Russian Gas Dual Pricing Consistency with WTO Law: A Question That Might Have Been Answered

Abstract

Russia sells its gas domestically at a price lower than the one used for the exported gas, creating the so-called situation of “dual pricing”. This difference leads to lower prices for final products that use gas as an input, which consequently pose competition problems for products originating in other Members. The purpose of the present thesis is to answer whether the practice of gas dual pricing in Russia’s case is WTO consistent. Based on the historical background, the thesis concludes that the status of dual pricing is not expressly enshrined in WTO law and it is unlikely that it will be soon. Moreover, by analysing Russia’s accession commitments and its national legislation it reaches the conclusion that gas dual pricing will not end in the near future. Since dual pricing is not expressly prohibited in WTO law, the thesis further analyses the consistency of Russian gas dual pricing with the WTO subsidies rules. It concludes that the specificity requirement that a subsidy has to comply with is not present. Moreover, where for the specificity requirement to be overcome there are other requirements that can pose hurdles for a subsidy to be found. Short after its accession Russia commenced three cases against anti-dumping measures imposed by the EU and Ukraine on the Russian products that used cheaper gas. By using the recent reasoning of the AB in EU – Biodiesel, a case that can provide with answers to dual pricing consistency with anti-dumping law, the thesis anticipates that anti-dumping measures imposed by the EU and Ukraine will be found in violation of anti-dumping rules. Even though Russian gas dual pricing is found consistent with subsidies and anti-dumping rules, the thesis concludes that the question of its compatibility with WTO law should not be considered fully closed, because of the discontent of other Members that can be manifested in legislative proposals for changes in WTO rules, and also because of the possibility of other existing provisions to be invoked by the affected Members.