International Trade News. January – March 2017

WTO NEWS

UKRAINE INITIATED A CASE IN WTO AGAINST THE RUSSIAN FEDERATION ON TRANSIT RESTRICTIONS

On 9 February 2017, Ukraine filed a request for the establishment of the Panel in case DS 512 “Russia — Measures Concerning Traffic in Transit” to the WTO Dispute settlement body.

From 1 January 2016 the Russian Federation imposed restrictions on transit cargo transportation through highways and railway from the territory of Ukraine through the Russian Federation to the Republic of Kazakhstan and from 1 July 2016 – to Kyrgyzstan. The reason behind the restrictions was application by Ukraine of Chapter IV of the Association Agreement between EU and Ukraine, regarding the free trade area. Around 79 per cent of export supplies from Ukraine to Kazakhstan and 95 per cent of export supplies to Kyrgyzstan have been affected due to restrictions and partial ban imposed by Russia.

In response the Ministry of Economic Development and Trade of Ukraine on 14 September 2016 filed a request to conduct consultations with the Russian Federation to the WTO Dispute Settlement Body. In the process of consultations the Russian Federation referred to the fact that the restrictions had been imposed for guaranteeing its economic safety and national interests. Whereas at the stage of consultations the Russian Federation did not take any measures to terminate the respective restrictions, Ukraine moved on to the next stage of dispute settlement within WTO and filed a request for establishment of the panel.

For reference: This case is a second case of Ukraine against the Russian Federation in WTO. In October 2015 Ukraine initiated a case against the Russian Federation on export restrictions for railway equipment. At this moment, according to the information of the Ministry of Economic Development and Trade, Ukraine is considering initiation of the third dispute in WTO against the Russian Federation regarding market restrictions on food products and certain industrial goods at the market of the Russian Federation due to their alleged incompliance with the technical regulations and phytosanitary requirements.

TRADE LIBERALIZATION AND ELIMINATION OF TRADE BARRIERS

UKRAINE RATIFIED THE FREE TRADE AGREEMENT BETWEEN UKRAINE AND CANADA

On 14 March 2017, the Ukrainian Parliament ratified the Free Trade Agreement between Ukraine and Canada by 272 votes.[1]

The negotiations on bilateral trade liberalization were in process since 2009. The negotiating process was successfully completed on 14 July 2015 and on 11 July 2016 the first Vice-Prime-Minister of Ukraine Stepan Kubiv and the Minister of International Trade of Canada Chrystia Freeland signed the Free Trade Area Agreement.

The Agreement will enter into force after its ratification by the Parliaments of both states. Currently the Agreement is awaiting for ratification by the Senate of Canada (third hearing), signing by the President of Ukraine and the Governor General of Canada respectively and exchange with ratification notes.

For reference: the Agreement will open duty-free access for Ukrainian exporters to 98 per cent of commodity markets. At the start of application of the Agreement the Parties will apply the principle of asymmetric obligations, giving Ukraine an opportunity to adapt its trade with Canada to new conditions. Thus, Ukraine will enjoy transitions periods until full liberalization of import duties.

THE WTO TRADE FACILITATION AGREEMENT ENTERED INTO FORCE

On 22 February 2017, the Trade Facilitation Agreement (TFA) entered into force, being the first multilateral WTO agreement aimed at liberalization of global trade procedures. TFA has been ratified by two thirds of the current 164 WTO members, which was the compulsory requirement for its entry into force.

WTO Director-General Roberto Azevêdo considers that TFA will reduce the global trade costs at least by 14 per cent. It is expected that TFA will provide more benefits to the developing countries whereas its provisions facilitate access of their products to the wealthy markets.

Deputy Minister of Economic Development and Trade of Ukraine – Trade Representative of Ukraine Nataliya Mykolska noted that TFA will provide an opportunity to eliminate part of trade barriers hindering realization of the Ukrainian export potential and compensate the loss of the Russian market. Trade Representative of Ukraine also noted that the interesting and important work on implementation of TFA provisions lies ahead, this will provide Ukraine a chance to enter TOP-50 of countries with the most comfortable conditions for business.

For reference: in November 2015 Verkhovna Rada of Ukraine ratified the Protocol Amending the Marrakesh Agreement Establishing the World Trade Organization. Ratification of the Protocol implied consent to the mandatory application of the provisions of the Trade Facilitation Agreement by Ukraine after its entry into force.

