EUROPEAN FOREIGN POLICY SCORECARD 2014

Trade liberalisation and overall relationship

11 - Trade liberalisation with Russia

Grade: B+
Unity 5/5
Resources 4/5
Outcome 5/10
Total 14/20
Scorecard 2012: A- (16/20)

Rather than following WTO rules, Russia defended itself against them. The EU used WTO mechanisms to fight back.

Europeans want to see further trade liberalisation in Russia. However, since Russia joined the WTO, in August 2012, it has sought to avoid further liberalisation and to avoid even following WTO rules. The EU believes Russia is in breach of the rules in a long list of areas. The most prominent breach concerns recycling or scrapping fees for foreign-produced cars. The EU filed a complaint with the WTO, requesting consultations, and then launched a formal dispute-settlement process in the autumn. As a result, Russia revised the legislation, which penalised foreign producers. Changes came into effect on 1 January, but the EU is not convinced that discrimination will end in practice. Also, past experience has shown that when Russia removes barriers in one area, it almost always introduces new ones in other areas. Other outstanding disagreements with Russia concern livestock imports and pulp and paper.

In the second half of 2013, Russia also waged a covert trade war against some of the Eastern Partnership countries. In particular, it banned selected imports from Moldova and Ukraine in an apparent attempt to dissuade them from signing Association Agreements with the EU. In the same vein, Russia punished Lithuania, which held the rotating EU presidency, by banning the import of its dairy products, citing phytosanitary problems. It is in principle possible, according to WTO rules, to ban imports of certain goods, but the importer needs to single out concrete producers and show exactly how their production is sub-standard. Russia has done none of that. In theory, the EU could use WTO mechanisms to protest against such behaviour. But this is difficult because Russia’s covert sanctions are “a moving target”. It can easily switch between different import articles against which it discriminates, and the WTO’s slow legal procedures make it hard to respond quickly enough.