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3 April 2018

International Trade News. January-March 2018

WTO NEWS

INCREASE IN NUMBER OF SAFEGUARD INVESTIGATIONS

The number of safeguard investigations initiated by WTO members has increased during the recent period,[1] in particular:

  • on 8 March 2018, Chile notified the WTO’s Committee on Safeguards that it had initiated a safeguard investigation on the import of powdered milk, classified under the following tariff subheadings of Chile’s customs tariff: 0402.1000, 0402.2111, 0402.2113, 0402.2114, 0402.2115, 0402.2116, 0402.2117, 0402.2118, 0402.2911, 0402.2912, 0402.2913, 0402.2914, 0402.2915, 0402.2916, 0402.2917 and 0402.2918, and Gouda cheese, classified under the following tariff subheading of Chile’s customs tariff: 0406.9010;[2]
  • on 26 March 2018, Costa Rica notified the WTO’s Committee on Safeguards that on 19 March 2018 it initiated a safeguard investigation on import of bars of steel for the reinforcement of concrete, classified under the Costa Rican Harmonized System (SAC) tariff subheadings 7214.20.00.00.10, 7214.20.00.00.90, 7214.99.20.00.10, 7228.30.00.00.10, 7228.50.00.00.10 and 7228.60.00.00.10;[3]
  • on 27 March 2018, the European Union notified the WTO’s Committee on Safeguards that on 26 March 2018 it initiated a safeguard investigation on import of certain steel products[4] classified under the following tariff groups of EU Combined Nomenclature codes: 7208-7216, 7219-7222, 7225-7228, and 7301-7306.[5]

Currently, there is an on-going safeguard investigation in Ukraine (initiated on 10 October 2017) relating to the importation of sulfuric acid and oleum regardless of country of origin and exportation classified under the UKTZED[6] code 2807 00 00 00.[7]

NEW CHAIR OF WTO GOODS COUNCIL

On 26 March 2018, the WTO Goods Council elected its new chair Stephen de Boer, Canadian Ambassador and Permanent Representative to the WTO. In addition, 14 chairs of subsidiary bodies that report to the WTO Goods Council were appointed.[8]

NEWS PORTAL FOR LEAST DEVELOPED COUNTRIES

On 19 February 2018, at the meeting of the WTO’s Committee on Trade and Development, the Trade for Development News platform was launched. The platform will function as a forum for the governments of the world’s least developed countries and stakeholders to share their successes, challenges and strategies for enhancing participation in global trade. The creation of this news portal follows several decisions providing assistance to less developed countries in their integration to the multilateral trading system adopted at the WTO Ministerial Conferences held in Bali (2013) and Nairobi (2015).[9]

WTO AND UN WORK TOGETHER FOR THE SAKE OF TRADE AND ENVIRONMENT

On 25 January 2018, the Executive Director of the United Nations Environment Programme (“UNEP”) Erik Solheim, and the Director General of the World Trade Organization Roberto Azevedo, announced the launch of a project for the promotion of innovative approaches in trade as a tool to boost economic development and environmental protection.

In particular, the UNEP and the WTO are creating a platform for all stakeholders interested in idea and experience exchange in trade projects aimed at reaching Sustainable Development Goals. In general, the platform aims to seize trade, investment and job opportunities emerging from trade and environment collaboration. Later in 2018, the UNEP and the WTO will bring together leaders from public and private sectors to start the platform.[10]

TRADE LIBERAZATION AND ELIMINATION OF TRADE BARRIERS

FREE TRADE AGREEMENT BETWEEN UKRAINE AND ISRAEL

On 28 March 2018, Israel and Ukraine finished their negotiations on a Free Trade Agreement between the Cabinet of Ministers of Ukraine and the Government of the State of Israel. Later, following legal review, the document will be handed over to the respective authorities of the states for adoption. After the entry into force of the Free Trade Agreement between Ukraine and Israel, the trade volume is expected to greatly increase. In 2017, the overall trade volume amounted to USD 604.6 million and increased by 23.8% comparing to 2016.[11]

