EU brings WTO case against Russia
Commission argues that a Russian fee to cover the cost of recycling vehicles discriminates against EU producers.
The European Commission today asked the World Trade Organization (WTO) to intervene in a trade dispute with Russia over a car levy, arguing that the fee charged to cover recycling costs is discriminatory.
This is the first time that the European Union has asked the WTO to mediate in a dispute since Russia joined the WTO last August.
Russia introduced the fee on all imported cars in September. However, it exempted cars made in Russia or in the two other member states of the Eurasian Customs Union, Belarus and Kazakhstan – in effect, creating an incentive for European carmakers to move production facilities to Russia.
The distinction drawn between imported and domestically produced cars is the basis of the Commission’s complaint to the WTO. However, a Commission official also questioned the size of the levy and its supposed rationale.
The levy varies widely from €420 to €2,700 for new cars, up to €17,200 for used cars and in €147,7700 for some trucks used in the mining industry.
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Recycling fees are charged in some countries in the EU but they do not distinguish between imported and exported cars and are also substantially lower. The Netherlands, for example, imposes a flat fee of €37.
A Commission official suggested that the scale and selection of the fees did not match the stated goal of covering recycling fees. The size of the market for car waste suggested the fees should be lower across the board, while some of the heaviest levies were imposed on vehicles with the greatest value on the recycling market.
Karel De Gucht, the European commissioner for trade, said that the levy was “severely hampering trade in a sector which is key for the European economy”.
The Commission says that in 2012 vehicles worth €10 billion were exported from the EU to Russia, of which €8 billion were cars and vans. Since the imposition of the levy in September, sales have shrunk 7% year on year in an expanding market, the Commission says.
The Russian Duma in late May introduced an amendment in response to complaints from the EU and other trading partners. However, the Commission says it is not scheduled for debate until October and it is also unclear whether it addresses all the concerns raised by the EU.
The timeline for WTO proceedings gives Russia ten days to respond and allows 60 days for consultations. Russia would then have six to nine months to take action. If it did not take action, the EU would potentially be able to take retaliatory action whose impact could be equivalent to the effect of recycling levy.
Other countries also affected by the recycling levy have yet to take action against Russia.
The EU has a range of other trade problems with Russia, including a levy on exports of timber, a Russian ban on EU cattle and pig exports, and an increase in tariffs on many products.