EU Launches New WTO Case Against Russia

22 May 2014

The EU filed a new WTO complaint against Russia on Wednesday, marking the third trade dispute the 28-nation bloc has launched against Moscow in less than a year. The case targets duties being imposed on imported light commercial vehicles from Germany and Italy, and comes at a period where economic and diplomatic relations between the two sides are already at a severe low.

At issue in this latest complaint are anti-dumping duties that the Eurasian Economic Commission imposed last May on imported light commercial vehicles (LCVs) from those two EU member states. Brussels says that these duties – 29.6 percent for German vehicles and 23 percent for Italian ones – are severely harming these countries’ access to the Russian market.

These duties, the EU says, have basically prevented Germany and Italy from receiving the benefits due to them as a result of Russia’s WTO accession commitments. The products at issue are light commercial vehicles, weighing between 2.8 and 3.5 tonnes. These vehicles are meant to transport a maximum of two tonnes of cargo apiece, and can also transport a mix of cargo and passengers.

Anti-dumping duties are imposed to counter instances where a foreign country allegedly sells products abroad at prices below their normal value – essentially flooding domestic markets with unfairly low-priced imports. Turkey, a non-EU member, has also been subjected to these duties, Brussels noted. Turkish vehicles face duties of 11.1 percent.

“The EU believes the anti-dumping duties are incompatible with WTO law, both on procedural and on substantive grounds,” EU officials said in an e-mailed statement. Combined with a separate vehicle recycling fee that Moscow imposed nearly two years ago, these anti-dumping measures “are further choking off EU exports of LCVs,” the statement continued.

The Eurasian Economic Commission is the permanent regulatory body for the customs union between Belarus, Kazakhstan, and Russia. Of these three, Russia is the only one that is a member of the WTO, and therefore required to adhere to its rules. The complaint is thus addressed specifically to Moscow.

Russia had not issued a public response to the EU’s claims at the time Bridges went to press on Thursday. The full text of the consultations request is expected to be issued publicly in the coming days.

Under WTO rules, the two sides must now hold consultations for a minimum of 60 days in an effort to resolve the dispute amicably. Should these talks fail to yield a solution, the EU may then ask that the WTO establish an expert panel to hear the case.

Series of disputes

The EU has already filed two other cases against Russia at the global trade arbiter. The first case, filed last July, dealt with the above-mentioned recycling fee that Russia imposed on motor vehicles in September 2012, just weeks after joining the WTO. (See Bridges Weekly, 11 July 2013)

Brussels had argued that since nearly all Russian-produced cars were eligible for an exemption from the fee – as were those vehicles produced in Belarus and Kazakhstan – the policy put foreign-made cars and trucks at an unfair disadvantage relative to their domestic counterparts. The Russian legislature has since passed legislation to amend the measure, though the EU has still requested that a panel hear the case.

Last month, Brussels submitted a second complaint to the WTO, this time citing a Russian ban on imported pork from the EU. The prohibition had been imposed as a result of four cases of African swine fever in wild boar that were detected in Lithuania and Poland – two EU members that share a border with Belarus. That case is currently at the consultations phase. (See Bridges Weekly, 10 April 2014)

Trade concerns have not been limited to the EU, however. In December, Moscow submitted its own complaint regarding a series of anti-dumping investigations that Brussels conducted on imported ammonium nitrate and certain steel products. That case has not yet advanced to the panel stage. (See Bridges Weekly, 16 January 2014)

Russia joined the global trade club less than two years ago, following nearly two decades of negotiations between Moscow and current WTO members. Though its membership was hailed at the time as a major achievement for both the global trade body and for Russia itself – bringing into the WTO system what was then the world’s largest non-WTO economy – questions have since been tabled by the EU, US, and various other members as to whether Russia is indeed serious about implementing international trade rules.

At a meeting of the WTO’s General Council last week, eleven members openly questioned Russia on its trade policies, with the US and EU among the most vocal in their criticisms. (See Bridges Weekly, 15 May 2014)

EU Ambassador Angelos Pangratis, repeating earlier qualms raised in other WTO committee meetings, openly urged Russia to “change gear” in order for its membership in the 159-member body “becomes an asset to the whole organisation, not just to Russia alone.”

Russia, in turn, has said that it is serious about its WTO commitments, and questioned the US and EU at the same meeting over whether some of their recent sanctions on Moscow – imposed in the wake of the Ukraine crisis – are in line with global trade rules.

ICTSD reporting.

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