Russia to impose new tariffs on European goods

Russia is planning to impose additional restrictions on goods imported from the EU. The Russian government has sent a corresponding notice to the World Trade Organization (WTO).

The restrictions will be a response to the EU’s 25% tariff on Russian steel which came into force on 2 February, according to the notice published on the WTO website.

The exact nature of the restrictions has not yet been decided, the Russian Ministry of Economic Development told Interfax.

According to the WTO’s rules, Russia has a right to compensation, and in the absence of that, to “counter-suspension of concessions”, a spokesperson for the ministry explained.

The tariff war on the steel market was sparked in 2018 by the US, which imposed tariffs on imports from South Korea, Argentina, Australia, Brazil, the EU, Canada, Mexico and Russia. In response, a number of WTO members started an investigation to safeguard themselves against the risk of American steel and aluminum flowing into their own domestic markets, the representative noted.

The result of the investigation was a quota policy – each country is authorized to supply the EU with the average volume for 2015-2017, and anything beyond that will be subject to a 25% tariff.

“According to the WTO’s rules, organization members who are ‘suffering’ from such special protection measures (quotas in this case) have the right to compensation or a counter suspension of concessions. We gave notice in accordance with WTO procedures that we reserve the relevant right. How we will use it has not yet been decided in practice,” the Russian ministry’s press service stated.

“Just like the EU imposed protective measures on our steel and did not offer compensation for the damage caused, Russia is announcing its intention to do it independently. As a rule, this will mean raising import tariffs,” said Maxim Medvedkov, deputy chair of trade policy at the Higher School of Economics in Moscow.

He noted that the new tariffs can typically be expected to affect a “comparable volume of goods”.

In the EU’s case, this could be roughly $4.4 billion worth of goods – the amount of steel Russia sold European clients in 2017. This would equate to around 5% of all of Europe’s exports to Russia ($89 billion in 2018).

In response to the steel and aluminum tariffs imposed by the US in March 2018, Russia placed restrictions on US imports and filed a lawsuit against the US in the World Trade Organization.

  Russia, Europe, WTO, EU, South Korea, Canada