European Commission Files Complaint over Car Recycling Fees in Russia

The European Commission has requested the World Trade Organization (WTO) rule on the legality of a recycling fee that Russia has placed on imported cars. The fees range from €420 to €2,700 (US$568-3,600) per new vehicle and from about €2600 to 17,200 (US$3,500-23,261) for a vehicle older than three years.

Russia says that the tax is being imposed to assist in the development of programs to ensure that proper end of life for the vehicles is achieved.

In its filing with the WTO, the European Union claims that vehicles produced in Russia are exempt from the tax under certain conditions. Additionally, imports of vehicles from Kazakhstan and Belarus are exempt from the fee.

In its appeal to the WTO, the EU notes that it 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, in its written appeal the EU says it strongly believes that the aim of Russia’s “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.

According to the EU's appeal, the recycling fee has a 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 around €10 billion 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 estimates, the fee (levied almost exclusively on imported vehicles) provides the Russian treasury with an extra €1.3 billion every year, according to Reuters.

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.

The EU initially launched the complaint in July, telling the WTO it believed Russia was illegally protecting its carmakers and had given up waiting for Moscow to change the law.

Japan also filed a trade complaint against Russia over the recycling fee in July.