GENEVA/BRUSSELS - The European Union will launch the first trade dispute against Russia at the World Trade Organization later on Tuesday, challenging Moscow's car recycling levy, diplomats said.
“We gave Russia until July 1 to lift these recycling fees and it failed to do so, so that is why we are taking this to the WTO. Hopefully this can be resolved quickly. It is important that Russia, as a WTO member, plays by global trade rules,” an EU diplomat said.
The dispute comes less than a year after Russia signed up to the global trade rules and follows repeated warnings from Brussels about non-compliance. Japan and the United States are set to join the EU at a WTO meeting on Thursday to air concerns about Russia’s failure to stick to the rules.
Cutting import tariffs on cars was a major sticking point in Russia’s 18-year negotiation to join the WTO. Moscow agreed to do so, but critics say the recycling fee, collected up-front when a car is imported, effectively cancels out the lower tariffs.
That matters to Brussels because Russia is on course to overtake Germany as Europe’s biggest car market within a few years, offering a lucrative export market for recession-weary EU car makers.
Russia has warned the European Union in the past that it has its own concerns with EU policies, suggesting it could hit back with another WTO dispute if the bloc launched a WTO challenge.
Under WTO rules, Russia has 60 days to satisfy EU concerns about the recycling levy, by changing or explaining its policy. After that the EU could ask the WTO to adjudicate, which could force Moscow to change the rules or face trade sanctions.
EU and Russian officials declined to comment on the case, which has not yet been formally notified.
