EU bringing first auto scrappage fee suit against Russia
MOSCOW. July 9 (Interfax) - The European Union will be filing suit on Tuesday with the World Trade Organization (WTO) against Russia's fees for automobile scrappage, a source at the Economic Development Ministry told Interfax.
This is the first suit filed against Russia since it joined the WTO in August of last year, the source said.
Last September 1, Russia began levying scrappage fees on cars and trucks built in Russia or brought in from countries other than the other two Customs Union states, Kazakhstan and Belarus. The base rate is 20,000 rubles. Certain categories of persons enjoying breaks on the import of automobiles into Russia are excluded from the payments, as well as producers that voluntarily undertake responsibility for the safe scrappage of vehicles they have produced. Such producers include Avtovaz , Kamaz , the GAZ Group and Sollers , meaning that none of Russia's main producers are paying the fees.
Experts take the view that the scrappage fees were introduced with the aim of protecting Russian automakers after customs duties on imported automobiles went down in association with Russia's accession to the WTO. The EU has strongly criticized the mechanism for levying the fees, and the subject has come up repeatedly during bilateral talks at all levels.
This past May, a governmental commission approved a bill that should have done away with the EU's claims. The document applies the scrappage fees to domestic producers, nullifying the competitive advantage the EU authorities see as not conforming to WTO standards.
The bill, which concerns changes to Article 241 of the federal law involving the byproducts of production and consumption, was "worked out in association with agreements reached by Russia during negotiations with EU Trade Commissioner Karel de Gucht," the government press service said. The main exception applying to automakers voluntarily assuming the scrappage obligations is to disappear from the law.
However, the bill was not debated during the recently concluded spring State Duma session. Nor has it been submitted to the appropriate committee.
Deputy Director of the Economic Development Ministry's Trade Negotiations Department Yekaterina Mayorova told reporters that official documents initiating the dispute resolution procedure have yet to arrive.
"But our colleagues from the EU did actually warn us in working order that they intend to submit these documents to the WTO in the very near future. We anticipated such a turn of events," she said.
According to Mayorova, the EU had expected the conflict over the scrappage fee to be settled by July 1 with the adoption of amendments to the law on byproducts of production and consumption, which equalize the terms of levying the fee for domestic and foreign producers. However, the amendments were not adopted by that date, and the State Duma has already gone on its summer holidays.
"So now, as per the EU's decision, we'll have to act under a formal dispute settlement procedure at the WTO," she said.
WTO rules grant the parties to a dispute 60 days to reach an amicable settlement via consultations. Within 60 days, the plaintiff is entitled to demand the formation of a panel.
"If the EU initiates the procedure today, it will transition from the stage of formal consultations to the stage of proceedings at the WTO on September 7," Mayorova said.
According to the State Duma's official website, its first plenary session of the fall is scheduled for September 9. Therefore, there is a high likelihood that an amicable settlement will not be reached.
