Russian automakers made to comply with WTO rules

Russia will fulfill its obligations as a WTO member by establishing a level playing field for domestic manufacturers and importers in 2014. Source: ITAR-TASS

Russia will fulfill its obligations as a WTO member by establishing a level playing field for domestic manufacturers and importers in 2014. Source: ITAR-TASS

The State Duma has adopted a draft law in its first reading, stripping Russian car manufacturers of the option of making commitments for utilization of their products instead of paying the mandatory fee. The draft law "On Amendments to Article 24.1 of the Federal Law on Waste of Production and Consumption" was sent to the lower house of the Russian parliament in May.

Starting Sept. 1, 2012, a recycling fee has been charged on all cars sold in Russia, but local producers could still escape paying it by replacing the tax with the guarantee of utilization.

Similarly, according to current regulations, the fee may be avoided for vehicles that are imported from the territory of the Customs Union (CU) and placed in the Kaliningrad region by procedure of the free customs zone.

The basic rate of utilization fee for passenger vehicles is 20,000 rubles (approximately $620) and, trucks and buses, 150,000 rubles (approximately $4,640). There are also increasing and decreasing rates, depending on the age of the car and its technical characteristics.

Around 50 billion rubles ($1.5 billion) in recycling fees on imported cars has been already collected, Russia’s deputy minister of industry and trade has stated. The spending of funds should include the establishment of a system of recycling cars.

Development of the draft law grew out of the need to adapt Russian legislation to the conditions of the country’s recent ascension to the World Trade Organization (WTO), an explanatory note attached to the draft law states.

With the adoption of this law, Russia will fulfill its obligations as a WTO member by establishing a level playing field for domestic manufacturers and importers.

Previously, the EU and other major car exporters had insisted on the payment of fees for local manufacturers and importers of machinery on equal terms. The amendments should have come into force in Russia on July 1, but deputies of the State Duma did not have time to consider the draft of the law before the end of the spring session.

In early June, the EU sent the WTO a dispute settlement action against Russia, in regards to the unequal terms of payment of the utilization fee for Russian car manufacturers and importers. Later, other car exporters — China, the U.S., Turkey, Ukraine and Japan — joined the EU in their complaint.

The Russian government has assured that the mandatory fee will not lead to a sharp rise in the prices of Russian cars. A system of measures aimed at preserving the competitiveness of the domestic auto industry will be developed, promised Russia’s deputy minister of industry and trade, Alexei Rakhmanov, at a meeting of the State Duma.

Any price increase that may occur on the Russian market is likely to be within the parameters of inflation expectations.

As one of the measures, the Ministry of Industry and Trade proposed to the government a ban on government purchases of vehicles and special equipment made outside of Russia, Belarus and Kazakhstan. The ban should extend to passenger cars, trucks, road tractors, buses, trolleys and special vehicles, and could enter into force on Jan. 1, 2014.

First published in Russian in Vedomosti.

All rights reserved by Rossiyskaya Gazeta.

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