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24th Jul 2016

Russia to file WTO lawsuit against EU energy laws

  • It is the second time this year that Moscow has protested to the Geneva-based trade body against the EU (Photo: qwertyuiop)

Russia is to file its second formal complaint against the EU with the World Trade Organisation (WTO) over the EU's so-called 'Third Energy Package,' according to reports on Wednesday (30 April).

At the heart of the Russian complaint are expected to be EU provisions which prevent a single company from both owning and operating a gas pipeline. EU lawmakers agreed the rules, known as 'ownership unbundling', as part of its Energy Package on rules governing the bloc's gas and electricity market. The new framework, which was agreed in 2009, is aimed at stimulating competition in the EU's gas market and lower prices.

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  • Russia has filed a WTO complaint against the EU's energy laws (Photo: Joffley)

For its part, Russia claims that its state-owned energy giant Gazprom is the only company with the right to export gas and that the EU rules should not be backdated to cover contracts signed before 2009.

"These and other elements of the Third Energy Package, in the opinion of Russia, contradict the obligations of the EU in WTO on basic principles of non-discrimination and market access," Maksim Medvedkov, a trade spokesman in Russia's Economic development ministry, told local news agencies.

Under WTO procedures, EU and Russian trade officials will have 60 days to try and settle their differences before further legal action is taken.

The next step would be for the WTO to set up an arbitration panel to review the case.

Ultimately, the WTO has the power to impose either a change of policy or economic sanctions.

It is the second time this year that Moscow has protested to the Geneva-based trade body against the EU, in what has become a running tit-for-tat trade battle. In January, Russia filed its first complaint as a WTO member against EU levies on steel products and ammonium nitrate, which is mainly used in fertilisers.

Russia joined the WTO in August 2012 but has itself already been subjected to two ongoing investigations relating to a car recycling tax on foreign cars, and a host of other complaints from the EU, Japan and the United States. It is seen by the trade body as one of the main culprits in imposing trade restrictions on other countries.

Gazprom has been under EU investigation since September 2012 over suspected anti-competitive tactics, which include overcharging eastern European countries for their gas and blocking rival suppliers.

However, the EU's competition commissioner, Joaquin Almunia, has indicated that his department's Gazprom probe will remain on hold until the crisis in the Ukraine, prompted by Moscow's annexation of the Crimea, has been at least partially resolved.

Gazprom currently accounts for over 30 percent of the EU's gas needs, more than half of which is piped through Ukraine.

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