FIRST DRAFTS OF NEW ALBANIA-UKRAINE FREE TRADE AGREEMENT

On 22 February 2018, the Ministers of Foreign Affairs of Ukraine and Albania exchanged the first drafts of a future Free Trade Agreement. The Ukrainian Minister of Foreign Affairs stressed the great perspectives for cooperation in both economic and humanitarian fields. The Albanian Minister of Foreign Affairs, in turn, emphasized that the Albanian business community is interested in importation of agricultural products to the Ukrainian market. Currently, Ukrainian exports to Albania include mostly ferrous metals, fertilizers, fats and oils, sugar and confectionary.[12]

SOME OF THE ADDITIONAL TRADE PREFERENCES GRANTED BY THE EU ARE EXHAUSTED

In summer 2017, the Council of the European Union granted Ukraine additional trade preferences in the form of annual duty-free tariff quotas on the importation of certain agricultural products. This included natural honey – 2,500 tonnes, processed tomatoes – 3,000 tonnes, grape juice – 500 tonnes, oats – 4,000 tonnes, wheat – 65,000 tonnes, maize – 625,000 tonnes, barley – 325,000 tonnes, groats and pellets of certain cereals – 7,800 tonnes.[13] Nevertheless, from 1 till 5 January 2018, Ukrainian exporters already exhausted all EU duty-free tariff quotas on the importation of wheat and maize.[14] Moreover, as of 11 January 2018, the annual EU duty-free tariff quotas on the importation of apple and grape juices and as of 24 January 2018, the tariff quotas on importation of natural honey were also exhausted.[15]

NEW CHECKPOINTS AT THE UKRAINIAN-ROMANIAN BORDER

On 11 January 2018, the Ministers of Foreign Affairs of Ukraine and Romania held a meeting that resulted in a decision to establish new checkpoints: “Diakivtsi – Rakovets” and “Krasnoyilsk – Vikovu de Sus” that will be constructed during the first half of 2018.[16]

UKRAINE SIGNED A DECLARATION ON THE PERSPECTIVES OF EUROPEAN INTEGRATION BETWEEN MOLDOVA, UKRAINE AND GEORGIA

On 2 March 2018, Moldova, Ukraine and Georgia signed a Declaration on Regional Security and Perspectives of European Integration during the conference “Republic of Moldova, Georgia and Ukraine: Eastern Partnership and Contemporary Security Challenges”. The parties also discussed issues of security and protection, energy infrastructure and reforms in the process of European integration.[17]

TRADE DEFENCE MEASURES

CHANGES TO ANTIDUMPING MEASURES ON AMMONIUM NITRATE FROM RUSSIA

On 27 March 2018, the decision of the Ukrainian Interdepartmental Commission on International Trade regarding changes in antidumping measures applied to Ukrainian imports of ammonium nitrate originating from the Russian Federation came into force.[18] According to the decision, antidumping duty applicable to PJSC “Dorogobuzh” equals to 29.25%, while the other Russian exporters are subject to 42.96% antidumping duty. Additionally, in order to prevent possible circumventions by Russian producers and exporters, the Interdepartmental Commission on International Trade amended the description of goods at issue.[19]

EAEU INCREASED ANTIDUMPING DUTIES ON SOLID-COATED STEEL WHEELS ORIGINATING FROM UKRAINE

On 7 March 2018, the Eurasian Economic Commission Department for Internal Market Defence published a notice: “On the review of antidumping measures regarding solid-coated wheels originating from Ukraine and entering the customs territory of the Eurasian Economic Union due to the change of circumstances”. The above notice provides for the decision of the Eurasian Economic Commission dated 28 February 2018 on the increase of antidumping duty on solid-coated steel wheels originating from Ukraine from 4.75% to 34.22%.[20] The Decision of the Eurasian Economic Commission becomes effective on 6 April 2018 (30 days after its official publication).[21]

