On 9 July 2013, the European Union (EU) formally challenged Russia on its recycling fee for imported vehicles by requesting consultations under the WTO dispute settlement system.1 This is the first WTO dispute initiated against Russia after less than one year of membership.

On 1 September 2012, Russia introduced a recycling fee, that is imposed on cars, trucks, buses and other motor vehicles. The amount of the fee is determined on the basis of the year of production, weight and other physical characteristics that may affect the disposal costs. It can range from approximately €420 to €2,700 for "new" vehicles and from about €2,600 to €17,200 for vehicles older than three years.2 For mining trucks, the fee amounts to €147,700.3

Under Russian law, domestic car manufacturers and companies that assemble cars in Russia are exempted from the fee if they commit to establish procedures designed to dispose of a vehicle at the end of its useful life. Exemptions also apply to cars imported from Kazakhstan and Belarus, which form a customs union with Russia. No such exceptions apply to cars imported from other countries.

The EU claims that Russia’s measures are discriminatory and violate several provisions of the General Agreement on Tariffs and Trade (GATT) and the Agreement on Trade-Related Investment Measures (TRIMS). Among others, the EU considers the recycling fee to be inconsistent with the national treatment principle (GATT Article III:4), which requires Russia to accord to imported vehicles "treatment no less favourable" than it accords to like vehicles of national origin and the most-favoured nation principle (GATT Article I:1), which prohibits discrimination among like vehicles imported from different countries. The EU is also of the view that the measures are WTO-inconsistent trade-related investment measures.4

Russia has defended the recycling fee arguing that it serves to address environmental concerns. However, in the course of negotiations with some of the concerned trading partners, Russia agreed to revise the relevant legislation. The draft law amending provisions on the vehicle utilization fee5 envisages extension of the fee to three categories of vehicles currently excluded from its scope.6

The draft law was included in the agenda of the autumn session of the State Duma (lower chamber of the Russian Parliament), and is expected to pass the first reading by October 2013.7 However, it may take a few months until these amendments become effective, while the EU has reportedly given the deadline for Russia to resolve this issue until July 1, 2013.8

Other countries that have questioned the WTO consistency of the recycling fee are Japan and the United States though they have not yet formally requested consultations.9

A request for consultations is the first step in a WTO dispute. If the parties do not reach an agreement within 60 days, the European Union can request the establishment of a panel.

The EU’s request for consultations is available here.