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22 June 2018

WTO NEWS

WTO DISPUTES OVER US TARIFFS ON STEEL AND ALUMINIUM

On 9 April 2018, China filed a request to the WTO for consultations with the USA with respect to 25% and 10% import duties imposed on steel and aluminium. Pursuant to the request for consultations, 25% and 10% tariffs on steel and aluminium are inconsistent with the General Agreement on Tariffs and Trade 1994 (GATT) and the Agreement on Safeguards.[1] On 23 May 2018 similar request was filed India and on 6-7 June 2018 – by the EU, Canada and Mexico.

From 23 March 2018, the USA applies 25% duty on imported steel and 10% duty on imported aluminium regardless of the country of origin. The US informed that imported steel and aluminium products pose a threat to US national security and weaken the US domestic economy. By 1 June 2018, Canada, Mexico and the EU were exempt from the application of the above duties. However, from 1 June 2018, the import tariffs on steel and aluminium are also applied to these countries.

The US safeguard measures allegedly violate the provisions of Article XIX:1(a), XIX:2 of the GATT and Articles 2.1, 2.2, 3.1, 4.1, 4.2, 5.1, 7, 9.1, 11.1(a), 12.1, 12.2 and 12.3 of the Agreement on Safeguards since the US has not reasonably explained the unforeseen developments under which imports to the United States have increased in such quantities and under such conditions to cause or threaten to cause serious injury to US domestic producers. The applicants also claim that the United States has violated the provisions of GATT Article II:1(a) and (b) since the duties on steel and aluminium are higher than those stipulated in the US Schedule of Concessions and agreed upon WTO accession. Moreover, the US have allegedly violated some procedural requirements for safeguard application. In particular, the US failed to notify and consult with other WTO members. In turn, the US does not consider duties on steel and aluminium as a safeguard measure since they were imposed under the Section 232 of the Trade Expansion Act of 1962 to ensure national security, and therefore they do not violate the provisions of either GATT or the Agreement on Safeguards.

US steel and aluminium import restrictions also affect Ukrainian producers. By imposing these measures, the US actually limits market access for the Ukrainian steel industry, which is already burdened with  34.98% and 44.03% (for certain exporters) anti-dumping duties on carbon and alloy steel wire rods[2]. Pursuant to WTO dispute settlement rules, Ukraine has the opportunity to participate in the above-mentioned disputes.

 

THE APPELLATE BODY REPORT IN CASE RUSSIA – COMMERCIAL VEHICLES WAS ADOPTED

At a meeting on 9 April 2018, the WTO Dispute Settlement Body adopted an Appellate Body report in the case Russia – Commercial Vehicles (DS 479). The case deals with anti-dumping measures introduced by the Eurasian Economic Commission on imports of certain light commercial vehicles from Germany and Italy. The EU, inter alia, contested before the Panel the definition of domestic industry, the evaluation of injury factors, the causal link between the imports and the alleged injury, as well as improper notification of the interested parties. The Russian Federation, not agreeing with the Panel’s conclusions, appealed to the Appellate Body.

The Appellate Body upheld the decision of the Panel that exclusion of a well-known producer of like products from the scope of the domestic industry leads to the risk of injury analysis distortion. Furthermore, the Appellate Body concluded that the investigating authority should not disregard the analysis of several factors or elements which could potentially influence the profit rate used for normal value construction. According to the report, the Panel violated Article 11 of the Dispute Settlement Understanding and Article 17.6 of the Agreement on Implementation of Article VI of the GATT 1994 (the “Anti-dumping Agreement”) since the Panel did not verify the validity of the confidential report provided by the investigating authority upon the request of the EU to the Panel. Simultaneously, the Appellate Body found that nondisclosure of certain facts by the investigating authorities to the interested parties does not violate Article 6.9 of the Anti-dumping Agreement.[3]

TRADE REMEDIES

NEW SAFEGUARD INVESTIGATIONS

 On 2 May 2018, Turkey notified the WTO’s Committee on Safeguards that on 27 April 2018, it had initiated a safeguard investigation on the import of iron and steel products, classified under the HS tariff codes 72.02 – 72.06, 72.08 – 72.17, 72.19 – 72.20, 72.25 – 72.28.[4]

On 23 April 2018, South Africa notified the WTO’s Committee on Safeguards that on 20 April 2018, it had initiated a safeguard investigation on the import of screws fully threaded with hexagon heads made of steel, classified under the tariff code 7318.15.39.[5]

On 3 April 2018, Indonesia notified the WTO’s Committee on Safeguards that on 29 March 2018, it had initiated a safeguard investigation on the import of ceramic flags and paving, hearth or wall tiles; ceramic mosaic cubes and the like, whether or not on a backing, classified under the HS tariff codes 6907.21.21, 6907.21.22, 6907.21.23, 6907.21.24, 6907.21.91, 6907.21.92, 6907.21.93, 6907.21.94, 6907.22.11, 6907.22.12, 6907.22.13, 6907.22.14, 6907.22.91, 6907.22.92, 6907.22.93, 6907.22.94, 6907.23.11, 6907.23.12, 6907.23.13, 6907.23.14, 6907.23.91, 6907.23.92, 6907.23.93, 6907.23.94, 6907.30.11, 6907.30.19, 6907.30.91, and 6907.30.99.[6]

 Safeguard investigations concern all import of goods at issue regardless of the country of origin and export, meaning that Ukrainian exports are also subject to such investigations. Ukrainian exporters can protect their interests by participating in the safeguard investigations of other WTO members and presenting their arguments against the imposition of safeguard measures.

