EU Requests WTO Panel in Russia Duties Dispute

05/03/2015 12:00 - 562 Views

The EU has moved forward in its WTO dispute against Russia over alleged violations of Moscow’s tariff commitments, filing a request on 26 February for the establishment of a panel to hear the case.

The case (DS485) is the fourth dispute that Brussels has lodged against Moscow in the two years since Russia joined the organisation, and deals specifically with the tariff treatment Russia accords to certain goods in both agricultural and manufacturing sectors.

The EU alleges that Russia has applied duty rates on products such as paper, palm oil, and refrigerators that exceed its bound rates, which are the maximum tariff ceilings that Moscow agreed to respect when joining the WTO in August 2012.

Those higher duties, Brussels claims, hurt European exports of those products, which are worth approximately €600 million a year.

The EU filed its original request for consultations – the first stage in WTO dispute settlement proceedings – last October. However, these consultations failed to settle the dispute. (See Bridges Weekly, 6 November 2014)

Russia is the EU’s third largest trading partner, with European exports to its Eastern neighbour amounting to €120 billion annually.

Trade tensions between the two sides have been running high over the past several months for a variety of reasons, some due to the fall-out from the crisis in Ukraine, as well as repeated claims by Brussels and several other WTO members that Moscow is running afoul of its commitments at the global trade body.

Russia, in turn, has charged that the economic sanctions it has suffered in the wake of the situation in Ukraine may themselves be WTO violations, while not formally filing a case on the subject. (See Bridges Weekly, 15 May 2014)

EU allegations

In its panel request, the EU refers to 12 measures imposed by Russia over different tariff lines through the Common Customs Tariff of the Customs Union of the Republic of Belarus, Kazakhstan and Russian Federation, as amended by subsequent acts.

The EU says that Russia subjects a number of goods to import duties inconsistent with its schedule of concessions and commitments annexed to the WTO’s General Agreement on Tariffs and Trade (GATT) 1994.

In these schedules, each WTO member sets out its tariff concession or bindings, committing not to raise the customs duty on a certain product above an agreed level.

The EU claims that Russia applies customs duties that are in excess of those outlined in its schedule for select goods. For instance, in the case of paper and paperboard products, Russia applies duty rates of 10 or 15 percent, depending on the tariff line, even though the bound rate is five percent.

Furthermore, regarding palm oil and its fractions, refrigerators and combined refrigerator-freezers, the EU refers to measures that result in duties being levied above those provided in the schedule when the customs value is below a certain level.

These measures involve a variation of the structure and design of duties from what is outlined in Russia’s schedule. The EU says that Russia uses a combination of ad valorem rates and specific elements even where the schedule outlines a different set-up.

The EU also claims that Russia does not have mechanisms in place that would prevent the applied duties from exceeding the bound duties.

Brussels says that each of those measures amounts to a violation of Articles II: 1 (a) and II:1 (b) of the GATT 1994. These articles prohibit according less favourable treatment to imports than what a member’s schedule dictates, particularly through applying ordinary customs duties at levels above those provided for in the schedule.

Next steps

The panel establishment request will be discussed at the DSB meeting on 10 March for the first time. Under WTO rules, the responding member can object to a first panel establishment request; however, should the issue be raised a second time by Brussels, a panel will automatically be established.

Source: ictsd.org