Brussels, 09/07/2013 (Agence Europe) - The EU is calling for consultations at the WTO in Geneva on the Russian recycling tax on vehicles, which heavily penalises imported vehicles.
Less than a year after Russia joined the WTO in August 2012, the EU brought its first case to the WTO against its Russian neighbour on Tuesday 9 July. Weary of wrangling, the European Commission has finally opened proceedings against the Russian recycling tax on vehicles, requesting consultations to be opened at the WTO headquarters. The EU has raised the issue of this tax on several occasions during its bilateral discussions with Moscow, but without ever reaching a concrete solution.
“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. It is severely hampering trade in a sector which is key for the European economy. We expect Russia to engage in WTO consultations with us to find a solution to this problem quickly”, said European Trade Commissioner Karel De Gucht in a press release.
The Russian recycling tax on vehicles was introduced on 1 September 2012 - just a few days after Russia became a member of the WTO. Targeting cars, lorries, buses and other motor vehicles, the tax is between €420 and €2,700 for a new vehicle, and between €2,600 and €17,200 for a vehicle of more than three years old. It can reach €147,000 for heavy mining lorries. While the tax is applied to all imports from the EU, vehicles produced in Russia are exempt, as are those from Kazakhstan and Belarus - as part of their customs union.
The Commission criticises the tax's “severe impact” on European vehicle exports to Russia, which total €10 billion per year. According to Russian estimates, the tax generates an additional €1.3 billion in annual revenue. Despite the promise Russia made at the bilateral summit in Iekaterinburg at the beginning of June, it continues to apply this tax.
The parties now have 60 days to find a satisfactory solution. If they do not, the EU will be able to ask the WTO to set up a special group to rule on the legality of the measures taken by Russia.
Russia is the EU's third largest trading partner and the EU is Russia's biggest source of imports. In 2012, the EU exported €123 billion worth of goods to Russia and imported €213 billion from its Russian neighbour. Russian exports to the EU are mainly composed of raw materials (80%) while EU exports to Russia are mostly machinery and transport equipment (50%). (EH/transl.fl)