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Trade defence instruments (anti-dumping, countervailing and special (safeguard) measures) have been applied in Ukraine since 1999 when the Law of Ukraine on Protection of Domestic Producer against Dumped Imports (the Anti-Dumping Law), the Law of Ukraine on Protection of Domestic Producer against Subsidised Imports (the Anti-Subsidy Law) and the Law of Ukraine on Application of Special Measures to Imports into Ukraine (the Safeguard Law) entered into force.
Thereafter, trade defence instruments have been applied by the domestic industries quite often. As of June 2017, the following anti-dumping investigations and reviews are conducted in Ukraine related to imports of: bars, certain carbamide-formaldehyde products and ammonium nitrate originating in the Russian Federation.
At the same time, the following trade defence remedies are applied to imports of such products as originating in:
Under Ukrainian law the following state authorities are involved in trade defence proceedings:
Irrespective of the type of investigation, the proceedings are very similar for all of them and include the following stages:
registration of interested parties in the investigation — usually the relevant requests shall be submitted within 20 to 30 days of the investigation initiation;
submission by the interested parties of their commentaries on investigation initiation including on application of the domestic industry — usually 45 to 60 days after the investigation initiation;
submission by the interested parties of their answers to the questionnaires. There are no special deadlines for the MEDT to send questionnaires to the interested parties. In practice, such terms differ considerably from case to case and may vary from two to five months after the investigation initiation. Initially, the MEDT grants 37 days for answering the questionnaires. However, the said term may be extended for a period of not more than four weeks based on the duly substantiated request;
on-the-spot verifications to be conducted by the MEDT. As of now, such verifications are conducted only in Ukraine in the premises of the related importers (if it is going on foreign producers and exporters) and of the domestic producers;
hearings usually are conducted at the final stage of the investigation. Under Ukrainian law hearings are conducted only if they are duly requested within terms set forth by the MEDT in the notification on investigation initiation. Following the results of the hearings, all interested parties shall submit post-hearings submissions in writing within five to 10 days of the hearings. Otherwise, their oral statements will be not taken into account;
comments by the interested parties on the draft definitive report of the MEDT with conclusions on the results of the investigation. Under Ukrainian law such a draft report shall be sent, as a rule, one month prior to adoption by the Commission of a definitive decision. However, in practice, such terms differ considerably from case to case and may be from two days to one month;
adoption by the Commission of a definitive decision based on the definitive report of the MEDT either on application of trade defence remedies or termination of investigation without application thereof. The relevant decision shall be published in Uryadovyy Kuryer. If trade defence remedies are applied, they will be imposed only within a certain period of time (usually 30 days) after the relevant notification publication;
challenging the Commission’s decision before the court not later than one month afterimposition of the relevant remedies;
reviews. The Anti-Dumping Law stipulates such reviews as sunset review, interim review, newcomer review and accelerated review. The Anti-Subsidy Law stipulates the following types of reviews: sunset review, interim review and newcomer review. The Safeguard Law sets forth a review for interim liberalisation of safeguard measures applied;
anti-circumvention investigation is conducted in case of unfair trade practices of foreign producers and exporters aimed at avoiding application of anti-dumping and countervailing measures; and
renewal of the investigation under the Anti-Dumping Law in cases when application of
anti-dumping duties has not changed import prices or changed them insignificantly.
Under Ukrainian law, all documents submitted in the course of investigation shall be in Ukrainian or accompanied by the Ukrainian translation. In case of violation of the above requirement, the relevant information and documents shall not be taken into account by the MEDT. In practice, such an obligation may be very burdensome for the interested parties, especially in case of submission of answers to the questionnaires. Since the MEDT does not conduct on-the-spot verifications in the premises of the foreign producers and exporters, it usually requires lots of supporting documents to be submitted together with the answers to the questionnaire, all of which shall be duly translated into Ukrainian.
In the absence of an electronic database of all investigation related documents, in order to ensure transparency, Ukrainian law obliges all interested parties to send all their submissions to other interested parties to the investigation for commentaries by post. No unsent documents and information shall be taken into account by the MEDT.
Pursuant to Ukrainian law, any documents shall be regarded as submitted in time only if they are provided by the end of the working hours of the MEDT and duly registered by the MEDT’s registry with the relevant date. In practice, in order to respect the relevant deadlines, it is highly advisable to submit documents to the MEDT’s registry at least one working day prior to the deadline. Otherwise, there is a risk that the MEDT’s registry will not register the documents in due time, and, thus, the delayed documents will not be taken into account by the MEDT.
