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WORLD TRADE ORGANIZATION

EU challenges Russian van duties at WTO

The European Union said Wednesday that it had launched a fresh challenge to Russia at the Geneva-based World Trade Organization, seeking to strike down Moscow's import duties on vans from Germany and Italy.

EU challenges Russian van duties at WTO
Photo: WTO

The EU's diplomatic mission at the Geneva-based WTO said it had filed a formal request for consultations with Russia, the first step towards a full-blown trade dispute.
   
In Brussels' sights are the anti-dumping duties that Russia has slapped on so-called "light commercial vehicles" (LCVs) made by Germany and Italy, both of which are leading global players in the auto sector.
   
"The EU believes the anti-dumping duties are incompatible with WTO law, both on procedural and on substantive grounds," the EU mission said in a statement.

Moscow rejected EU claims of any wrongdoing.
 
"We consider that our measure fulfils our WTO obligations completely," Maxim Medvedkov, Russia's chief trade negotiator, was quoted as saying by the news agency Ria Novosti.. 

"We're ready to work closely with a panel to find a solution to this dispute." 

Both sides now have 60 days to try to negotiate an end to the trade issue, before the EU has the option of asking for a WTO ruling.
   
WTO members are allowed to impose extra duties when goods are being "dumped" on them or sold at below market prices to grab business.
   
But they must prove that their domestic producers are suffering as a result of dumping, and that they are not simply deploying duties to hobble foreign firms' trade.
   
The EU argues that "the duties of 23 percent to 29.6 percent imposed on European LCVs are significantly hampering access to the Russian market."
   
In 2012, the year Russia joined the WTO, EU LCV exports to the country were worth more than 100 million euros ($137 million), it said.
 
Exports have been declining since Russia imposed a "recycling fee" on cars, trucks, buses and other vehicles, days after joining the WTO, it added.
   
The WTO has already been asked to rule on an EU complaint over the recycling fees, which apply only to imported vehicles.
   
"The anti-dumping measures subject of today's panel request are further choking off EU exports of LCVs," the EU said.
   
Brussels and Moscow are also wrangling at the WTO over embargoes on a string of goods from ex-communist countries, several of which are now members of the 28-nation EU.
   
Since joining the WTO, Russia has imposed bans on dairy products, chocolates, wine and meat from countries including Lithuania, Poland, Moldova and Ukraine.
   
Moscow has cited quality concerns that allow countries to take such a step under WTO rules. Critics say Russia offers little scientific evidence and claim the bans are political, hitting countries that refuse to toe their Soviet-era master's line.
   
Russia, in turn, has hit the EU with a WTO complaint over Brussels' energy market reforms, which it says hurt its gas giant Gazprom.
   
The WTO polices global trade accords in an effort to offer its 159 member economies a level playing field, and can authorize penalties against wrongdoers.

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ECONOMIC GROWTH

WTO slashes global growth forecast for 2015

Sluggish economies and global conflicts are taking their toll on world commerce, the Geneva-based World Trade Organization said on Tuesday as it slashed its trade growth outlook for 2015.

WTO slashes global growth forecast for 2015
WTO headquarters in Geneva. Photo: WTO

"For trade growth it is important that you have certain elements present in the global economy (including) stability, predictability, and those things are not there right now," WTO chief Roberto Azevedo told reporters in Geneva.
   
With economies around the world still struggling to fully recover from the 2008 financial crisis, and with conflicts flaring in places like Ukraine and the Middle East, global trade is expanding far more slowly than anticipated a year ago.
   
The Ebola outbreak in west Africa, unusually harsh winter weather in the United States and collapsing world oil prices are also taking their toll, as are strong exchange rate fluctuations, Azevedo said.
   
"All of these things have effects, sometimes destabilising effects," Azevedo said.
   
On Tuesday, WTO said preliminary estimates showed global trade had expanded just 2.8 percent last year and was expected to swell only 3.3 percent this year.
   
A year ago, the WTO was singing a different tune.
   
Last April, it had forecast that trade would expand 4.6 percent in 2014 and 5.8 percent this year.
   
But it downgraded those predictions in September, to 3.1 percent and four percent respectively, before slashing them further on Tuesday.
   
"Trade growth has been disappointing in recent years due largely to prolonged sluggish growth in GDP following the financial crisis," Azevedo said.
   
"Looking forward, we expect trade to continue its slow recovery, but with economic growth still fragile and continued geopolitical tensions, this trend could easily be undermined," he warned.
   
Last year was the third consecutive year in which trade grew less than three percent, WTO said in a statement.
   
In fact, trade growth averaged just 2.4 percent between 2012 and 2014 — the slowest rate on record for a three-year period when trade was expanding.
   
Trade growth is expected to pick up in 2016 with an expansion of four percent, it said, warning though that going forward, trade growth looks set to remain well below the annual average of 5.1 percent seen since 1990.

Slow recovery

"We are cautiously forecasting that trade will continue its slow recovery," Azevedo told reporters.
   
WTO acknowledged though that "risks to the trade forecasts are mostly on the downside."
   
Trade is a key measure of the health of the global economy, which it both stimulates and reflects.
   
But Azevedo warned Tuesday that a systemic shift might be under way and that trade expansion would no longer far outstrip overall economic growth as it has largely done for decades.
   
"The rough two-to-one relationship that prevailed for many years between world trade growth and world GDP growth appears to have broken down," WTO said.
   
The organization noted that "the 2.8 percent rise in world trade in 2014 barely exceeded the increase in world GDP for the year, and forecasts for trade growth in 2015 and 2016 only surpass expected output growth by a small margin."
   
Azevedo said that the 2015 forecast was based on an assumption that global GDP would expand by nearly three percent, while the 2016 forecast depended on economic growth reaching over three percent.
   
The International Monetary Fund announced later Tuesday that it expects to see global growth at a tepid 3.5 percent this year, and 3.8 percent next year.
   
WTO meanwhile said developing countries were expected to see exports rise 3.6 percent this year, while their imports were set to jump 3.7 percent.
   
In developed countries, exports and imports were set to rise just 3.2 percent, it said.
   
Asia was expected to have the strongest export rise at five percent, followed by North America at 4.5 percent.
   
The weakest export growth this year is predicted to come in South America with just 0.2 percent.

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