EU reports Russia to WTO over protectionism

The EU has told the WTO that Russia has been illegally protecting domestic car manufacturers through the introduction of a recycling fee levied on imported cars

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The fee has cut European automobile exports to Russia by seven percent. Russian car companies however, are exempt, which has allowed the domestic market to grow. The EU has grown impatient waiting for Moscow to change the law. “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,” EU Trade Commissioner Karel De Gucht said in a statement.

Importing cars to Russia means paying a fee to cover the future cost of recycling it, which acts as a form of green tax, but the EU sees this as just another form of import tax. The cutting of import tariffs on cars was one of the major stipulations for Russia’s 18-year negotiation to join the WTO back in August of last year.

Russia’s membership to the WTO was meant to help improve trade relations with the 28 member states of Europe, its biggest trading partner. However, EU officials have complained that many of the country’s trade barriers remain and a few new ones have even surfaced.

The EU has estimated that the recycling levy has had a severe impact on €10bn of annual exports and claims that Russia has generated €1.3bn in government revenues.

This is just one of many complaints under consideration. EU officials say that since Russia joined the Geneva based authority it has raised levies on poultry and palm oil to rates well above those allowed. In contrast Russia has warned the EU about its own concerns with some of their policies, including restrictions on Gazprom’s control of its European gas pipeline assets.

The Russian government submitted a bill to parliament in May that would apply the recycling fee to both domestic and foreign manufacturers. However, it will take many more months to pass through the legislative process. The bill must make it through three readings in the lower chamber before it will even reach President Vladimir Putin’s desk where it can be signed into law.