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RUSSIA

EU takes Russia-Italy trade row to WTO

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

EU takes Russia-Italy trade row to WTO
Moscow rejected EU claims of any wrongdoing. WTO logo: Shutterstock

The EU's diplomatic mission at the Geneva-based World Trade Organization (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 Italy and Germany, 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.

Both sides now have 60 days to try to negotiate an end to the dispute, before the EU has the option of asking for a ruling by a WTO disputes panel – a process that can last for years, amid appeals, counter-appeals and compliance assessments. Moscow rejected EU claims of any wrongdoing. 

"We consider that our measure fulfils our WTO obligations completely. We're ready to work closely with a panel to find a solution to this dispute," Maxim Medvedkov, Russia's chief trade negotiator, was quoted as saying by the news agency Ria Novosti.

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."

'Choking off' EU exports

In 2012, the year Russia joined the WTO, EU LCV exports to the country were worth more than €100 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 authorise penalties against wrongdoers.

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EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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