GUAM MEMBERS SIGNED A QUADRUPLE PROTOCOL ON PROMOTION OF COORDINATION IN THE FRAMEWORK OF THE FTA

On 27 March 2017, a summit of member states of the Organization for Democracy and Economic Development (GUAM) was held in Kyiv with participation of the Prime-Minister of Ukraine Volodymyr Groysman, Deputy Prime-Minister of Azerbaijan Ismet Abasov, Prime-Minister of Moldova Pavel Filipe and Prime-Minister of Georgia Georgiy Rvirikashvili. Upon the results of the meeting of heads of Government of the countries of GUAM the Protocol on Adoption of the Rules of Creation and Operation of the Working Body coordinating actions of the Parties of the Agreement on creation of the free trade area between GUAM member states. On behalf of Ukraine the document was signed by the Deputy Minister of Economic Development and Trade of Ukraine – Trade Representative of Ukraine Nataliya Mykolska.[2]

According to the clarification of the Prime-Minister Volodymyr Groysman, these agreements, alongside with the Protocol between the customs administrations of GUAM members states on mutual recognition of certain results of customs formalities, are aimed at introduction of the free trade agreement in the nearest future. It is also expected to sign the new rules of origin of goods within GUAM, which will replace the outdated rules of origin, currently used within CIS.

THE AGREEMENT ON TECHNICAL AND FINANCIAL COOPERATION WITH NORWAY WAS CONCLUDED

On 22 March 2017, Verkhovna Rada of Ukraine ratified the Agreement between the Cabinet of Ministers of Ukraine and the Government of the Kingdom of Norway on Technical and Financial Cooperation (the Agreement was signed on 18 October 2016 in Oslo)[3].

The Agreement provides for the conditions of financial borrowing and technical assistance from the Government of Norway, stipulates the types and forms of such assistance, the mechanism of approval of technical assistance projects, subsidies, privileges and immunities for the Norwegian party within framework of the said projects.

In 2015 the volume of Norwegian assistance to Ukraine was EUR 36,5 million, which was directed to macro financial stabilization, development of state administration, energy sector, energy efficiency, radiation security, facilitation of trade and European integration, humanitarian help.

THE V ROUND OF NEGOTIATIONS BETWEEN UKRAINE AND ISRAEL ON THE FREE TRADE AGREEMENT WAS HELD

On 8-9 March 2017, the V round of negotiations regarding conclusion of the Free Trade Agreement between Ukraine and the State of Israel was held. Upon the results of the round the Parties created the plan of intersession work and agreed to carry the next round of negotiations this year in Kyiv.[4]

The Parties reached sufficient progress on mutual agreements regarding access to the markets of agricultural and industrial goods and agreed certain chapters of the Agreement.

Ukrainian negotiation group in chaired by Nataliya Mykolska, Deputy Minister of Economic Development and Trade of Ukraine – Trade Representative of Ukraine. According to her clarification, in the course of the negotiations the Parties “agreed the majority of issues regarding access to the commodity markets, as well as certain chapters of the Agreement, in particular, regarding the rules of origin of goods”. In the next round of negotiations it is planned to discuss the acceptable level of liberalization of customs tariffs for the specified range of sensible goods.

SANITARY AND PHYTOSANITARY MEASURES

MOLDOVA IMPOSED RESTRICTIONS ON POULTRY SUPPLIES FROM UKRAINE

On 13 February 2017, Moldova imposed temporary restrictions on import of poultry meat from Ukraine due to outbreak of acute viral disease – avian flu. Whereas no specific terms of the restrictions have been communicated, it is expected that they will remain in force until disappearance of the threat. Besides of Ukraine Moldova also prohibited import of poultry meat and eggs from Germany, Poland and Russia.

The State Service for the Issues of Food Product Safety and Consumer Protection informed that Moldova has not officially informed of the restrictions of supply of poultry from Ukraine, however according to the agency such restrictions are highly probable. According to the press-service: “Whereas there were cases of avian flu registered in Ukraine, according to the international restrictions the competent bodies of Moldova are authorized to introduce such measures”.

