Brussels, 10/10/2013 (Agence Europe) - After the failure of consultations with Moscow, the EU is calling for a special group to be set up to rule on the legality of a tax that is damaging to EU exports.
There is now a new stage in the trade friction pitting the EU against its Russian neighbour. On Thursday 10 October, the European Commission requested the WTO to set up a special group to rule on the legality of a recycling fee that Russia is imposing on imported vehicles.
After months of vain bilateral discussions, the Commission opened a procedure at the WTO on 9 July asking for consultations. The EU thus initiated its first appeal against Russia since Russia became a member of the WTO. Japan did the same on 24 July. However, after consultations held on 29-30 July the EU had made no progress.
“We've used all the possible avenues to find with Russia a mutually acceptable solution. As the fee continues to severely hamper exports of a sector that is key for Europe's economy, we are left with no choice but to ask for a WTO ruling to ensure Russia complies with its international obligations”, said European Commissioner for Trade Karel De Gucht in press release.
The WTO dispute settlement body (DSB) will discuss the EU's request at a meeting on 22 October, during which Russia will have the right to object to the establishment of the panel. If the EU raises the issue again at the following DSB meeting in November, Russia will not be able to block the request for a second time. Once the panel is formally established, the parties and/or the director general of the WTO will select the panellists in charge of the adjudication procedure.
The Russian fee in question was introduced on 1 September 2012 - just a few days after Russia joined the WTO. Targeting cars, lorries, buses and other motor vehicles, it ranges from €420-2,700 for a new car, and from €2,600-17,200 for a vehicle over three years old. It can be as high as €147,700 for mining trucks. While the fee applies to all imports from the EU, vehicles produced in Russia are exempt, as are those produced in Kazakhstan and Belarus, as part of the customs union.
The Commission criticises the “serious consequences” of this fee on European exports of vehicles to Russia, which stand at €10 billion per year. According to Russian estimates, the fee generates additional public revenue of around €1.3 billion.
Russia is the EU's third biggest trading partner. In 2012, the EU exported €123 billion of goods to Russia and imported €213 million from it. Russian exports mainly comprise raw materials (80%), and those of the EU mainly comprise machinery and transport material (50%).
Decision independent of current tension. On Thursday, the Commission stated that its request targeting the Russian recycling fee on imported vehicle depends totally on the WTO process. In other words, this initiative is not linked to the current trade tension between Brussels and Moscow, which has been reignited since Russia's announcement on 6 October that it was suspending its imports of Lithuanian dairy products due to health reasons. On 8 October De Gucht said that he would be checking the compatibility of this ban with WTO rules (see EUROPE 10939). This new disagreement on Russian trade restriction methods for reasons of health illustrates the growing tension between the EU and Russia ahead of the Eastern Partnership summit in Vilnius on 28-29 November - a summit which is due to bring the EU and six former USSR countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) closer together. Russia, which wants to build its own trade alliance with countries, looks badly upon this rapprochement. (EH/transl.fl)