Tensions in the trade sector, between the European Union (part of the World Trade Organization or WTO) and Russia have risen recently due to a pesky auto recycling fee which the latter refuses to give up on, while the former is adamant that it is “an illegal trade barrier against imported cars.” Now, new information been revealed, via a Reuters report, which announces that the fellow WTO members the United States will also be joining the case.
Russia, whose own recent admission into the trade organization is now being questioned, previously announced that it was going to lower import duties on cars, and this was apparently one of the key points that got them in. Now, that all of the paperwork has been signed, though, the vast Eurasian nation doesn’t seem to be complying, thus having all imported cars incur additional fees to be used “cover the future cost of recycling” the vehicle once it is no longer needed.
Locally-made vehicles don’t receive this tax, and thus can be sold at more competitive prices. I think that the Russians are doing the right thing, though, protecting the market from cars made abroad, thus encouraging at first and then genuinely helping out the entire automotive sector in their own country, creating jobs and additional need for them.
Regardless, it is very difficult to maintain such a firm stance nowadays, as trade giants like the WTO has an agenda of its own, and an “either with us, or against us attitude,” if you will. Still, organization leaders are not completely unreasonable, and are asking either for the fees to be cut, or at least explained in a relevant way, put into context so that they can better understand the situation.
Honestly, all of the above just sounds like a bit of intimidation aimed at the occasional flourishes of independence shown by Russia – one of the few countries of the world which still runs its own business pretty much its own way, even if Western influences are more present there than in the past. Moreover, there’s also the country’s huge growth potential, as it has been announced as a possible European market leader by 2016 (and world’s fifth largest), when it could surpass the Germans. By 2020, annual sales are expected to reach 4.4 million units, up from today’s 2.9 million.
This all means that if Russia refuses to lower the levies, when the established automakers begin to plot their next factory, their choice will be far easier. In fact, it’s already started, with Ford having built a factory for a joint-venture in record time, and plans another engine plant in the near future. General Motors is also hard at work, and in the midst of a $1 billion investment push in Russia to increase annual production capacity from about 100,000 to 230,000 vehicles,” according to The Detroit News.
By Andrei Nedelea
Note: Modern Citroen DS-like 2012 Lada XRay concept pictured below; promising things ahead for Lada?
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