For information: the first cases of avian flu in Ukraine in 2016 were registered on 30 April in Kherson region. At the beginning of January 2017 new cases were registered in Chernivtsi and Odesa region. Subsequently EU, Belarus and Hong Kong imposed restrictions on import of Ukrainian poultry meat from the territories where the cases of the disease had been registered.

MEAT SUPPLIES TO THE EUROPEAN UNION HAVE BEEN RESUMED

The press-service of the Ministry of Agrarian Policy of Ukraine from 30 January 2017 Ukraine resumed poultry meat supplies to the European Union, which were suspended at the end of 2016 due to outbreak of avian flu in Kherson region.

For information: in December 2016 EU imposed ban on import of poultry meat and products from the territory of Ukraine due to cases of highly pathogenic avian influenza (H5) in Kherson region. Ukrainian authorities provided to the European Union information on the measures taken to eliminate the virus disease outbreak.

TRADE PROTECTION MEASURES

ANTIDUMPING DUTY ON EXPORT OF UKRAINIAN STEEL ROPES TO THE EUROPEAN UNION HAS EXPIRED

According to the notification of the European Commission[5], the antidumping duty on import of steel ropes originating in Ukraine and Moldova ceased to apply from 10 February 2017.

Antidumping duty for Ukrainian goods at the rate of 51,8 per cent was introduced in 1999 and since then has been extended several times. In 2004 upon the results of investigation of the facts of circumvention of antidumping duty this rate was extended, as well, to the ropes supplied to the EU from Moldova.

In November 2014 the interim review of antidumping measures applied to PJSC “VO “Stalkanat-Silur” was initiated. Upon the results of the review the antidumping duty rate was changed for this company from 51,8 per cent to 10,5 per cent[6]. Whereas none of the European manufacturers did not apply for sunset review of the measures, their validity term expired on 10 February 2017 and the measures lost their legal force.

For reference: currently the European Union applies antidumping measures in regard of only 1 Ukrainian product: seamless steel pipes. The term of this antidumping duty shall expire on 05 July 2017.

TAIWAN IMPOSED ANTIDUMPING MEASURES AGAINST FLAT-ROLLED STEEL FROM UKRAINE

Upon the results of the antidumping investigation the customs administration of Taiwan informed about imposition of final antidumping measures for a period of 5 years regarding import of flat-rolled steel products from Ukraine, as well as from Brazil, China, India, Indonesia and South Korea[7]. Antidumping measures entered into force on 1 March 2017.

It shall be noted that the amount of final antidumping duty for Ukraine is lower in comparison to preliminary duty which was applied during the investigation period. The preliminary duty rate for Ukrainian companies, in particular the Mariupol Metallurgy Works and Metinvest International SA was 26,57 per cent, the preliminary duties applied since 22 August 2016. Now the final duty rate is 17,91 per cent. Duty rates for other countries range from 4,02 per cent (for POSCO) to 80,50 (for other South Korean companies except from Hyundai Steel Company).

For information: antidumping investigation was initiated by Taiwan on 22 January 2016, investigation subject was carbon steel plate, hot-rolled, of a thickness of 6mm or more.

EAEU INITIATED INTERIM REVIEW OF ANTIDUMPING MEASURES IN REGARD OF UKRAINIAN STEEL WHEELS

On 28 February 2017, the Department of Internal Market Protection of the Eurasian Economic Commission published the notification about initiation of the subsequent antidumping investigation due to change of circumstances in regard of steel all-rolled wheels originating from Ukraine[8].

The subject of the interim review are all-rolled wheels of 710 mm and more in diameter, intended for production and repair of sets of wheels of electric and diesel train railcars of the special railway rolling stock, classified under TN VED EAEU (HS) code 8607 19 100 9.

Investigation was initiated at the request of JSC “Vyksunski metallurgical works” and JSC “EVRAZ Nyzhnyotagilsky metallurgic works” and was supported by LLC “Prommashcomplekt”, which allege that the existing antidumping measure is insufficient for prevention of dumping import and elimination of injury to the EAEU industry sector, whereas the dumping margin during 2016 increased from 4,75 per cent to 51 per cent and the amount of supplies increased by 34,1 per cent.

For information: antidumping duty in regard of all-rolled wheels originating from Ukraine in the amount of 4,75 per cent was imposed for a period of 5 years on 22 January 2016.