USA IMPOSED ANTI-DUMPING DUTIES ON IMPORTS OF CARBON AND ALLOY STEEL WIRE RODE FROM UKRAINE

On 1 March 2018, the US Department of Commerce issued an Order imposing antidumping duty on imports of carbon and alloy wire rode originating from Ukraine. Ukrainian producers OJSC “ArcelorMittal Steel Kryvyi Rih” and PJSC “Yenakiieve Steel” are subject to 44.03% antidumping duty, while the relevant duty for other Ukrainian exporters of carbon and alloy is 34.98%.[22]

PHARMACEUTICALS

NEW REQUIREMENTS FOR MEDICINAL PRODUCT LICENSES

On 1 March 2018, the License Terms for the Production of Medicinal Products, Wholesale and Retail Trade in Medicinal Products and Import of Medicinal Products (Except for Active Pharmaceutical Ingredients) (the “License Terms”) became effective. The License Terms were approved by resolution of the Cabinet of Ministers of Ukraine No.929 of 30 November 2016. In particular, importers of medicinal products became subject to additional obligations, namely: introduction of pharmaceutical quality system (including such elements as GMP, GDP, GSP) and risk assessment obligation; obligation to conclude a contract with a foreign producer or supplier of medicinal products (based on GMP requirements) and a contract on external (outsourcing) activity etc.[23]

RENEWED LIST OF PHARMACEUTICAL PRODUCTS EXEMPTED FROM VAT

On 25 January 2018, the List of pharmaceutical products exempted from VAT during the anti-terrorist operation in Ukraine (the “List”)   underwent amendments at the instruction of the Cabinet of Ministers of Ukraine. In particular, the volume of pharmaceuticals and medicinal products exempted from VAT has been increased. Furthermore, the List was supplemented with 18 items of pharmaceuticals and 45 items of medical products. Additionally, the List excludes some pharmaceuticals, in particular, the amoxicillin trihydrate/potassium clavulanate, 500 mg/125 mg, film-coated tablets, No. 14.[24]

NEW REGISTER OF MEDICINAL PRODUCTS SUBJECT TO REIMBURSEMENT

On 22 January 2018, the new Register of medicinal products subject to reimbursement was approved by the Decree No. 111 of the Ministry of Healthcare of Ukraine. On 5 February 2018, the Register was renewed.[25] Currently, it includes 239 items of medicinal products for treatment of cardiovascular diseases, type 2 pancreatic diabetes and bronchial asthma. In addition, the new Register increased the number of medicinal products subject to full reimbursement by 13 – from 34 to 47 items.[26]

OTHER TRADE ISSUES

THE ESTABLISHMENT OF UKRAINIAN EXPORT PROMOTION OFFICE

On 28 March 2018, the Cabinet of Ministers of Ukraine adopted a decision on the establishment of State Enterprise “Ukrainian Export Promotion Office” based on the Export Promotion Office serving as the project for export support (since 2015) and as the advisory body under the Ministry of Economic Development and Trade of Ukraine (since November 2016).[27]

SUSPENSION OF ECONOMIC COOPERATION BETWEEN UKRAINE AND RUSSIAN FEDERATION

On 21 March 2018, the Program on Economic Cooperation between Ukraine and the Russian Federation for 2011-2020 was terminated by CMU Resolution No.191.[28] This decision is primarily due to a range of trade and transit restrictions imposed by the Russian Federation in respect of Ukraine,[29] effective since 2015.

