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RF Vehicle Utilization Fee contravenes WTO national treatment principle

Kyiv. September 3, 2012

Amendments to the Russian Federal Law "On Consumption and Industrial Wastes’ introducing vehicle utilization fee from September 1 undermine one of the key World Trade Organization (WTO) principles, namely, national treatment, states a Senior Associate of Volkov and Partners Law Firm, Andrii Zablotskyi.
“On August 22, Russia became a full-fledged WTO member, and, consequently, undertook obligations set forth in official package of WTO Agreements. Among other obligations is a national treatment regarding internal taxes and regulations prescribed by Article 3 of the General Agreement on Tariffs and Trade (GATT 1994)”, explained the lawyer.
According to him, the national treatment obligation requires that the RF may not treat imported products less favourably than like (similar) domestic products. And despite the Law does read that it applies to both imported and domestic vehicles, section 6 of article 24.1 envisages some cases allowing to avoid payment of utilization fee.
“One of the cases is producer’s obligation to ensure further safe utilization of waste associated with the disposal of vehicles that are no longer operational, i.e. dispose of them. The foreigner (e.g. Ukrainian) can hardly undertake this obligation,” believes Mr. Zablotskyi.
Hence, he said that if the law is actually applied the foreign producers will face more competition comparing to Russian producers, and reminded that the EU has already expressed its worries concerning this discriminatory law.
The Lawyer supposes that the issue may appear to be a subject for the first hearing associated with Russia within the WTO dispute settlement procedure.
Reportedly, on September 1, 2012 the Law ‘On 30 percent utilization fee for fleet vehicles’ entered into force. Currently, it reads that utilization fee shall be paid for each vehicle, imported to the Russian Federation or produced in Russia to support ecological safety. The fee will be paid by persons importing cars to the Russian Federation, and those producing the same on its territory.
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