UKRAINE INITIATED ANTIDUMPING INVESTIGATION AGAINST IRON BARS AND RODS FROM THE RUSSIAN FEDERATION

On 13 February 2017, the Interdepartmental Commission on International Trade of Ukraine adopted the decision No. AD-366/2017/4411-05 on initiation of antidumping investigation in regard of import of reinforcing bars and rods originating from the Russian Federation. The investigation was initiated at the request of PJSC “ArselorMittal Kryvyi Rig”[9].

UKRAINE POSTPONED INTRODUCTION OF ANTIDUMPING MEASURES FOR NITROGEN FERTILIZERS FROM THE RUSSIAN FEDERATION

On 13 February 2017, the Interdepartmental Commission on International Trade of Ukraine upon consideration of the motion of the Ministry of Agrarian Policy of Ukraine, decided to suspend antidumping measures regarding importation in Ukraine if certain nitrogen fertilizers (carbamide and carbamide-ammonium mixture) originating from the Russian Federation[10]. The respective decision was adopted by the Commission with reference to the national interests of Ukraine which, allegedly, require suspension of such measures[11] to prevent shortage.

For information: on 27 December 2016 the Interdepartmental Commission on International Trade adopted the decision to impose antidumping measures on import of carbamide and carbamide-ammonium mixture from the Russian Federation, the measures had to enter into force from 1 March 2017[12].

In the course of investigation it was established that import of Russian fertilizers in Ukraine is made by Russian manufacturers at dumping prices, which inflicts serious injury to Ukrainian producers. Supplies of carbamide and carbamide-ammonium mixture from the Russian Federation amount to 80-90 per cent of all import supplies of nitrogen fertilizers to Ukraine, which makes Ukrainian agrarian sector dependent on the Russian producers.

PAKISTAN IMPOSED ANTIDUMPING MEASURES ON ROLLED STEEL FROM UKRAINE

On 19 January 2017, the National Tariff Commission of Pakistan issued a notification on introduction of antidumping duty on import of cold-rolled steel from China and Ukraine. The decision was imposed for a period of 5 years upon the results of antidumping investigation, which was initiated in July 2015 at the request of Aisha Steel Mills Ltd.

The duty for the cold-rolled steel of Ukrainian origin equals 18,36-18,92 per cent and of steel, manufactured by Chinese producers – from 13,17 per cent  to 19,04 per cent.

PHARMACEUTICALS

AMENDMENTS TO THE LEGISLATION ON REFERENCE PRICING

On 01 February 2017, the Cabinet of Ministers of Ukraine adopted the Regulation No. 38 “On Making Amendments to the Regulation of the Cabinet of Ministers of Ukraine dated 9 November 2016 No. 862”[13]. This Regulation postponed introduction of state regulation of prices on pharmaceuticals, which now become effective from 01 April 2017 simultaneously with the state program of compensation of pharmaceuticals price. At the same time the Government of Ukraine adopted certain documents aimed at implementation of the system of reimbursement of the costs of medicinal products:

1) Regulation of the Cabinet of Ministers “On Ensuring Access to Medicinal Products” No. 152 dated 17 February 2017[14];

2) Regulation of the Cabinet of Ministers “On Making Amendments and Recognizing Void of Certain Regulations of the Cabinet of Ministers of Ukraine” No. 180 dated 16 September 2017[15];

3) Order of the Ministry of Health of Ukraine “On Making Amendments to the Order of Calculation of Margin Wholesale and Trade Prices for Medicinal Products on the Basis of Reference Prices” No. 299 dated 21 March 2017[16];

4) Order of the Ministry of Health of Ukraine “On Approval of the Form of the Register of Medicinal Products, which Cost is Subject to Compensation” No. 298 dated 21 March 2017[17];

5) Order of the Ministry of Health of Ukraine “On Approval of the Typical Form of the Contract for Compensation of the Costs Incurred due to Sale of Medicinal Products which Cost is Subject to Full or Partial Reimbursement” No. 326 dated 25 March 2017[18];

6) Order of the Ministry of Health of Ukraine “On Approval of the Register of Margin Wholesale and Trade Prices for Medicinal Products” No. 325 dated 25 March 2017[19];

These documents provide for the following provisions and amendments:

- Requirements on reference pricing and compensation, the same way as before, concern the list of international unpatented names;

