Russia Challenges EU's CBAM Scheme at WTO
Russia opened a World Trade Organization dispute on May 19 against the EU's carbon border adjustment mechanism, arguing that the mechanism violates various provisions of the General Agreement on Tariffs and Trade 1994. Russia's request for consultations also covered the EU's scheme for greenhouse gas emissions allowances trading within the EU.
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The carbon border adjustment mechanism (CBAM) is an effort by the EU to ensure that carbon-intensive goods imported into the bloc comply with local EU carbon emission regulations. Under the scheme, the EU requires importers to pay a fair price on the carbon emitted during the production of the imported merchandise to ensure that the carbon price of the imports is equivalent to the carbon price of domestic production.
In its request for consultations on the mechanism, Russia said the EU requires importers to "submit a significant number of documents and data" so the bloc can come up with its carbon price. For instance, an importer must provide the "estimated monetary value and volume of imports of the covered goods into the EU by type of goods for the calendar year during which the application is submitted and for the following calendar year," among numerous other things, Russia said.
CBAM requires that producers in third countries "monitor, collect, and calculate emissions data" in line with the EU's methodologies and procedures, even if EU member states' regulatory systems don't require such calculations or follow different approaches to emissions reduction, Russia said.
Russia alleged that CBAM violates Articles I, II, III, X and XI of the GATT, which cover the general most-favored nation principle, WTO parties' schedules of concessions, national treatment of internal regulations, the publication and administration of trade regulations and the general elimination of quantitative restrictions. The request for consultations also said the scheme violates the protocol of accession for Bulgaria, Latvia, Estonia, Croatia and Lithuania, along with the Agreement on Import Licensing Procedures.
The request also said that the EU's carbon credits trading system violates the Agreement on Subsidies and Countervailing Measures and two articles of GATT 1994 by nullifying or impairing the "benefits accruing to the Russian Federation directly or indirectly under the cited covered agreements."