In Ukraine, the trade defence instruments are regulated by the international treaties duly ratified by the Parliament of Ukraine and constituting the national legislation of Ukraine under the Law of Ukraine on International Treaties of Ukraine, specifically:
the special national legislation consisting of:
Even though the above Laws were adopted during the accession of Ukraine to the WTO and were declared as fully compliant/based on the relevant WTO Agreements, there are some discrepancies. For instance, the Safeguards Law does not stipulate a requirement to establish unforeseen developments in the course of safeguard investigations. The Anti-Subsidy Law still divides subsidies on legitimate (for such subsidies it is not allowed to apply countervailing measures) and illegitimate subsidies (which may be subject to countervailing measures), contrary to the Agreement on Subsidies and Countervailing Measures, which since 2000 does not address non-actionable subsidies.
Free Trade Areas
After its accession to the WTO in 2008, Ukraine takes persistent efforts to strengthen economic ties with its trade partners and to create new business opportunities by establishing free trade areas (FTAs). To date, Ukraine has FTA Agreements with the European Union, European Free Trade Association (EFTA), the Commonwealth of Independent States (CIS) and a number of other states. For the purposes of this review, we will focus only on the provisions of the FTAs in respect of trade defence instruments.
EU-Ukraine FTA (DCFTA)
The DCFTA provides for separate rules for safeguards in general and safeguards on passenger cars. In the part containing general rules on safeguards, the respective WTO obligations are reaffirmed and additional certain provisions on transparency and due process are added, as well as a clause that the parties shall endeavour to impose safeguards in a way that least affects their bilateral trade. Additionally, Ukraine may apply a safeguard measure in the form of a higher import duty on passenger cars originating in the EU if certain conditions are met. Notably, safeguards and safeguards on passenger cars shall not be applied simultaneously.
Anti-dumping and countervailing measures
The parties reaffirmed their respective WTO obligations and envisaged the provisions on:
DCFTA provisions on dispute settlement are not generally applied to the trade remedies Chapter, subject to some exceptions, namely safeguards on passenger cars and provision on non-cumulation of general safeguards and safeguards on passenger cars.
CIS (Armenia, Belarus, Kazakhstan, Kyrgyz Republic, Moldova, Russia, Uzbekistan)-Ukraine FTA
The parties agreed to impose safeguards in line with the WTO provisions. The parties agreed as well to exclude other parties from application of safeguards if import of the product concerned from such parties does not cause injury to domestic industry, that is, if the following conditions are simultaneously met:
The party intending to impose safeguard measures shall inform the parties to the FTA of such intention. The parties hold the consultations to find a mutually acceptable solution.
Anti-dumping and countervailing measures
The parties reaffirmed their respective WTO obligations and agreed to disclose essential facts and conclusions not later than 30 days after the end of investigation. The parties to the CIS FTA shall have adequate possibility to hold consultations before the end of the investigation.
The EFTA-Ukraine FTA sets out separate provisions for global safeguard measures and bilateral safeguard measures.
As to the former, the parties reaffirmed their respective WTO obligations and added that a party, taking a safeguard measure under the WTO provisions, shall, to the extent consistent with the obligations under the WTO, exclude imports of an originating good from another party if such imports are not a substantial cause of serious injury or threat thereof.
Bilateral safeguard measures could be taken if, owing to reduction or elimination of a customs duty under the EFTA-Ukraine FTA, a product originating in a party to the agreement is being imported into the territory of another party in such increased quantities that it constitutes substantial cause of serious injury or threat thereof to the domestic industry. Bilateral safeguard measures may only be taken in case there is sufficient evidence of the above facts and to the extent necessary to eliminate the injury.
The parties agreed to non-application of anti-dumping measures, as provided in the respective WTO Agreements in relation to products originating in another party. It is also mentioned that this non-application provision could be reviewed in a five-year period.
The parties reaffirmed their respective WTO obligations. However, they also added the clause requiring parties to seek a mutually acceptable solution before initiation of the investigation. It provides that the party considering initiating an investigation shall notify in writing the party whose goods are subject to investigation and allow for a 60-day period with a view to finding a mutually acceptable solution. The consultations shall take place in the Joint Committee if any party so requests within 30 days of the receipt of the notification.
Canada-Ukraine Free Trade Agreement (CUFTA)
The parties reaffirmed their obligations under the respective WTO provisions and added a clause, which allows a party under certain conditions to take emergency actions (e.g., suspend the further reduction of a rate of duty or increase a rate of duty).
