Обзор по международной торговле: Украина. Третье издание (на английском языке)

Under Ukrainian law the following state authorities are involved in trade defence proceedings:

• the Interdepartmental Commission on International Trade (the Commission) is responsible for adoption of key decisions in the course of proceedings, to name but a few: on initiation of investigations; on positive/negative conclusions on existence of dumping, specific subsidies or surge in imports and their amounts; on positive conclusions on existence of injury; on termination of proceedings with or without trade defence remedies;
• the Ministry of Economic Development and Trade of Ukraine (MEDT) is responsible for procedural issues, to name but a few: for registration of interested parties; collecting answers to questionnaires; holding hearings and consultations; drafting preliminary and definitive reports following preliminary or final results of investigations with the relevant recommendations to the Commission on the decisions to be adopted; and
• the Ministry of Finance of Ukraine and the State Fiscal Service of Ukraine is responsible for providing the MEDT with all relevant statistics related to proceedings.

Irrespective of the type of investigation, the proceedings are very similar for all of them and include the following stages:

• submission by a domestic industry of an application for initiation of the relevant investigation;
• initiation by the MEDT of an anti-dumping/anti-subsidy procedure for verifying sufficiency of evidence of dumping/non-legitimate subsidy, injury and causal link in the application. Following the results of the anti-dumping/anti-subsidy procedure, the MEDT drafts a report with the relevant recommendations for the Commission either to initiate investigation or not;
• adoption by the Commission of a decision on investigation initiation or on refusal to initiate. Usually the above decision shall be adopted within 30 days of submission of an application to the MEDT’s registry;
• publication of an official notification on investigation initiation in Uryadovyy Kuryer, the governmental newspaper — Ukrainian law is silent on the exact deadlines. In practice, the relevant term differs considerably from case to case and may vary from three to 14 days. The date of the notification publication is considered as the date of official investigation initiation;
• conducting by the MEDT of an investigation including:

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.

LEGAL FRAMEWORK

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:

• GATT 1994;
• the Agreement on Application of Article VI of the GATT 1994;
• the Agreement on Safeguards;
• the Agreement on Subsidies and Countervailing Measures; and

the special national legislation consisting of:

• the Anti-Dumping Law;
• the Anti-Subsidy Law;
• the Safeguard Law and
• the Law of Ukraine on Foreign Economic Activity (Article 31 establishing deadlines for challenging the Commission’s decisions before the court).

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.

TREATY FRAMEWORK

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)

Safeguards

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:

• transparency, for example, disclosure of all essential facts and considerations concerning application of measures immediately after provisional measures and before final determination. Interested parties shall be given 10 days to comment on the final disclosure;
• due process, for example, provisional anti-dumping or countervailing measures may be
• applied by the parties only if a preliminary determination has shown the existence of dumping or subsidy causing injury to a domestic industry;
• consideration of the public interests prior to imposition of the measures;
• lesser duty rule.

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

Safeguards

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 other party to the FTA is not among the top five exporters of the product concerned
• to the country imposing the measures for the last three years;
• for the last three years the volumes of import from the other party decreased or increased
• by lower volumes (in absolute and comparative figures) than from the other states; and
• the level of prices for the imported products from the other party is equal to or less than
• the level of prices of the domestic producer of like or directly competitive products.

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.

EFTA-Ukraine FTA

Safeguards

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.

Countervailing measures

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)

Emergency actions

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.

Other FTAs

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

Safeguards

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

Safeguards

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:

• acoding: Similarly to other countries, the MEDT has coded the products under the major characteristics thereof to ensure fair comparison of normal value and export price. Such coding in Ukraine is named ‘PCN coding’. For the first time in its practice, the MEDT applied PCN coding for the purposes of the dumping margin calculation in the anti-dumping investigation related to imports into Ukraine of abrasives originating in Russia. The said PCN coding was elaborated by MEDT without consulting with the interested parties. The said approach was heavily criticised later on, and currently in further investigations the MEDT has consulted with the interested parties prior to application of coding in the course of investigation;
• ‘trade war’ between Ukraine and Russia: In 2016, investigations in Ukraine were initiated only against imports of products originating in Russia. Moreover, as of today nine out of 16 anti-dumping measures are applied against products originating from Russia. The first countervailing duties for Ukraine also were imposed against Russian products. Like night follows day, three out of six investigations currently being conducted in the Eurasian Economic Union are against products originating from Ukraine, while seven of 19 anti-dumping duties are applied against Ukrainian products; and
• customers’ activities: For the first time in anti-dumping investigations in Ukraine, the end customers of the products subject to investigation (agricultural producers) strongly and actively opposed application of anti-dumping measures following results of the investigation related to imports into Ukraine of nitrogen fertilisers with their origin in Russia. Thus, the Commission and the MEDT were forced to strike a balance between the interests of end customers and the domestic producers initiating the investigation. By way of compromise, the Commission applied anti-dumping duties in December 2016 on condition of their suspension, which was carried out in February 2017, even prior to the coming into force of anti-dumping duties.

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:

• the law sets as a mandatory precondition for the initiation of an anti-circumvention investigation, newcomer review and accelerated review the placement of the deposit for the customs authorities and introduction of a procedure for contract registration. However, Ukrainian law does not establish the procedures for deposit placement and contract registration, which is a stumbling block for initiation of the above procedures in Ukraine;
• the Safeguard Law stipulates a possibility to reconsider a decision on application of safeguard measures upon the request of the State Fiscal Service of Ukraine, the domestic industry or other state authorities within 30 days of publication of the relevant decision. Following the results of such reconsideration, the said decision may be either terminated, amended or left as it is. However, in the absence of the relevant detailed rules, it is practically impossible to employ this option; and c the anti-circumvention mechanism may be engaged in very limited cases — only in case of increase of imports of the products subject to anti-dumping/countervailing duties from the third countries or in case of assembling of the products in issue in Ukraine from the imported parts. At the same time, the most frequently used type of anti-dumping/countervailing duties circumvention, such as minor changes to the products and their further importation under different customs code, cannot be addressed by an anti-circumvention investigation.

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.

TRADE DISPUTES

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:

• Ukraine v. Armenia — Measures Affecting the Importation and Internal Sale of Cigarettes and Alcoholic Beverages (DS411) — on 25 October 2010 the DSB deferred the establishment of a panel;
• Ukraine v. Moldova — Measures Affecting the Importation and Internal Sale of Goods (Environmental Charge) (DS421) — on 17 June 2011 the DSB established a panel; however, a panel has not been composed;
• Moldova v. Ukraine — Taxes on Distilled spirits (DS423) — on 20 July 2011 the DSB established a panel; however, a panel has not been composed;
• Ukraine v Australia — Certain Measures Concerning Trademarks and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging — on 28 May 2015 Ukraine requested the panel to suspend its proceedings in accordance with Article 12.12 of the DSU ‘with a view to finding a mutually agreed solution’. On 30 May 2016, the panel’s jurisdiction lapsed because it had not been requested to resume its work within the 12 months following the suspension of the panel

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:

• Articles 1, 2.1, 2.2, 2.2.1, 2.2.1.1, 2.4, 5.8, 6.1, 6.2, 6.4, 6.5.1, 6.6, 6.8, 6.9, 9.2, 9.3, 11.1, 11.2, 11.3 and 18.1, and Annex II of the Anti-Dumping Agreement; and
• Article VI of the GATT 1994.

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.

OUTLOOK

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.