Background
Trade measures
Formal WTO disputes looming?


Background

Trade between Russia and the European Union is significant. The European Union is the first trading partner of Russia and Russia is the third partner of the European Union. Russia's accession to the World Trade Organisation (WTO) in August 2012, after over 19 years of negotiations, was intended to increase trade between Russia and the European Union.

The trade-restrictive measures adopted by Russia since joining the WTO concern products of various origins (including products from the United States), but the high number of measures affecting EU products has led to heightened tensions between the European Union and Russia.

Trade measures

Among others, the following trade measures taken by Russia have raised concerns:

  • On September 1 2012 (just over a week after Russia joined the WTO) Russia imposed a recycling fee on imports of all types of car. The fee's design suggests that it might be discriminatory and contrary to WTO law as it does not apply to domestic producers provided that they guarantee to recycle their automobiles in the future.
  • Since October and November 2012 Russia has banned the import of cattle and small cattle (and related genetic materials) from Austria and Finland, as well as the transit of such cattle, due to disease concerns. Since the end of November 2012 it has also temporarily banned imports of live pigs, boar semen, pork, raw pork products and pork goods from Latvia that have not been heat treated (to at least at 70 degrees Centigrade).

Formal WTO disputes looming?

The prevailing opinion is that some of the trade measures imposed by Russia could give rise to the initiation of a formal WTO dispute. Indeed, the European Union's dissatisfaction has been made clear to Russia. In December 2012 EU Trade Commissioner Karel De Gucht publicly warned Russia that the European Union would not tolerate these measures and would initiate a dispute settlement if necessary. De Gucht declared that if Russia continued on its course of restricting imports from the European Union, the Europeans and the Russians would see each other "back in Geneva".

Despite this firm warning in December 2012, Russia has continued to impose measures that restrict market access for European products and plans to introduce more.

There has been a wave of Russian measures targeting agricultural products originating in the European Union since December 2012, which were purportedly taken due to safety concerns.

Since December 21 2012 Russia has banned the importation of cattle and small cattle from Sweden (and related genetic materials), as well as transit through Russia of such cattle.

Russian measures have also targeted European meat, specifically chilled pork, beef and poultry from Germany. In late January 2013 Russia notified the WTO that it would be banning these meat products from February 4 2013. It did not elaborate on the reasons for this ban but simply stated that there had been "no proper control by [the] veterinary service of Germany" with respect to such exports. This measure received a particularly adverse reaction in the European Union, which issued a communication highlighting its dissatisfaction with what it considers to be an unwarranted and "disproportionate" measure.

Most recently, on February 6 2013, Russia notified the WTO that it would be banning seed potatoes from the European Union from April 1 to avoid pests.

The European Union's warning suggests that it believes that many, if not all, of Russia's trade measures violate its recently accepted WTO obligations. Russia's official position is that all of these measures are justified under WTO law. The debate is clearly set to continue.

For further information on this topic please contact Ilia Rachkov, Charles Julien or Jennifer Hawkins at King & Spalding LLP by telephone (+41 22 591 0800), fax (+41 22 591 0880) or email (irachkov@kslwa.com, cjulien@kslaw.com or jhawkins@kslaw.com).