The European Union is filing its first dispute with Russia at the World Trade Organization over fees imposed on used cars and trucks that the country imports.

Fees begin at about €420 ($541) for small cars and increase with the size of the vehicle. Russia has defended the tariffs on environmental grounds, noting that more than half of the cars now on its roads are 10 years or older and will soon be scrapped.

The EU says Russia is illegally protecting its carmakers with the recycling fee. The issue matters to Brussels because Russia is on course to overtake Germany as Europe’s biggest car market within a few years, offering a lucrative export market for recession-hit EU carmakers.

“The European Commission has pursued every diplomatic channel for almost one year now to find a solution with our Russian partners on this matter but to no avail. The fee is incompatible with the WTO’s most basic rule prohibiting discrimination against and among imports,” EU Trade Commissioner Karel De Gucht said in a statement.

Cutting import tariffs on cars was a major sticking point in Russia’s 18-year negotiation to join the WTO. Moscow agreed to do so, but critics say the recycling fee, collected up-front when a car is imported, effectively cancels out the lower tariffs. Russian-produced cars, however, are not subject to the same charge, making it, in the EU’s eyes, in effect an import tax.

The EU says the fee has a severe impact on €10 billion ($12.9 billion) of annual exports, and says Russia’s own estimates show it generates €1.3 billion in Russian government revenues.

“We would have hoped that things could have been solved differently,” said Frank Schauff, head of the Association of European Businesses in Russia. “We have no illusions about the WTO disputes procedure, which can take years.”

Russian trade official Ekaterina Mayorova said: “Our colleagues from the EU warned that they intend to send these documents to WTO. We have been expecting this development.”

The EU had expected Russian lawmakers to equalize fees between foreign and domestic carmakers, Mayorova said. The State Duma adjourned July 5 for its summer vacation without enacting the legislation.