Africa may find an opportunity to challenge the European Union’s Carbon Border Adjustment Mechanism through Russia’s ongoing legal case against the EU at the World Trade Organization (WTO).
In recent weeks, Russia’s challenge to the EU’s Carbon Border Adjustment Mechanism (CBAM) has progressed, with a dispute settlement panel formed in September 2026 after failed consultations between the EU and Russia, which the EU attributed to “Russia’s war of aggression against Ukraine”. This panel will examine whether CBAM and related EU emissions trading measures comply with WTO rules.
The WTO dispute process explained
A dispute at the WTO is formally initiated when a member requests consultations. These consultations provide a platform for the parties involved to discuss the issue and seek a mutually acceptable resolution before moving to the litigation phase. If the dispute remains unresolved after 60 days of consultations, the complaining party can request the establishment of a dispute settlement panel. The formation of this panel marks a significant step towards determining whether CBAM aligns with WTO law.
Russia’s challenge to CBAM is based on two primary arguments: firstly, that CBAM acts as a barrier to trade, and secondly, that the EU Emissions Trading System (ETS) provides unlawful subsidies through the free allocation of emissions allowances to European industries.
Russia’s challenge to CBAM
Russia argues that CBAM violates the General Agreement on Tariffs and Trade (GATT) by being a protectionist and discriminatory measure. Specifically, Russia claims that CBAM breaches the most-favoured-nation (MFN) principle, national treatment obligations, and the prohibition on quantitative restrictions, citing the need to purchase CBAM certificates, calculate emissions, and register with the relevant authorities.
MFN treatment requires WTO members to extend trade advantages granted to one country to all other WTO members. National treatment requires imported goods to receive treatment no less favourable than that afforded to like domestic products. The prohibition on quantitative restrictions generally prohibits quotas and other trade volume restrictions, with certain exceptions.
Regarding the second argument, Russia asserts that the free allocation of emissions allowances under the ETS constitutes an unlawful subsidy according to the WTO Agreement on Subsidies and Countervailing Measures. This argument focuses on the criteria for eligibility for free allowances, including factors related to emissions intensity and trade exposure.
The EU ETS functions as a cap-and-trade system, where companies must surrender allowances equal to their greenhouse gas emissions. Certain industries receive some allowances free of charge, a practice critics argue undermines claims that CBAM ensures equal treatment of domestic and imported products.
For African nations affected by CBAM, participating as third parties in the dispute could provide a means to engage with the legal challenge without incurring the substantial costs associated with initiating a WTO dispute.
However, the WTO’s appeal mechanism is currently non-functional, which means there’s a risk that a panel’s findings could be appealed without a final resolution, as described by the phrase “into the void”. Nonetheless, the panel’s conclusions could influence the interpretation of trade and climate measures in future disputes.
African countries should not rely solely on the WTO legal process. While the proceedings may clarify CBAM’s compatibility with international trade rules, Africa must also engage in proactive diplomacy and regional coordination. One potential avenue is revisiting the dialogue platform on CBAM’s impact, announced after the EU–African Union summit in November 2024, which has seen little progress since its announcement.
Africa can draw lessons from countries like India, which is participating in the WTO dispute as a third party and has recently signed a free trade agreement (FTA) with the EU. The agreement includes provisions related to CBAM, such as flexibility, recognition of Indian verifiers, and potential crediting of domestic carbon pricing, although it does not exempt India from EU carbon border charges.
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