August 17, 2016
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.
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