 

THE DECISIONS OF THE INTERGOVERNMENTAL COMMISSION ON INTERNATIONAL TRADE

At its meeting on 20 April 2018, the Intergovernmental Commission on International Trade adopted the following decisions:

  1. To apply definitive antidumping duties of 15.21 % on import of fittings and rod originating from the Russian Federation;[7]
  2. To initiate a sunset review of antidumping measures on import of medical glassware with the volume of up to 0.15 L originating from the Russian Federation;[8]
  3. To initiate an antidumping investigation against import of medical rubber plugs originating from Poland and the People’s Republic of China;[9]
  4. To prolong the safeguard investigation against imports of sulfuric acid and oleum regardless of the country of origin and exports up to 330 days (initiated on 31 July 2017);[10]
  5. To reject the request for safeguard investigation against import of some refined products (motor gasoline and heavy distillates (diesel fuel) due to lack of grounds for its initiation.[11]

 

MEXICO INTRODUCED ANTIDUMPING DUTIES ON UKRAINIAN PIPES

From 4 April 2018, Mexico applies antidumping measures on carbon steel pipes originating from Ukraine, South Korea, Spain and India. The decision to impose antidumping duties followed an antidumping investigation. Carbon steel pipes originating from Ukraine are now subject to duty at the rate of USD 170.1 per metric tonne, from South Korea – USD 131.2 per tonne, from Spain – USD 378.5 per tonne, from India – USD 206.7 per tonne.[12]

 

IMPORT AND EXPORT REGULATIONS

UPDATED LIST OF PRODUCTS PROHIBITED FOR IMPORT FROM THE RUSSIAN FEDERATION

On 23 May 2018, the Cabinet of Ministers of Ukraine adopted a decision to ban importation into the territory of Ukraine of asbestos-cement board (corrugated asbestos cement sheets), and a mixture of ammonium nitrate and calcium carbonate containing not more than 28% of nitrogen by weight originating from the Russian Federation. The government believes that such measures will ease the business of domestic producers, save working places, decrease social tension in relevant regions, and increase budget revenues from taxation of domestic production. The Resolution became effective 10 days after its publication.[13]

 

PROCEDURE FOR IMPORT OF VEHICLES INTO THE TERRITORY OF UKRAINE WAS SIMPLIFIED

On 21 May 2018, the Ukrainian President signed the Law of Ukraine “On amending Article 2 of the Law of Ukraine “On Certain Issues regarding the Importation into the Customs Territory of Ukraine and the Registration of Vehicles”. The law cancels the inspection of vehicle conformity to ecological standards for the purpose of their importation into Ukraine. Certificates of conformity to ecological standards are not required now for importation. However, the above certificate remains compulsory for customs clearance at inner-border customs bodies.[14]

 

UKRAINE IS NOW ALLOWED TO EXPORT BEEF INTO TURKEY

On 14 May 2018, the State Service of Ukraine for Food Safety and Consumer Protection (the “Service on Food Safety”) notified that Ukraine will be able to export beef upon the results of the technical mission of the General Directorate of Food and Control of the Ministry of Food, Agriculture and Livestock of the Republic of Turkey, which assessed state control over beef production at the end of April 2018.The Service on Food Safety also informs that the form of veterinary certificate for Ukrainian origin beef export to the Republic of Turkey is finally being negotiated.[15]

 

SUSPENTION OF US TRADE PREFERENCES FOR GOODS OF UKRAINIAN ORIGIN

On 5 May 2018, the Ministry of Economic Development and Trade of Ukraine (the “Ministry”) informed that from 26 April, the US Trade Representative Office suspended the trade preferences for 155 types of Ukrainian goods according to the Generalized System of Preferences (GSP), which granted zero tariff duty for importation into the territory of the US of Ukrainian origin products. The suspension covers certain food products, consumer goods, woodworking and machinery industrial products, certain types of electrical appliances, etc. The Ministry informs that renewal of trade preferences depends on the adoption by the Ukrainian Parliament of the draft law No. 7466[16], which shall secure effective and transparent collective management of copyright and related rights. On 15 May 2018, Parliament adopted draft law No.7466, and on 25 May 2018, it was signed by the Ukrainian President.[17]

 

LAW ON STATE CONTROL OF FOOD PRODUCTS BECAME EFFECTIVE

On 4 April 2018, the Law of Ukraine “On State Control over Compliance with Legislation on Food Products, Feed, Animal By-products, Animal Health and Welfare” became effective (adopted on 18 May 2017). The Law affects food and feed importers by establishing new requirements for state border inspections. The Ministry of Agrarian Policy and Food of Ukraine will now approve via corresponding by-laws the types of products subject to state inspections.

