WTO Panel Rulings Circulated in Two EU-Russia Disputes

7 September 2016

Over the month of August, two separate WTO panels have ruled that certain Russian trade policies are in violation of global rules. One case involves a Russian import ban on pigs and related products from the EU, while the other addresses import duties on certain agricultural and industrial goods from the same 28-nation bloc. The rulings are the first ones involving Russia as a respondent since it joined the Geneva-based organisation.

Russia joined the WTO in August 2012, following a difficult negotiating process that spanned nearly two decades. However, in the years since it has come under scrutiny from some of its major trading partners, including the EU, for allegedly not complying with the organisation’s rulebook – a charge that Moscow has repeatedly denied. (See Bridges Weekly, 15 May 2014)

Meanwhile, diplomatic relations between Russia and many of these same partners, such as the EU and the US, have also deteriorated sharply over various issues, most particularly Russia’s annexation of Crimea and its handling of the Ukrainian crisis.

Given Russia’s status as one of the WTO’s newer members, how it would apply the organisation’s rules and engage with its dispute settlement mechanism has drawn the attention of trade watchers, with more dispute panel rulings in the pipeline.

Pig import ban: questions on scientific basis, alternatives

One of the panel rulings issued last month deals specifically with alleged Russian restrictions on imports of pigs, pork, and related goods from the European Union (DS475). Brussels filed the case after Russia imposed in early 2014 a sweeping ban on imported pigs and related products from the EU, along with issuing a few country-specific bans involving Estonia, Latvia, Lithuania, and Poland. All of those countries, with the exception of Poland, share a border with Russia. (See Bridges Weekly, 10 April 2014)

Russia, for its part, had argued that the ban was needed given that there had been cases of African swine fever – an extremely contagious condition that can prove deadly to pigs – in wild boar found in Lithuania and Poland, and later in some Latvian boars and pigs. The EU maintained that the cases of swine fever were very limited in number, and that the 28-nation bloc had already taken steps to contain the virus from further spread.

The EU challenged those restrictions at the WTO over two years ago, arguing that these bans violated rules on sanitary and phytosanitary (SPS) measures – in other words, those measures that relate to animal or plant health, or food safety. In a press release issued after the ruling, the European Commission also argued that the Russian ban was largely politically motivated, rather than scientifically driven.

“Today's ruling confirms that the measures taken by Russia against the EU have little to do with any real sanitary or health risks. EU products are safe and there is thus no need for any country to maintain unjustified import restrictions,” said the EU’s executive arm.

Among other findings, the panel ultimately deemed that the import ban is not in line with the international standards set by the World Organization for Animal Health, known as the OIE by its French acronym.

The panel also faulted Moscow for not customising the ban around the actual circumstances in the areas where the pigs or pig products were being imported from – particularly as the EU had proven that there were regions that were fully fever-free.

Other areas where the panel found Russia to be violating trade rules were procedural, such as by requesting information beyond necessary on changing risk levels or determining if an area was indeed disease-free.

Along with faulting the procedural elements of the SPS measures, as well as their scientific basis, the panel also raised certain concerns regarding the economic implications of the policy and whether there were better ways to address the alleged swine fever concern.

For instance, the panel deemed that the ban was more trade-restrictive than what was needed to actually support Russia’s goal of preventing the spread of the swine fever, and agreed with the EU’s claims that the import bans led to unfair discrimination between WTO members facing similar conditions. 

Certain other claims were left unaddressed, with the panel citing lack of evidence among other reasons.

Duties on paper, refrigerators, palm oil

In a separate case, a WTO panel also ruled that a series of import duties on select agricultural and industrial goods (DS485) are also in violation of global trade rules. The affected goods include various types of paper and paperboard products, along with some palm oil products and household freezers.

The EU filed the case in late 2014, alleging that for a series of tariff lines Russia was exceeding its “bound” rates that it had negotiated when joining the WTO – in other words, the ceilings that it agreed to respect for those products. (See Bridges Weekly, 6 November 2014)

The panel ruled that the bulk of the measures – 11 out of the 12 – were indeed above agreed limits, finding that the twelfth, “more general” measure of “systematic duty variations” was not supported by sufficient evidence by the EU.

“Those measures are severely hampering trade in important sectors,” said the European Commission in a press release. However, the EU’s executive arm noted that Russia has already brought some of the measures cited in the dispute into compliance with global trade rules.

In both cases, either side has a 60-day window in which they can appeal the panel report. Should that occur, the dispute would go to the Appellate Body for review, which will usually focus on facts of law or legal interpretation.

ICTSD reporting.

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