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Dispute settlement | Brussels, 12 August 2016

WTO confirms Russian import duties violate WTO rules

In a ruling circulated today, a WTO panel confirmed that Russian import duties on paper, refrigerators and palm oil violate WTO rules. The import duties exceed those Russia agreed to when it joined the WTO. This is the first case ever decided in the WTO against Russia.

Despite being a WTO member since August 2012, Russia has not yet fulfilled some of its commitments made before its accession. This includes one of the WTO’s most fundamental rules, according to which its members must not apply customs duties in excess of the ‘bound rates’ they commit themselves to in their respective Schedules. Following the dispute settlement procedure activated by the EU in October 2014, the WTO panel fully agreed that Russia's customs duties on paper, refrigerators and palm oil are inconsistent with its WTO commitments.

For certain paper products Russia applies duties of 15% or 10% instead of the 5% it agreed when it joined the WTO. The panel confirmed that these measures are in clear breach of Article II-1 of the GATT. For other products, Russia essentially fixes a minimum amount of import duty that needs to be paid even if this is not justified by the agreed duty rate (reflected in Russia's accession schedule) that is expressed in a percentage of the product value. The panel confirmed that these measures are in breach of Article II-1 of the GATT. Indeed, they imply that import duties are levied in excess of WTO-bound levels whenever products are imported at a certain price. Those measures are severely hampering trade in important sectors. The EU exports some €240 million worth of paper products to Russia every year. Annual exports of palm oil are worth €50 million; those of refrigerators amount to €150 million.

In the recent past, the EU has initiated Dispute Settlement procedures on a number of other trade barriers imposed by Russia, such as recycling fees on cars, a ban on import of pigs and pork, and antidumping duties on light commercial vehicles. These other procedures are ongoing.

Russia has already brought some of the challenged measures into compliance in the course of the panel proceedings. The panel report can be appealed within 60 days. If no appeal is filed within that deadline the report will be adopted and Russia will be bound to comply with the recommendation to bring all the concerned measures into line with WTO rules.

Background

Paper:

The first category of measures that were challenged covers a number of instances in which Russia's applied ad valorem import duties exceed ad valorem bound WTO levels. This concerns six tariff lines on paper and paper board products, including tariff lines 4810 22 900 0, 4810 29 300 0, 4810 92 300 0, 4810 13 800 9, 4810 19 900 0 and 4810 92 100 0. The applied duty rates of 10% or 15% on those tariff lines, depending on the tariff line, exceed the bound rate of 5%.

The other category of measures concerns instances where the form/structure of applied duty rates differs from the form/structure of the bound rates. This leads to the imposition of duties in excess of bound levels, if the product concerned is below a certain value.

Palm oil:

Tariff lines 1511 90 190 2 and 1511 90 990 2

Russia has a bound rate of 3% yet applied an alternative duty of "3%, but not less than 0.09 €/kg" at the date of the Panel's establishment.

Refrigerators:

For tariff line 8418 10 200 1 Russia has a bound rate of 16.7% yet applies an alternative duty of "16.7%, but not less than 0.13 €/l" at the date of the Panel's establishment.

For tariff line 8418 10 800 1 Russia has a bound duty of "16.7 %; or 16 %, but not less than 0.156 €/l; whichever is the lower" yet applies a duty of "16% but not less than 0.156 €/l" at the date of the Panel's establishment.

For tariff line 8418 21 100 0, Russia has a bound duty of "14.7%; or 13.3%, but not less than 0.12 €/l; whichever is the lower" yet applies an alternative duty of "13.3%, but not less than 0.12 €/l" at the date of the Panel's establishment. By applying import duties in excess of duty rates bound in the Schedule, Russia is in violation of Article II-1 of the GATT. The respect of Scheduled tariff commitments is one of key principles of the WTO. The panel fully agreed with the EU. The panel noted that Russia corrected its applied rates in the course of the proceedings for some of the challenged tariff lines (for example, for palm oil and freezers). Therefore, for these lines the panel issued only a finding of inconsistency with WTO rules. For the other lines where inconsistency remains, the panel also recommended that Russia bring itself into compliance.


The full list of products is:
a. 4810 22 900 0 (certain kinds of light-weighted coated paper)
b. 4810 29 300 0 (certain paper and paperboard products in rolls)
c. 4810 92 300 0 (certain multi-ply paper and paperboard products with only one outer layer bleached)
d. 4810 13 800 9 (certain paper and paperboard products in rolls)
e. 4810 19 900 0 (certain paper and paperboard products)
f. 4810 92 100 0 (certain multi-ply paper and paperboard products with each layer bleached)
g. 1511 90 190 2 (certain palm oil products in tare of capacity 20,000 kg or less)
h. 1511 90 900 2 (certain palm oil products in tare of capacity 20,000 kg or less )
i. 8418 10 200 1 (freezers refrigerators household type)
j. 8418 10 800 1 (freezers refrigerators household type)
k. 8418 21 100 0 (compression-type refrigerators of a capacity exceeding 340 litres)

 

For further information

EU requests WTO consultations with Russia over excessive import duties

The WTO Panel Report