EXPORT-CREDIT AGENCY

On 7 February 2018, the Export-Credit Agency (“ECA”) in the form of Private Joint Stock Company was established by the decision of the Cabinet of Ministers of Ukraine. The main tasks of the ECA will include insurance, reinsurance and provision of guaranties under contracts for export development. The Export-Credit Agency will partly contribute to the compensation program for export loans and provide exporters with consultancy services. As underlined by the Trade Representative of Ukraine, the establishment of the ECA is a gradual step towards launching state support and the promotion of Ukrainian exporters.[30]

On 14 March 2018, the Cabinet of Ministers of Ukraine approved the Draft Law of Ukraine “On Amending Certain Laws of Ukraine to Ensure Effective Functioning of Export-Credit Agency”, which provides for protection of Ukrainian exporters from insolvency and financial loss risks, as well as being designed to strengthen the competitiveness of Ukrainian producers on world markets.[31]

LAW ON DONBAS REINTEGRATION BECAME AFFECTIVE

On 24 February 2018, the Law of Ukraine “On the Peculiarities of State Policy on Ensuring State Sovereignty of Ukraine over the Temporary Occupied Territories in Donetsk and Lugansk Regions” became effective and created a new legal basis for trade in goods with temporary occupied territories of Ukraine. According to the law, the transfer of goods to and from the temporary occupied territories is conducted through specific entry-exit points. The Law also envisages that the Cabinet of Ministers of Ukraine determines the procedure of goods transfer to and from these territories.[32]

STRENGTHENING TIMBER MARKET CONTROL

On 30 January 2018, the State Forestry Agency of Ukraine adopted Decree No. 46, which strengthens control over timber harvesting and sales in Ukraine. Among others, the Decree provides for control over timber sale and purchase contracts, a ban on sales of oak wood logs to consumers, as well as envisaging the monitoring of differentiations between technical and fuel timber.[33]

Additionally, a ten-year export ban on raw round wood (as of 1 November 2015) including pipe (as of 1 January 2017) is still effective.[34]

CONCEPT FOR DEVELOPMENT OF DIGITAL ECONOMICS AND SOCIETY FOR 2018-2020

On 17 January 2018, the Cabinet of Ministers of Ukraine adopted a concept for the Development of the Digital Economics and Society for 2018-2020. The concept establishes a plan of development of digital infrastructure for the next three years through (1) the introduction of broadband Internet in Ukraine and (2) other numerous digital transformations in education, healthcare, ecology, non-cash economics, infrastructure and transport.[35]

STATE SUPPORT PROGRAMS FOR UKRAINIAN FARMERS IN 2018

The Ministry of Agrarian Policy and Food of Ukraine is going to implement a number of development programs for farmers in 2018. Firstly, UAH one billion will be spent on loan programs with 1% interest rate per annum, primary targeting support for fruit, berry and milk producers etc.

The programs of the Ministry also envisage that up to 70% of costs associated with the storage of fruit, vegetable and dairy products may be reimbursed by the state in 2018. Additionally, the compensation program will cover purchases of agricultural machinery of Ukrainian origin.[36] Finally, farmers will be compensated for the costs of Ukrainian selection seeds.[37]

If you have any questions regarding this information please contact Anzhela Makhinova, Ivan Baranenko, or Victoriia Mykuliak.

[1] Unlike antidumping investigations, safeguard investigations concern all imports of goods at issue regardless of country of origin and export.  For the period from 1 January 1995 until 30 June 2017, the WTO members totally initiated only 328 safeguard investigations, 164 of which resulted in application of safeguard measures on import.

[2] https://www.wto.org/english/news_e/news18_e/safe_chl_08mar18_e.htm

[3] https://www.wto.org/english/news_e/news18_e/safe_cri_26mar18_e.htm

[4] https://www.wto.org/english/news_e/news18_e/safe_eec_27mar18_e.htm

[5] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2018.111.01.0029.01.ENG&toc=OJ:C:2018:111:TOC

[6] UKTZED stands for the Ukrainian Foreign Economic Activity Commodity Classification.

