UPDATE 1-Russia likely to contest EU energy rules at WTO-source

Thu Sep 27, 2012 1:44pm EDT

* EU rules restrict Gazprom's pipeline ownership

* Putin once referred to the EU rules as "robbery"

* Russian foreign minister says EU wants new concessions

By Gleb Bryanski

MOSCOW, Sept 27 (Reuters) - Russia is likely to contest European Union energy rules at the World Trade Organization in what would be its first trade dispute since it joined the global body, a government source said on Thursday.

The rules, known as the Third Energy Package, restrict gas company Gazprom's control over its European pipeline assets and have been an irritant in relations between Russia and the EU, which accounts for half of Russia's trade.

The source, who spoke on condition of anonymity, said Russia - which joined the WTO last month - was looking into whether the EU rules were subject to WTO regulations and that the study should be completed in two weeks.

"If the WTO rules are applicable to the Third Energy Package, as well as other measures restricting the Russian imports, we will contest them at the WTO," the source said.

"In all likelihood it is (subject to WTO rules)."

Once a WTO member initiates a trade dispute, the country with which it is in disagreement has 60 days to resolve the complaint. After the 60-day period, the complainant can ask the WTO to set up a dispute panel to adjudicate on the issue.

Trade diplomats say they expect Russia will take some time to settle in at the WTO before engaging in disputes, as China did after it joined in 2001, but others are watching to see whether Russia or one of its trading partners throws the first punch.

Russia's trade team in Geneva is not yet fully up and running as no ambassador has been appointed yet.

Russian President Vladimir Putin, who returned to the Kremlin in May, called the Third Energy Package "robbery" when he was prime minister but this month dismissed a suggestion that Russia was entering a trade war with Europe over Gazprom.

FLOW OF GAS

The European Commission, the EU executive, is investigating suspected anti-competitive practices by Gazprom, which is more than 50 percent owned by the Russian state.

The anti-trust case focuses on complaints that Gazprom is hindering the flow of gas and mistreating its customers by linking the price of gas to oil.

Russia joined the WTO in August after an 18-year wait. Putin has said his country will use its membership to try to develop freer trade and is hoping it will boost Russia's energy-driven $1.9 trillion economy.

Speaking at the G20 summit in Mexico, Putin spoke strongly against disguising protectionist measures as environmental and technical regulation.

Europe's Trade Commissioner, Karel De Gucht, threatened to take Russia to the WTO over a string of restrictive practices on Sept. 7, saying Moscow needed to play by the rules now it was a member of the global body.

De Gucht criticised Russia's plans to levy scrappage fees on imported vehicles, a ban on European live animal imports, two anti-dumping cases and another trade defence case launched by Moscow against Europe in recent months.

Russian Foreign Minister Sergei Lavrov has said the trade disputes have affected work on a framework partnership agreement which Russia is due to sign with the EU.

"There are glitches on many fronts, including work on the new framework agreement, where our partners would like to fish for a lot more concessions compared with what has been agreed during the WTO accession negotiations," Lavrov told reporters in New York on the sidelines of the U.N. General Assembly.

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