Japan has filed a trade complaint against new WTO member Russia over a fee the latter levies on car imports. Critics allege the tax is illegal, as the fee meant to cover recycling costs did not have to be paid by all.
Two weeks after the European Union took similar action, Japan on Wednesday filed a complaint with the World trade Organization (WTO) over a new recycling levy in Russia that allegedly hampered foreign vehicle imports.
Moscow introduced the fee on cars last September which can be as high as 2,700 euros ($3,600) per new vehicle. Russia had said the levy offset the costs of recycling cars, but its critics pointed out the fee was effectively an illegal tax on imports as it did not affect all market players.
Carmakers from Russia, Kazakhstan and Belarus have been able to win exemptions to the recycling fee, if they produce in Russia and are registered as companies in the country.
Ratcheting up the pressure
“Therefore, the measure at issue discriminates between imported vehicles and the ones produced domestically,” Japan told the WTO. The Asian country said it shipped 357,000 cars, trucks and buses to Russia last year alone, based on statistics compiled by the Japanese Automobile Manufacturers’ Association.
The WTO complaints from Japan and the EU are the first against Russia since it joined the world trade body in August last year and reflect a global battle among governments desperate for economic growth. Russia’s objections to opening up its car market were already a major sticking point in the Kremlin’s 18-year negotiations to join the WTO.
Russia now has 60 days to deal with the complaint, otherwise facing trade sanctions, if it doesn’t change its rules. The United States has also signaled it will join the challenge to Russia.