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25 Jul, 2013 10:32

World’s biggest economies team up in WTO fight against Russian car levy

World’s biggest economies team up in WTO fight against Russian car levy

Japan has filed a trade dispute against Russia over the fee it levies on car imports, following a similar move by the EU. China, the US, Turkey, and Ukraine have also reportedly joined the WTO consultations over the Russian tax.

The countries claim the new charge, the so-called "recycling fee”, that Russia imposes on motor vehicles applies only to imported vehicles and thereby increases their costs. Japan claims the Russian recycling fee flouts international trade rules, according to the FT.

"Therefore, the measure at issue discriminates between imported vehicles and the ones produced domestically," Reuters quotes Japan’s letter to the WTO.

Moscow introduced the fee on cars last September which can be as high as $3,600 per new vehicle, DW reports. The levy aimed at offsetting the costs of recycling cars is effectively applied only to imports of new and used cars, as local manufacturers do not pay it if they can provide the authorities with a guarantee of safe disposal of the vehicle in the future.

The United States is also joining  the challenge to Russia, and told the WTO that between September 2012 and May 2013, the fee was levied on $1.25 billion of US exports, more than 10 percent of total US exports to Russia, Reuters reports.

The EU says $13.2 billion of its exports are affected annually, according to the news agency.

Russia now has 60 days to deal with the complaint. If it doesn’t succeed the complainants could ask the WTO to adjudicate, with an end goal of forcing Moscow to change its rules or face trade sanctions, Reuters reports.

Russia's objections to opening up its car market, Europe's second biggest, were already a major sticking point in its 18 year negotiation to join the WTO, according to the agency.