CBAM at the WTO: The EU Blocks Russia's Panel Request, But Only Once
CBAM Weekly – Issue 105
The EU exercises its veto in Geneva
On 24 July 2026, the WTO's Dispute Settlement Body considered the Russian Federation's request to establish a panel on CBAM. The EU objected to the establishment and confirmed that it will not hold consultations. The proceedings are therefore stalled, not closed. This is the first case in which CBAM itself could come before a WTO panel.
Why the block only holds for two months
The WTO's Dispute Settlement Understanding allows the respondent to object to the first request to establish a panel. That right does not extend to the second request. Russia may submit it at the next meeting of the Dispute Settlement Body, scheduled for 25 September 2026, and the panel is then normally established automatically.
The block of 24 July therefore buys the EU around two months, not a lasting defence. Importers should expect live WTO proceedings on CBAM from the autumn onwards.
The history goes back to May 2025
Russia requested consultations on the CBAM Package on 12 May 2025. The EU declined those consultations, citing Russia's war of aggression against Ukraine. Without consultations the usual first procedural step is missing, which is why Russia moved directly to request a panel on 10 July 2026. The request has been in circulation as document WT/DS639/3 since 14 July. The EU maintains that CBAM is applied impartially and without discrimination and is consistent with WTO rules.
Two lines of attack in one complaint
The complaint runs along two lines. First, it targets the CBAM Package itself, citing several provisions of the GATT 1994, including most-favoured-nation treatment under Article I:1, tariff bindings under Article II, and national treatment under Article III. Russia additionally invokes the Agreement on Import Licensing Procedures and the accession protocols of Bulgaria, Croatia, Estonia, Latvia and Lithuania.
Second, it targets free allocation under the EU Emissions Trading System, which Russia characterises as a prohibited export subsidy under Article 3.1(a) of the Agreement on Subsidies and Countervailing Measures. The timing of this second point is awkward. One week after the panel request, the Commission proposed in COM(2026) 616 to extend precisely this free allocation for CBAM sectors until 2038.
The appeal route has led into the void since December 2019
Even a panel report is unlikely to produce a binding outcome in this case. The WTO's Appellate Body lost its quorum on 11 December 2019 because the United States has been blocking appointments to the vacant seats since 2017. Three of its seven seats must be filled for appeals to be heard. If a party appeals, the report is not adopted and the dispute remains unresolved.
The block has become routine. In October 2025, the United States declined for the 91st time a proposal by 130 WTO members to launch a selection process. It has held that position across both administrations, citing overreach by the Appellate Body.
There is no way around this in DS639. The EU has joined the MPIA, the substitute arrangement that allows appeals by arbitration and counted 61 participants in March 2026. Russia is not among them. Either side can therefore appeal a report into the void.
Nothing changes for the definitive period
WTO proceedings do not suspend the measure under challenge. CBAM continues to apply unchanged, reporting obligations remain in place, and the first CBAM declaration for the 2026 import year is due by 30 September 2027. Even if a panel is established in the autumn, its report and any appeal are years away. Reading this news as an argument for waiting confuses a legal risk with an extended deadline.
Where the residual risk actually sits
A panel report carries political weight even if it is never adopted. A finding on free allocation would not strike down CBAM. It would weaken the EU's negotiating position on the phase-out of free allocation, and with that touch the cost curve we described in Issue 104.
The sound response is the same regardless of how the case ends. Collecting verified actual emissions from suppliers instead of calculating with default values lowers certificate costs today and holds up whatever Geneva decides in a few years.
Outlook
The next meeting of the Dispute Settlement Body is scheduled for 25 September 2026. If Russia submits its second request there, the panel will be established and other WTO members may join as third parties. Whether China, India or Türkiye take that step is the more telling signal than the block itself.
Support
If you would like to understand how moving from default values to verified actual emissions affects your CBAM costs, and what evidence you need from your suppliers to do so, please get in touch at helge@kolum.earth.