EU Requests WTO Panel in Russia Recycling Fee Dispute

17 October 2013

The EU-Russia row over a controversial vehicle recycling fee escalated another notch last week, after Brussels formally asked that a WTO panel review the case. The EU had requested consultations with Russia on the subject in July, in what marked Moscow's first case at the global trade arbiter. (See Bridges Weekly, 11 July 2013).

"We've used all the possible avenues to find with Russia a mutually acceptable solution," said EU Trade Commissioner Karel De Gucht last week, adding that Brussels was left "with no choice."

The recycling fee was introduced just a month after Russia's WTO accession took effect in August 2012. Japan has also requested consultations with Russia on the matter, though it has not yet requested a panel to review the case. (See Bridges Weekly, 25 July 2013)

Moscow claims the fee is necessary to recoup the cost of recycling older vehicles. The EU, for its part, argues that the fee is discriminatory since Russian-based producers, as well as those in the country's customs union with Belarus and Kazakhstan, can qualify for an exemption under certain conditions. Imports of automobiles into Russia from the 28-country EU amount to €10 billion annually.

The Russian Parliament passed legislation on Tuesday that would remove the distinction between foreign and domestic producers, just days after the EU tabled its panel request, leaving approval from the Russian Federation Council and President Vladimir Putin as the last remaining steps.

The panel request is set to be discussed at next week's meeting of the WTO Dispute Settlement Body (DSB). At that time, Russia has the right to reject the request; however, if the EU files it again, a panel will automatically be established.

According to European Commission data, EU exports to Russia totalled €123 billion in 2012, while imports reached €213 billion in the same year, making Moscow the bloc's third largest trading partner.

ICTSD reporting; "Russia Passes Controversial Car Recycling Bill," THE WALL STREET JOURNAL, 15 October 2013.

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