U.S. to Join WTO's Complaint Against Russia

The U.S. plans to join a World Trade Organization case against Russia over laws Americans and Europeans say discriminate against global companies and violate trade rules.

The complaint was filed this month by the European Union and targets a Russian law imposing a recycling fee on imports from foreign auto makers.

"We'll be joining that case," U.S. Trade Representative Michael Froman told a House committee Thursday, when the U.S. formally asked to join dispute-settlement consultations over the car fee at the WTO, officials said. If the U.S. doesn't end up in the EU case it could bring its own complaint.

The Geneva-based WTO is a forum for trade deliberation, rule enforcement and adjudication between countries. Russia joined the WTO a year ago, raising U.S. companies' hopes of gaining access to a growing market and pushing Moscow to run its economy transparently.

Around the time it entered the WTO, Russia set the recycling fee on automotive imports for five years. The levy is meant to pay for the future costs of scrapping or recycling an imported car and doesn't apply to domestic cars. The levy appeared after Moscow reduced car-import tariffs as a condition of joining the global trade body.

The EU had warned for months that it would take Russia before the WTO in July unless the law was changed to stop discriminating against foreign companies.EU officials say the levy has cut European auto exports to Russia by 7%.

The Russian Embassy in Washington didn't return calls seeking comment. Kremlin officials have said previously they expected the EU's WTO case and that they will work through the dispute-resolution process at the WTO.

A spokesman for the Washington-based Alliance of Automobile Manufacturers declined to comment.

Legislation has recently been introduced in the Russian Parliament to apply the recycling fee to domestically made cars. But it could take some time to wind its way through the country's legislative process.

Russia has long sought to keep alive its domestic car industry—which thrived during Soviet times—through import tariffs and deals between domestic manufacturers and global car companies. 

This year all ten of the most-popular models sold in Russia are produced domestically, according to the Association of European Businesses in Russia. Leading models include homegrown brands such as OAO Avotvaz's Lada, as well as Russian-made vehicles of foreign manufacturers, like Ford Motor Co.'s Focus model, produced near St. Petersburg.

After years of growth, Russian car sales are slipping this year. The AEB trade group last month cut its forecast for annual sales to 2.8 million cars and light vehicles. In 2012, Russians bought 2,935,000 cars, a gain of 11% from the year before.

July 18, 2013

Source: Wall Street Journal