- Pharmaceuticals which price is higher than margin price are not be enrolled into the compensation program, however, they will remain on market;

- margin wholesale and trade prices are calculated as the median of reference prices for such medicinal products in reference countries;

- Pricing and state regulation of the prices for medicinal products shall take into account the currency exchange rate: in case of change of average monthly rate of Ukrainian hryvha to US dollar by more than 5 per cent during current month or by 10 per cent during current quarter the Ministry of Health of Ukraine shall recalculate the margin wholesale and trade prices for pharmaceuticals;

- State regulation of prices for medicinal products shall cover ready and registered in Ukraine medicinal products for curing heart diseases, II type diabetes and bronchial asthma, purchased and/or compensated for budget funds, included to the register of international unpatented names and the register of medicinal products subject to compensation;

- The register of medicinal products which cost shall be subject to compensation was approved in the new reading. The Register shall include trade names of medicinal products, which wholesale and trade price for 1 unit of the pharmaceutical form of certain dose does not exceed the margin wholesale and trade price. Enrollment of the trade name of a medicinal product to the Register shall be performed upon application to the Ministry of Health of Ukraine and submission of the respective documents;

- The typical form of contract between the administrator of the budget funds and the pharmaceutical stores was adopted. Such contract shall be signed to provide for compensation of costs incurred due to the sale of medicinal products which cost is subject to full or partial reimbursement.

OTHER NEWS

UKRAINE RECEIVED ACCESS TO EUR 2,3 BILLION OF COSME PROGRAM

On 22 February 2017, Verkhovna Rada of Ukraine by 226 votes ratified the Agreement between the Government of Ukraine and the European Union on Participation of Ukraine in the EU program “Competiveness of Small and Medium Enterprises” (COSME).

The program consists of themed projects for the period from 2014 to 2020 with the general budget of EUR 2,3 billion. The list of the projects is prepared by the European Commission and is usually changed on annual basis.

The program available for Ukraine consists of 25 sub-programs in three spheres:

  • facilitation of entrance into foreign markets;
  • improvement of competitiveness conditions;
  • development of business culture.

The list of programs includes the European Network of Enterprises; Erasmus for young entrepreneurs; Internationalization of small and medium business clusters, development of tourism, facilitation of access to government procurement, etc.

Ukraine became eighth country beyond the EU which joined COSME program. Among participants of this program are Montenegro, Macedonia, Moldova, Turkey, Albania, Serbia and Armenia.

BUSINESS MANUAL ON EXPORT OF FOOTWEAR AND APPAREL TO THE EU

On 7 February 2017, the Ukrainian Fashion Week drew the audience of the representatives of Ukrainian textile industry for presentation of the Practical Guide on Export of Apparel and Footwear to the EU. Among the participants of the event were the Trade representative of Ukraine Nataliya Mykolska, Extraordinary and Plenipotentiary Ambassador of the Kingdom of the Netherlands to Ukraine Kees Klompenhouwer, Head of the Export Promotion Office Maryana Kaganyak, founder and head of the organization committee of the Ukrainian Fashion Week Iryna Danilevska and the executive director of the Ukraine Investment and Trade Facilitation Centre Olena Kudliak.

The Practical Guide was developed at the order of the Ministry of Economic Development and Trade of Ukraine and the Export Promotion Office. The project was performed by the experts of the Ukraine Investment and Trade Facilitation Centre (ITFC) with the support of the Embassy of the Kingdom of the Netherlands in Ukraine.

The Trade representative of Ukraine informed that during the previous year Ukraine exported finished goods of textile industry to 92 countries for the amount of USD 665,8 million, to the EU – for the amount of USD 594,2 million. From 1 January 2016 the free trade area between the EU and Ukraine was established, giving thereby preferential access to the markets of 28 countries (500 million consumers) for Ukrainian manufacturers. This supports interest of Ukrainian manufacturers to the export of textile goods.

The Practical Guide clearly explains how to reach consumers at the European market, how to certify the goods, find the suitable business model and make first supplies.

The Practical Guide is available at http://bit.ly/2kmlXLb.

For more information, please contact Anzhela Makhinova.


[8]http://www.eurasiancommission.org/ru/act/trade/podm/investigations/PublicDocuments/AD19R1_notice_initiation.pdf