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European Commission

Memo

Brussels, 9 July 2013

EU Challenges Russian "Recycling" Fee in WTO

Why does the EU think the fee is discriminatory?

The fee is imposed on cars, trucks, buses and other motor vehicles. Vehicles produced in Russia can be exempted under certain conditions and in practice almost all producers based in Russia benefit from such an exemption. Furthermore, the fee is not imposed on imports from Kazakhstan and Belarus.

By contrast, the fee has to be paid for all vehicles imported from the EU. As an example, for cars, the fee ranges from approximately €420 to €2700 per "new" vehicle and from about €2600 to €17200 for a vehicle older than three years. For some vehicles, such as certain mining trucks, it can go as high as €147700.

It is clear, therefore, that vehicles imported from the EU receive less favourable treatment than those produced in Russia and those imported from Kazakhstan and Belarus. Such treatment is inconsistent with the principles of non-discrimination (national treatment and most-favoured nation treatment) set out in WTO rules.

Does the “recycling fee” have an environmental objective?

The EU supports and encourages all countries to take appropriate environmental measures, including those that deal with end-of life vehicles. The EU itself has adopted relevant legislation on this (see Directive 2000/53/EC of the European Parliament and of the Council of 18 September 2000 on end-of life vehicles).

However, the EU strongly believes that the aim of Russia’s so-called “recycling fee” is not to help the environment but discriminate arbitrarily and unjustifiably against imported vehicles. The EU's own measures to deal with end-of life vehicles show that environmental objectives can be achieved very effectively without applying the sort of high and discriminatory fees imposed by Russia.

Has the issue been discussed with Russia on bilateral basis?

The EU has repeatedly voiced its concerns regarding the “recycling fee” in bilateral discussions with Russia, both before and after its introduction on 1 September 2012. The issue was also raised in WTO fora, such as the Council for Trade in Goods. However, almost one year after the introduction of the fee and Russia’s accession to the WTO, the discrimination still continues.

Therefore, in view of the economic impact of the fee and of important systemic concerns, the EU had no choice but to address this issue in the multilateral context of the WTO dispute settlement understanding, or DSU. The EU hopes that WTO consultations will result in a satisfactory solution.

What is the economic impact of this case?

The recycling fee has a clear negative impact on EU exports to Russia and on the competitive position of EU products on the Russian market.

The fee affects exports from EU to Russia worth €10 billion a year (in 2012). The levels of the fee represent a significant proportion of the customs value of vehicles concerned and, in some cases, are prohibitive. According to Russia’s own estimates, the fee (levied almost exclusively on imported vehicles) provides the Russian treasury with an extra €1.3 billion every year.

What happens next?

The request for consultations formally initiates a dispute under the WTO dispute settlement understanding. Consultations give the EU and Russia the opportunity to discuss the matter and to find a satisfactory solution without resorting to litigation.

If these consultations do not reach a satisfactory solution within 60 days, the EU may ask the WTO to set up Panel to rule on the legality of Russia’s measures.

Further information

IP/2013/665: The EU brings its first WTO case against Russia, 9 July 2013

http://europa.eu/rapid/press-release_IP-13-665_en.htm

WTO dispute settlement in a nutshell:

http://ec.europa.eu/trade/policy/accessing-markets/dispute-settlement/

EU-Russia relations:

http://ec.europa.eu/trade/policy/countries-and-regions/countries/russia/


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