25th Oct 2021

WTO to decide on 'illegal' Russian car tax

  • The controversial car recycling tax has poured over €1 billion into the Kremlin's coffers (Photo: Dnevnik)

The World Trade Organisation (WTO) will decide later this month whether to set up an arbitration panel on what the EU has described as an "illegal measure" by Russia against the bloc's car industry.

Speaking with journalists in Brussels on Thursday (10 October), John Clancy, the commission's trade spokesman, said that the EU executive had "been left with no other choice but to pursue WTO arbitration" in response to a measure he described as "a clear discrimination against EU motor vehicle exports."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The complaint, which centres on a controversial car recycling tax imposed by Moscow on foreign cars, is the first of its kind by the EU.

Russia's car recycling tax charges between €420 to €2,700 for new cars, or up to €17,200 for used cars, and is estimated to have generated €1.3 billion for the Kremlin's coffers since it was introduced in September 2012. The EU exports vehicles worth €10 billion per year, according to the commission.

For its part, the Japanese government lodged an identical complaint over the summer.

However, the tax does not apply to imports from Belarus and Kazakhstan, both of whom are members of the Russian-led eurasian Customs Union.

The WTO Dispute Settlement Body (DSB) will discuss the EU's request at its next meeting in Geneva on 22nd October.

The organisation's rulebook allows Russia to object to the panel but this would only delay the process by one month. The Swiss-based trade body has the power to force a change of policy from Moscow or to impose trade sanctions.

The EU executive had given Moscow 60 days to respond to a formal complaint filed in July, but revealed that attempts to broker a solution had broken down.

Clancy commented that the move reflected "a very clear determination by the Commission to follow through on issues that concern European businesses who are facing clear discrimination."

In a statement released earlier, trade commissioner Karel de Gucht said that the commission had "used all the possible avenues to find with Russia a mutually acceptable solution."

Although Russia joined the WTO last August, the country continues to attract criticism about its application of trade rules. Russia imposed the tax shortly after agreeing to remove similar tariff barriers as part of its successful bid to join the trade body.

The move comes amid increasingly frosty relations between Brussels and Moscow.

Last week, the EU's competition chief, Joaquin Almunia, revealed that the commission was preparing a list of formal anti-trust charges against Russian gas giant Gazprom.

The EU has also condemned Russian threats of economic sanctions against Ukraine if Kiev agrees to a trade deal with the EU over the Customs Union.

EU takes Russia to world trade body over car tax

The European Commission will take Russia to the World Trade Organization (WTO) over a car tax, arguing that the fee charged to cover recycling costs discriminates against EU countries.  

EU lodges new WTO protest against Russia

The EU lodged its fourth formal complaint against Russia to the World Trade Organisation (WTO) on Friday in the latest round of the trade battle between the two blocs.

Erdoğan orders out US and EU ambassadors

Turkish president Recep Tayyip Erdoğan has ordered out the ambassadors of his top Nato allies and Western investors, in what his opponents called a reckless political stunt.

EU banks play 'major role' in deforestation, report finds

Banks based in the EU have earned a reported €401m from deforestation, out of more than €30bn worth of deals with companies linked to logging. Deal-making was dominated by big banks from the Netherlands, France, Spain, Germany, and Italy.

News in Brief

  1. Timmermans cancels Moscow visit ahead of COP26
  2. Report: EU to open new mission in Kabul
  3. Bulgaria and Romania run out of beds for Covid-patients
  4. Afghanistan 'on brink of collapse', Sweden warns
  5. Far-right vigilantes stopped on Polish-German border
  6. Croatian right-wingers seek euro referendum
  7. Orbán accuses EU and US of election meddling
  8. Militants free international observers in Russia-occupied Ukraine


Energy and gender in EU focus This WEEK

In the European Parliament, the home affairs committee will start to work on new migration laws: providing the legal framework for the new migration policy in the EU.


Lessons for the EU in Sahel, from Afghanistan

Former UK ambassador to Mali and Niger, who also served in Kabul, reflects on the implications of the Taliban's victory in Afghanistan for EU policy in the Sahel.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew report reveals bad environmental habits
  2. Nordic Council of MinistersImproving the integration of young refugees
  3. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  4. Nordic Council of MinistersCan you love whoever you want in care homes?
  5. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  6. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals

Latest News

  1. Erdoğan orders out US and EU ambassadors
  2. EU banks play 'major role' in deforestation, report finds
  3. NGOs reveal 71 'revolving-door' cases at fossil-fuel giants
  4. Energy and gender in EU focus This WEEK
  5. Nato invite sees Nordic states stepping up security cooperation
  6. Lessons for the EU in Sahel, from Afghanistan
  7. EU states want more Belarus sanctions
  8. Gas price spike exposes rift at EU summit

Join EUobserver

Support quality EU news

Join us