EU asks WTO to decide on auto row with Russia

(BRUSSELS) - The European Union on Thursday asked the World Trade Organization to rule on a dispute with Russia over a controversial "recycling fee" Moscow imposes on imported vehicles.

"We've used all the possible avenues to find with Russia a mutually acceptable solution", said EU Trade Commissioner Karel De Gucht.

The EU says the fee, introduced days after Russia joined the WTO last year, is discriminatory because domestic vehicles are exempted as are those imported from Kazakhstan and Belarus which are in a customs union with Moscow.

The request for WTO settlement comes after the EU launched proceedings at the Geneva-based trade body last July in view of a friendly settlement.

It is the first such proceeding targeting Russia since the country joined the WTO after two decades of fraught negotiations.

In Moscow, Maxim Medvedkov, Trade Director at the Ministry of Economic Development, said the decision "is as unexpected as inexplicable".

He said the move came the day after the Duma had agreed legislation in an initial vote to harmonise the levy between Russian producers and importers.

"The European Commission is refusing to seek a solution acceptable to both sides," he added.

Levied on cars, trucks, buses and other motor vehicles, it ranges from about 420 to 2,700 euros for a "new" vehicle and from 2,600 to 17,200 euros for a vehicle older than three years.

For specialist vehicles such as mining trucks the fee can be extremely hefty.

Brussels says the levy is impacting EU vehicles exported to Russia, worth 10 billion euros a year.

"As the fee continues to severely hamper exports of a sector that is key for Europe's economy, we are left with no choice but to ask for a WTO ruling to ensure Russia complies with its international obligations," De Gucht added.

De Gucht in December had listed the recycling fee as a key concern in trade with Russia, along with a ban on the import of live animals, a health measure he said was designed to protect Russian producers.

He said at the time that the EU "would prefer to negotiate our way to a solution."

"However, if that does not prove possible the EU is most certainly prepared to use all the legal avenues at our disposal. And since Russia's accession, that includes dispute settlement at the WTO," he had said.

Russia is the EU's third-largest trading partner and the EU is Russia's biggest partner.

In 2012, the EU exported 123 billion euros of goods to Russia -- mostly machinery and transport equipment including vehicles -- and imported 213 billion euros worth, mainly raw materials.

The Russian parliament in May modified the recycling fee to extend it to locally-made vehicles but the draft legislation has not gone before parliament.