[7] https://ukurier.gov.ua/uk/articles/mizhvidomcha-komisiya-z-mizhnarodnoyi-torgivli10_0/

[8] https://www.wto.org/english/news_e/news18_e/good_26mar18_e.htm

[9] https://www.wto.org/english/news_e/news18_e/if_26feb18_e.htm

[10] https://www.wto.org/english/news_e/news18_e/igo_25jan18_e.htm

[11] http://www.me.gov.ua/News/Detail?lang=uk-UA&id=359d772f-0af7-4870-9daa-b73554d550c7&title=UkrainaZavershilaPeregovoriProUkladenniaUgodiProVilnuTorgivliuZIzrailem

[12] http://www.eurointegration.com.ua/news/2018/02/22/7077890/

[13] http://www.consilium.europa.eu/en/press/press-releases/2017/06/28-ukraine-trade-preferences/

[14] http://www.eurointegration.com.ua/news/2018/01/15/7076116/

[15] http://ec.europa.eu/taxation_customs/dds2/taric/quota_consultation.jsp?Lang=en

[16] http://interfax.com.ua/news/general/476147.html

[17] https://www.ukrinform.ua/rubric-polytics/2414264-ukraina-moldova-i-gruzia-pidpisali-deklaraciu-pro-perspektivi-evrointegracii.html

[18] https://ukurier.gov.ua/uk/articles/mizhvidomcha-komisiya-z-mizhnarodnoyi-27032018/

[19] http://www.me.gov.ua/News/Detail?lang=uk-UA&id=cbecaf1b-a31f-4f42-9d15-8206c60c7fc8&title=MizhvidomchaKomisiiaZMizhnarodnoiTorgivliPidvischilaMitoNaImportMineralnikhDobrivZRosii

[20] http://www.eurasiancommission.org/ru/act/trade/podm/investigations/PublicDocuments/AD19R1_notice_fin.pdf

[21] https://docs.eaeunion.org/docs/ru-ru/01417145/clcd_06032018_34

[22] https://enforcement.trade.gov/download/factsheets/factsheet-multiple-carbon-alloy-steel-wire-rod-ad-final-010918.pdf

[23] https://www.apteka.ua/article/448287

[24] http://www.apteka.ua/article/444874

[25] http://www.apteka.ua/article/444813

[26] http://www.apteka.ua/article/446818

[27] https://www.kmu.gov.ua/ua/news/uryad-prijnyav-rishennya-pro-stvorennya-derzhavnoyi-ustanovi-ofis-z-prosuvannya-eksportu-ukrayini

[28] https://www.kmu.gov.ua/ua/npas/pro-pripinennya-diyi-progr

[29] Such trade restrictions imposed by RF include: the termination of the CIS Free Trade Agreement only with regard to Ukraine, which resulted in customs duties application to the goods originating from Ukraine; import prohibition on certain kinds of agricultural products, raw materials and food; de facto transit ban for the goods of Ukrainian origin through the territory of the Russian Federation.

[30] https://www.epravda.com.ua/news/2018/02/7/633831/

[31] http://www.me.gov.ua/News/Detail?lang=uk-UA&id=546fc6f5-7670-4301-bea2-d32903bdd64f&title=UriadPriiniavZminiDoZakonuProEksportnokreditneAgentstvo

[32] http://zakon5.rada.gov.ua/laws/show/2268-19/print1503429277092937

[33]http://dklg.kmu.gov.ua/forest/control/uk/publish/article;jsessionid=B24A64D3944DB1E34EB11D913EFFBB8F.app2?art_id=189571&cat_id=65319

[34] The temporary timber export ban was introduced according to Art.2-1 of the Law of Ukraine “On peculiarities of state regulation of business activities in timber sale and export ”, available in Ukrainian at: http://zakon2.rada.gov.ua/laws/show/2860-15

[35] http://www.me.gov.ua/News/Detail?lang=uk-UA&id=ad097ec8-d77d-4e1b-bb67-9483c3631ec2&title=UriadSkhvalivKontseptsiiuRozvitkuTsifrovoiEkonomikiTaSuspilstvaUkrainiNa2018-2020

[36] https://ukurier.gov.ua/uk/articles/stavka-na-rozvitok/

[37] http://minagro.gov.ua/node/25351

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