January 24, 2018 / 12:15 PM / in a year

U.S. quizzes Moscow at WTO over 'made in Russia' laws

GENEVA (Reuters) - The United States wants Russia to explain how laws giving priority to the purchase of domestically produced goods can comply with World Trade Organization rules, according to a filing published on Wednesday.

Russian President Vladimir Putin (front) visits the company United Engine Corporation - Ufa Engine Industrial Association in the city of Ufa, Russia January 24, 2018. Sputnik/Alexei Nikolsky/Kremlin via REUTERS

WTO rules generally ban policies that discriminate against importers, and since the global financial crisis a series of disputes have arisen over governments telling manufacturers to source a certain proportion of their inputs from national firms.

The U.S. statement on “made in Russia” listed 10 measures it said Moscow had taken since 2015 to give Russian goods and services priority, and posed four questions about how the system worked.

“The United States has already asked Russia for information on a number of these measures, but has not yet received any answers,” it said.

Russian Industry and Trade Ministry said the U.S. query was “legally unjustified” because Moscow had not joined a special WTO agreement regulating state’s purchases.

“Russia entered into commitments to start working to join separate agreement under WTO, regulating state’s purchases. We started this work already, but have not taken any obligations yet”, it said.

The United States, historically quick to challenge any apparent breach of the rules, has under President Donald Trump focused particularly on perceptions of unfair trading in state-dominated economies, with China and Vietnam already singled out.

It has also imposed high tariffs on a range of imported goods, this week adding solar panels and washing machines to the list, as part of a protectionist agenda billed by Trump as a way of safeguarding American jobs.

Russia’s economy took a hit in 2014 after the United States and the European Union imposed sanctions over Moscow’s annexation of Crimea, and ramped them up as pro-Russian separatist unrest spread to eastern Ukraine. Russia retaliated by limiting food imports from a range of Western countries.

Until 2015, state-backed firms were required to give priority to Russian-made goods, but under a law enacted that July, other companies - including those with big projects and minority state funding - were also expected to do so.

In 2014, Russia had also made it a priority for state-owned companies to source industrial products locally and gave the government a role in setting the terms of purchasing contracts, it said.

“Taken together, these laws grant the Government of Russia the authority to restrict the purchasing decisions of a large part of the Russian economy, separate and distinct from government procurement,” the U.S. statement said.

At the end of 2017, President Vladimir Putin signed a law authorizing “made in Russia” requirements for aircraft and ships when purchased by one of the defined entities, it said.

Reporting by Tom Miles, additional reporting by Gleb Stolyarov, editing by Larry King

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