The Law also covers domestic producers. Pursuant to the Law, inspectors of the Service on Food Safety and Consumer Protection are authorized to perform state control over food and feed products with a frequency sufficient to improve product safety. The Law introduces a unified publicly available inspection act and a video recording of the inspection for the purposes of mitigating corruption risks. Offenders will be subject to fines.[18]

 

TRADE LIBERAZATION

RATIFICATION OF THE UKRAINE-MOLDOVA AGREEMENT ON MUTUAL BORDER CONTROL

On 12 April 2018, Ukrainian President Petro Poroshenko signed the Law of Ukraine “On ratification of the Agreement between the Cabinet of Ministers of Ukraine and the Government of the Republic of Moldova on mutual control over people, vehicles, goods and objects at the checkpoints alongside the Ukrainian-Moldovan state border“.[19] The agreement defines the basis for cooperation between the Moldovan and Ukrainian control authorities while conducting mutual control at checkpoints along the Ukrainian-Moldovan border. The law becomes effective on the 30th day from the date of the last written notification on the completed internal procedures necessary for the agreement’s entry into force, as sent by diplomatic channels. [20]

 

SUSPENSION OF CERTAIN AGREEMENTS WITHIN THE COMMONWEALTH OF INDEPENDENT STATES

On 22 May 2018, the President of Ukraine adopted Decree No. 139/2018 enacting the decision of the National Security and Defence Council “On Suspension of Certain International Agreements concluded within the Commonwealth of Independent States by Ukraine” dated 2 May 2018. [21] The list of suspended agreements is not yet published. Importantly, the CIS Free Trade Agreement is still effective for Ukraine with all CIS member-states, except for the Russian Federation. [22]

 

OTHER TRADE NEWS

LAW ON COUNTER SANCTIONS WAS ADOPTED BY THE RUSSIAN FEDERATION

On 30 May 2018, the Federation Council of the Russian Federation adopted the Law “On the Measures (Countermeasures) in Response to Unfriendly Actions of the USA and (or) other Foreign States“. The law enables the President of the Russian Federation to promptly react to sanctions imposed against Russian individuals or legal entities by introducing measures in response to unfriendly actions of the United States and other countries. Pursuant to the law, such measures include prohibition or restriction of the importation of products and raw materials into the territory of the Russian Federation, prohibition or restriction of the export of products and raw materials by non-residents from the territory of the Russian Federation, prohibition or restriction of work performance, services supply and other measures upon the decision of the President of the Russian Federation. The law became effective on 4 June 2018. [23]

 

PUBLICATION OF NEW SANCTIONS LIST APPROVED BY THE PRESIDENT

On 14 May 2018, the President of Ukraine adopted the Decree No. 126/2018 “On the Decision of the National Security and Defence Council of Ukraine dated 2 May 2018 “On introduction and repealing of special economic and other restrictive measures (sanctions) of personal nature” approving a new list of individuals and legal entities under sanctions. Compared to the previous year, the presidential sanctions list has been extended and currently comprises 1,748 individuals and 756 legal entities. [24]

 

PREPARATION FOR DISPUTE OVER TIMBER EXPORT BAN CONTINUES

On 20 April 2018, the speaker of the EU Delegation to Ukraine Jurgis Vilcinskas informed the media that Ukraine and the EU have agreed on “neutral” arbitrators in the dispute regarding the Ukrainian timber export ban according to arbitration procedure provided in the Association Agreement. [25] On 28 February 2018, the European Commission announced its desire to resolve the dispute in arbitration, since it failed to reach any agreement with Ukraine on termination of the timber export ban. The arbitration hearing is scheduled for June 2018. [26]

 

NEW LABELING OF TOBACCO PRODUCTS

On 4 April 2018, the Cabinet of Ministers of Ukraine adopted Resolution No. 257 approving new samples of excise labels for domestic and imported tobacco products (except for cigarettes with and without filters, mouthpiece cigarettes). The State Fiscal Service shall ensure production and sale of new excise labels by 25 June 2018. The CMU Resolution also amends the Regulations on the Manufacturing, Storage and Sale of Excise Tax Labels and the Labelling of Alcoholic Beverages and Tobacco Products dated 27 December 2010. The amendments include, among other things, an approved list of state bodies responsible for designing excise labels, approved colours of excise labels designed for alcoholic beverages, and the letter labelling for different kinds of labels. The CMU Resolution becomes effective on 1 July 2018. [27]

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