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EU Challenges Russian 'Recycling Fee'

by Ulrika Lomas, Tax-News.com, Brussels

11 July 2013


The European Union (EU) has called the World Trade Organization (WTO) in to arbitrate its ongoing dispute with Russia over a so-called "recycling fee."

The EU says that it has repeatedly raised the issue of the fee in bilateral talks with Russia, but does not feel that any concrete decision has been made. This has left it with "no choice" but to resort to the WTO's dispute settlement procedures.

The fee was introduced on September 1, 2012, shortly after Russia joined the WTO. It is imposed on all vehicle imports from the EU, but vehicles produced within Russia, along with those imported from Kazakhstan and Belarus, are exempt.

According to the EU, it is clear that its exports "receive less favorable treatment," something it argues is "inconsistent with the principles of non-discrimination (national treatment and most-favored nation treatment) set out in WTO rules."

The cost ranges from EUR420 (USD539) to EUR2,700 for a "new" car, and from EUR2,600 to EUR17,200 for a vehicle older than three years. The fee can, however, be hiked to EUR147,700 in the case of certain mining trucks.

The EU claims that the fee has a severe impact on EU vehicle exports to Russia, the value of which topped EUR10bn last year. The EU regards that the "levels of the fee represent a significant proportion of the customs values of vehicles concerned, and, in some cases, are prohibitive."

The EU further contends that the aim of the fee is "not to help the environment but to discriminate arbitrarily and unjustifiably against imported vehicles."

Trade Commissioner Karel De Gucht elaborated: "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. It is severely hampering trade in a sector which is key for the European economy. We expect Russia to engage in WTO consultations with us to find a solution to this problem quickly."

The EU's request for WTO consultations formally initiates a dispute under the WTO dispute settlement understanding. The aim is for the EU and Russia to discuss the issue, and reach a satisfactory solution without needing to resort to litigation. The EU has nevertheless warned that if a settlement cannot be reached within 60 days, it may ask the WTO to set up a Panel to rule on the legality of the fee.

TAGS: Russia | environment | compliance | tax | European Commission | tax compliance | mining | tariffs | World Trade Organisation (WTO) | trade disputes | tax rates | Belarus | Kazakhstan | revenue statistics | tax reform | trade | European Union (EU) | Europe

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