GENEVA/BRUSSELS: The European Union launched the first formal trade dispute with Russia at the World Trade Organisation yesterday, less than a year after Moscow joined the trading club.
The EU has told the WTO it held that Russia was illegally protecting its carmakers with a recycling fee levied on imported cars, and had given up waiting for Moscow to change the law.
“The European Commission has pursued every diplomatic channel for almost one year now to find a solution with our Russian partners on this matter but to no avail. The fee is incompatible with the WTO’s most basic rule prohibiting discrimination against and among imports,” EU Trade Commissioner Karel De Gucht said in a statement.
The dispute follows repeated warnings from Brussels about what it sees as Russia’s non-compliance and loud dissent within Moscow about the merits of being in the WTO at all.
Joining the WTO is a compact, with the cost of signing up to tough standards offset by the benefits of gaining access to a globally regulated market with guarantees against protectionism.
But Russia’s critics say it has never made good on its obligations, and the car levy, introduced nine days after Russia became a member, is one of a slew of non-compliant policies.
Importing a car to Russia involves paying a fee to cover the future cost of recycling it, a form of green tax. Russian-produced cars, however, are not subject to the same charge, making it, in the EU’s eyes, in effect an import tax.
Cutting import tariffs on cars was a major sticking point in Russia’s 18-year negotiation to join the WTO. Moscow agreed to do so, but the EU says the recycling fee, collected up-front when a car is imported, effectively cancels out the tariff cut. The EU says the fee has a severe impact on ¤10bn($12.9bn) of annual exports, and says Russia’s own estimates show it generates ¤1.3bn in Russian government revenues.
Reuters