Emergency actions may be taken only during the transition period and only if reduction or elimination of duties pursuant to the CUFTA resulted in a significant increase in imports of a certain product that causes or threatens to cause serious injury to the domestic industry.
A party shall maintain an emergency action only to the extent necessary to prevent or remedy serious injury, for a period not exceeding three years or within the transition period.
CUFTA also includes a non-cumulation clause in relation to safeguards and emergency actions. A party shall not adopt or maintain, with respect to the same good, at the same time an emergency action under the CUFTA and a safeguard measure under the WTO provisions.
Anti-dumping and countervailing measures
The parties reaffirmed their obligations on anti-dumping and countervailing measures under the respective WTO provisions.
The dispute settlement mechanisms under CUFTA shall not be applied in relation to anti-dumping and countervailing measures.
Ukraine also has FTA Agreements with Azerbaijan, Georgia, Macedonia, Montenegro, Tajikistan, Turkmenistan and Uzbekistan, which also provide for preferential trade conditions and trade cooperation.
FTA with Montenegro
The Montenegro-Ukraine FTA provides for separate provisions for global safeguard measures and bilateral safeguard measures.
As to the former, the parties reaffirmed their respective WTO obligations. Additionally, they added a provision on transparency: the party, intending to impose safeguard measures at the request of the other substantially interested party shall immediately provide ad hoc written notification of all pertinent information on the initiation of the safeguard investigation, the provisional findings and the final findings of the investigation. Bilateral safeguard measures can be imposed if reduction or elimination of a customs duty under the Montenegro-Ukraine FTA results in increased quantities of imports of such good, causing serious injury or threat thereof to the domestic industry.
A party shall take bilateral safeguard measures upon clear evidence and to the minimum extent necessary to remedy or prevent the injury.
Anti-dumping and countervailing measures
The parties reaffirmed their respective WTO obligations. They also added additional clauses on application of a lesser duty rule and certain rules concerning transparency: full disclosure of all facts after the provisional measures and before the final measures, provision of a 10-day period to comment on the final disclosure, etc.
FTA with Macedonia
Under the Macedonia-Ukraine FTA, initiation of the safeguard procedure shall be preceded by notification of the opposite party to the FTA and consultations between the parties with a view to finding a mutually acceptable solution. The safeguards may be adopted if the Joint Committee fails to find such solution within 30 days.
Anti-dumping and countervailing measures
The parties reaffirmed their respective WTO obligations without introduction of new legislative provisions.
RECENT CHANGES TO THE REGIME
In the past year, the Ukrainian legislation in the field of trade defence instruments remained without change.
However, we consider it necessary to point out the following recent practices that were introduced in 2016:
SIGNIFICANT LEGAL AND PRACTICAL DEVELOPMENTS
One of the urgent issues related to trade defence instruments in Ukraine is quite old-fashioned legislation adopted in 1998 that does not implement recent developments as set forth in the WTO jurisprudence. The Commission and the MEDT are not able to improve their practice or fill in the gaps by applying the relevant new developments because under Article 19 of the Constitution of Ukraine, both the Commission and the MEDT shall act only in a way as directly set forth by law.
Ukrainian law does not precisely define all stages of investigation with the specific time limits, as well as not addressing documents to be issued by the MEDT etc., which in practice results in non-transparency and can even be detrimental for securing the rights of the interested parties. For instance, the Safeguard Law does not stipulate an obligation of the MEDT to disclose its final determination. Thus, in practice the interested parties are deprived of an opportunity to analyse whether the decision has been adopted in full compliance with the Agreement on Safeguards or the Safeguard Law, or both. The said conclusions may be disclosed only through initiation of the court proceedings. Moreover, Ukrainian law does not directly allow conducting any consultations between the MEDT and the interested parties even in order to clarify certain important issues (e.g., controversial PCN coding, problems with the dumping margin calculations, etc.).
According to the business community, the investigation procedure as currently set forth by the law is not transparent, as it does not provide that the MEDT discloses its position on all important issues, except for sending its final determination to the interested parties at the close of investigation. Thus, even though interested parties usually submit lots of different documents to the MEDT and address all its requests, they are not able to identify the approach taken by the MEDT and to understand the MEDT’s relevant position in due course, leaving this until the end of the investigation when it is usually too late to clarify or improve submissions. The situation is even worse in case of safeguard investigations when the MEDT’s final determination is not provided to the interested parties in principle.
