombia, on behalf of the 130
members, said it regretted that for the 100th occasion members have not been able
to launch the selection processes. Ongoing conversations about reform of the dispute
settlement system should not prevent the Appellate Body from continuing to operate
fully, and members shall comply with their obligations under the DSU to fill the
vacancies as they arise, Colombia said for the group.
The DSB Chair, Ambassador Guilherme
de Aguiar Patriota of Brazil, said members' statements at an informal meeting held
on 24 July broadly supported information sessions to preserve institutional memory
on DS reform. The first information session, held after the DSB meeting on 25 September,
consisted of two parts: the first on the history of the DS system, including trends
in dispute activity and use of different means of dispute resolution; the second
on DS reform processes following the 12th and 13th Ministerial Conferences.
The United States presented status
reports with regard to DS184, "US - Anti-Dumping Measures on Certain Hot-Rolled
Steel Products from Japan", DS160, "United States - Section 110(5)
of US Copyright Act", DS464, "United States - Anti-Dumping and Countervailing
Measures on Large Residential Washers from Korea", and DS471, "United
States - Certain Methodologies and their Application to Anti-Dumping Proceedings
Involving China."
The EU presented it status report
with regard to DS600 "European Union and Certain Member States - Certain Measures
Concerning Palm Oil and Oil Palm Crop-Based Biofuels" and DS291, "EC - Measures Affecting the
Approval and Marketing of Biotech Products" and DS593, "European Union
- Certain Measures Concerning Palm Oil and Oil Palm Crop-Based Biofuels."
Indonesia presented its status
reports in DS477 and DS478, "Indonesia - Importation of Horticultural Products,
Animals and Animal Products."
The next regular DSB meeting
will take place on 27 October 2026.