On Monday 19 May, Russia called for consultations to be opened at the World Trade Organization (WTO) with the European Union on the Carbon Border Adjustment Mechanism (CBAM). This is the first stage in a WTO dispute. It is also the first time the CBAM has been attacked at the WTO, while many third countries have repeatedly pointed the finger at it in Geneva (see EUROPE 13486/9).
Russia believes that with this carbon tax system on cement, fertiliser, iron, steel, aluminium, electricity and hydrogen imports, the EU is favouring its producers and therefore breaking the rules of international trade.
Moscow cites the allocation of free quotas by the EU to some of its companies. These free allowances were introduced with the intra-EU Emissions Trading System (ETS) to prevent carbon leakage. However, they will only phase out gradually after the CBAM comes into force, creating a double safeguard against carbon leakage.
Russia also criticises the administrative procedures imposed on importers to comply with CBAM, which generate costs. In general, it denounces “the highly trade-restrictive and discriminatory mechanisms established by the EU under the pretext of climate policy”.
If consultations between the EU and Moscow do not lead to an agreement within 60 days, Russia may request that a panel be established.
See the communication sent to the WTO: https://aeur.eu/f/gwg (Original version in French by Léa Marchal)