Another problem arises from the stipulation in Ukrainian legislation in the field of trade defence instruments of certain inoperative provisions, to name but a few:
Another problem is connected with the enforcement by the Commission and the MEDT of the relevant court decisions. In case of full invalidation of the Commission’s decision on application of trade defence instruments, the situation is clear because such decisions are invalidated automatically. However, the situation is absolutely unclear when the Commission’s decision is invalidated partially in respect of a certain foreign producer or exporter subject to individual anti-dumping/countervailing measures. In practice, in the absence of the specific instructions of the court to the Commission and the MEDT, the latter is not in a position to reopen the proceedings (e.g., recalculate dumping margin or reinvestigate injury).
In Ukraine, there is also an issue with implementation of the reports of panels and the Appellate Body adopted in the course of the WTO dispute settlement procedure; Ukrainian law does not specifically address this issue. Ukraine has only one example of practical implementation of such reports, namely the panel report in Ukraine — Passenger Cars. In the said case, the panel has established that Ukraine has not duly established all relevant circumstances allowing application of safeguard duties as well as seriously infringed procedural rules. As a result, in view of the nature of violations the Commission has adopted a decision to invalidate the relevant safeguard duties with reference to the national interests. However, it is unclear how Ukraine will be able to implement reports that are not so straightforward when, for instance, reopening of the procedure will be required.
The Commission and the MEDT were criticised for practice on initiation safeguards. Initially, domestic industries preferred to request safeguard measures rather than anti-dumping and countervailing. As a result, despite the extraordinary nature of safeguards, there were years when safeguards prevailed over anti-dumping measures. It was easily explained because the domestic producers were able to just submit import statistics demonstrating an increase in imports (even not so recent, significant and unexpected) without any further analysis of unforeseen developments, non-attribution requirements, etc., while the subject of proof in anti-dumping/anti-subsidy investigations is evidently more difficult. After accession by Ukraine to the WTO, the situation began to improve, and several safeguard investigations (i.e., in respect of ferroalloys, certain oil and gas products, refrigerators, freezers and fertilisers) were terminated without application of safeguard measures.
Ukraine has been involved in five disputes as a complainant, four as a respondent and 16 as a third party. A brief description is as follows:
Japan v. Ukraine — Definitive Safeguard Measures on Certain Passenger Cars (DS468) on 30 October 2013 Japan requested consultations with Ukraine regarding the definitive safeguard measures imposed by Ukraine on imports of certain passenger cars. On 20 June 2014, the Panel was composed by the Director General. On 26 June 2015, the panel report was circulated to members. The Panel found that Ukraine acted inconsistently with Article XIX:1(a) of the GATT 1994, Articles 2.1, 4.2(a), 4.2(b), 8.1, 4.2(c), 12.1, 12.2 and 12.3 of the Agreement on Safeguards. On 20 July 2015, the DSB adopted the panel report. On 6 October 2015, Ukraine informed the DSB that it had revoked the safeguard measures on imports of passenger cars;
Russia v. Ukraine — Anti-Dumping Measures on Ammonium Nitrate from Russia (DS493) on 7 May 2015 Russia requested consultations with Ukraine regarding anti-dumping measures imposed by Ukraine on imports of ammonium nitrate. Russia claimed that the measures were inconsistent with:
On 29 February 2016, Russia requested the establishment of a panel, which was composed on 2 February 2017 by the Director General. The final report is expected not before the first quarter of 2018, in light of the amount and complexity of the work involved;
Ukraine v. Russia — Measures affecting the importation of railway equipment and parts thereof (DS499) the panel was composed on 2 March 2017;
Ukraine v. Russia—Measures Concerning Traffic in Transit (DS512) — on 6 June 2017 the
Director General composed the panel; and
Russia v. Ukraine — Measures relating to Trade in Goods and Services (DS525) — on 19 May 2017, Russia requested consultations with Ukraine with respect to alleged restrictions, prohibitions, requirements and procedures adopted and maintained by Ukraine in respect of trade in goods and services as well as transit.
It goes without saying that the Ukrainian legislation in the field of trade defence instruments shall be completely revised to fully implement well-established WTO jurisprudence. During 2017—2017, the MEDT, together with the legal and business community, was elaborating the relevant draft laws aimed at improvement of the current regulations. Eventually, on 17 July 2017 the MEDT presented five draft laws considerably changing the legal environment in the field of trade defence instruments and eliminating many problems currently faced by the Commission, the MEDT and the interested parties of investigations. It is expected that the above draft laws will be adopted by the parliament of Ukraine by the end of 2017.