The WTO Initiates Dispute Settlement Procedures Against the Russian Federation

On 25 November 2013, the World Trade Organization's Dispute Settlement Body, at its meeting held on 25 November 2013, established a panel requested by the European Union to examine the measures imposed by the Russian Federation relating to a charge, the so called “recycling fee”, imposed on motor vehicles.

In October 2013, at a similar meeting, Russia rejected the first request filed by the EU for the establishment of a panel. Under WTO rules, a second request may not be rejected. So, the panel started its first meeting in regard of the first dispute involving the Russian Federation since this country's accession to the WTO in 2012.

Now, the WTO will send to Russia a List of Arbitrators. Within two weeks from the date of receipt of the List, Russia will have to agree the proposed arbitration team membership with the EU. If they fail to reach understanding under this schedule, the case will be passed over to the WTO Director General, who will then appoint the arbitrators.

The third-party group, within a period of six months, must come to a decision as to who is right in this dispute. At this stage, the governments of the disputing parties must ensure that they are supported by highly qualified consultants (lawyers, economists, negotiators, experts, etc.), as well as by the governments of other states, whose interests may be affected by the outcome of the dispute's settlement.

As shown by statistics, approximately 60% of the third-party group's decisions are appealed against to the WTO Appellate Body, and such decisions are seldom modified or reversed. The Appellate Body Reports, once adopted by the Dispute Settlement Body, must be accepted by the parties to the dispute, and they are the foundation of the rule of binding precedent in the WTO legal order.

China, India, Japan, Korea, Norway, Turkey, Ukraine and the USA reserved their rights as third parties in this dispute.

The Russian party believes that the dispute could be settled by way of consultations. To ensure equal conditions for domestic producers of transport vehicles and importers of foreign vehicles, alterations were introduced to Article 24.1 of Federal Law of 24 June 1998, No 89-FZ 'On Production and Consumption Wastes' in October 2013, whereby Russia-based producers, from 1 January 2014 onwards, will pay the 'recycling fee' under the generally applied rule. At present, the recycling fee is imposed only on imported motor vehicles. This is the cause of the European Union's claim in a nutshell.

N.P. Volovik – Head of the Foreign Trade Department