Russia Is Expected to Go Through Proceedings in WTO

In accordance with agreements related to Russia's accession to the World Trade Organization, in the nearest future our country will have to reduce the import customs duties for different automobiles.
At the same time, the reduction is not very large. Thus, the import duty for the used compact cars, which were made from 5 to 7 years before import, should reduce from 25% but at least €0.5per cm3 of the engine cubic capacity to 20% but at least €0.4 per cm3 of the engine cubic capacity. The import duty for the used trucks should reduce from 15% to 10%.

This reduction, no doubt, will be for the benefit of both Russian consumers, for whom the growth of prices for the foreign vehicles will be cut, and those manufacturers who use the trucks as production assets. But the Russian automobile manufacturers will lose, because there will be additional competitive pressure from the foreign manufacturers who are competitive enough without such reduction. The cumulative effect of such reduction will be positive: in spite of lots of disagreement, in general, economists agree that the trade liberalization positively influences upon cumulative public welfare; the benefit for the users of imported goods will always be larger than the loss for the manufacturers. At the same time,  resources used in inefficient sectors of industry, including labour ones, can move to more efficient sectors capable to produce the goods competitive at the world markets.

Simultaneously with joining WTO, the Russian authorities made a decision to introduce an additional tax for imported vehicles – the recycling tax. This tax is related to new and used automobiles of all categories: cars, commercial vehicles, and trucks. It must be paid both by companies and individuals importing foreign vehicles.

Introduction of the recycling tax is an attempt by the Russian authorities to compensate the reduction of the tariff shelter for domestic automobile industry cutting corners of WTO regulations. According to these regulations, it is not allowed to introduce additional protective measures to support competitiveness of domestic industry. Now the international trade faces the period, when all the tariff measures are minimized to zero, and the priority is given to non-tariff or technical regulation measures. All countries try to use different technical requirements and sometimes the line between allowed things and violations is too fine. At the same time, the recycling tax is not an obvious violation of rules, because there is no increase of the import duties, the value of which is tightly agreed upon in the agreements related to Russia's joining WTO. Now Russia appears to expect proceedings in the WTO Dispute Settlement Commission. There can also appear counter-claims, additional anti-dumping investigations against Russian companies. All that is not the best beginning for membership in an international organization.

A. Yu. Knobel – Candidate of Science, Economy., Head of Foreign Trade Department