Overview of the current WTO Disputes between Ukraine & Russia

By Nataliia Isakhanova & Olesia Kryvetska

Posted: 9th March 2018 08:54

Ukraine and Russia have accumulated a “critical mass” of the controversial issues that have led both parties to the WTO dispute settlement forum.
 
Both states are parties to the Commonwealth of Independent States (CIS) Free Trade Agreement of 1994. This FTA also provides a dispute settlement mechanism under the Annex 4 to the FTA. However, this clause has never been used.
 
Moreover, Russia suspended the FTA with Ukraine on 1 January 2016 as a response to the EU-Ukraine FTA that entered into effect on the same date. In January 2016, Russia also added Ukraine to the “black list” of countries subjected to the import ban on certain food and agricultural products under the Resolution of the Government of the Russian Federation No. 778 of 7 August 2014 (hereinafter – the “Resolution No. 778”). Resolution No. 778 bans imports to Russia of certain products originating in Canada, EU, the EFTA Countries, Albania, Montenegro, the United States and Ukraine. It cover, inter alia, bovine meat, fresh pork, live fish, fish and crustaceans, milk and dairy products, vegetables, fruits and nuts, sausages and similar products, food or prepared food, salt and plant products.
 
Over the last two years Ukraine has been at the forefront of WTO dispute settlement mechanism in order to defend its national interests and interests of Ukrainian producers in “trade wars” against Russia. Hencethe WTO results to be the most appropriate forum.Currently, the WTO DSB accounts for four pending disputes between Ukraine and Russia.
 
WTO disputes initiated by Ukraine vs. Russia
 
DS 499: Russia Measures Affecting Importation of Railway Equipment
Ukraine filed its first case against Russia in October 2015. The measure at issue encompass prevention of Ukrainian producers from exporting their railway products to Russia by way of i) suspending the valid conformity assessment certificates; ii) rejecting new applications for conformity assessment certificates, and iii) non-recognising of conformity assessment certificates issued by the competent authorities in other CU members – Belarus and Kazakhstan.
 
The first Panel meeting took place in Geneva on 10-11 June 2017, where the Ukraine’s primary target was to prove a systemic nature of the alleged violations of the GATT 1994 and the TBT Agreement being a part of the Russian trade aggression against Ukraine (according to statement by Nataliya Mylkolska, the Trade Representative of Ukraine). The next Panel meeting is scheduled for November 2017, while the Panel report is expected in April 2018.
 
DS512: Russia — Measures Concerning Traffic in Transit
 
In September 2016, Ukraine challenged a set of measures imposed by Russia that resulted in breach of freedom of transit enshrined in Article V of the GATT 1994. The alleged violations concerns goods in transit from Ukraine to other countries through the territory of the Russian Federation. The Ukraine’s Request for Panel Establishment encompass a range of claims, including deny in freedom of transit through its territory via the routes most convenient for international transit; unnecessary delays and restrictions; MFN-based discrimination with regard charges, regulations and formalities that at the end of the day result in the import ban of Ukrainian products destined to the territory of countries in Central and Eastern Asia and Caucasus prohibited by Article XI:1 of the GATT 1994.
 
First group of measures at issue. In January 2016, Russia banned international cargo transit through its territory from Ukraine to Kazakhstan by road and rail networks. As a result, Russia restricted such traffic in transit to be carried out exclusively through the territory of Belarus (pursuant to the Decree of the President of the Russian Federation No. 1 and Resolution of the Government of the Russian Federation No. 1).
 
Moreover, after having suspended the FTA with Ukraine, in July 2016 Russian Government fostered the transit-related restriction by imposing a ban on all road and rail transit destined to Kazakhstan and the Kyrgyz Republic of goods which are subject to non-zero import duties according to the Common Customs Tariff of the Eurasian Economic Union as well as of goods falling under the import ban pursuant to the Resolution No. 778.
 
Ukraine claims however in the Request for Panel Establishment that these trade restrictions are applied by Russia in the meaner that result inde facto restriction of transitto other countries in Central and Eastern Asia and Caucasus apart from the Republic of Kazakhstan and the Kyrgyz Republic.
 
Second group of measures at issueis specified in the instructions of the Federal Service for Veterinary and Phytosanitary Surveillance of the Ministry of Agriculture of the Russian Federation (“Rosselkhoznadzor”) dated November 2014. The Instructions targeted cargo transit of the goods covered by the ResolutionNo. 778 that were destined for market of Kazakhstan and other third countries. Russia prohibited transit via its territory through the checkpoints in Belarus and allowed such an entry exclusively through the checkpoints located at the Russian part of the external border of the Customs Union. Moreover, the Rosselkhoznadzor Instruction provides burdensome requirements of veterinary and phitosanitary control and surveillance.
 
It comes without saying that 21 WTO Members have been registered as third parties to the dispute, including Australia, Canada, China, India, the EU, and the US.
 
WTOdispute initiated by Russiaagainst Ukraine
 
DS493:Ukraine – Anti-Dumping Measures on Ammonium Nitrate
 
In November 2015, Russia challenged anti-dumping duties imposed by the Interdepartmental Commission on International Trade (i.e. a public body authorised to adopt trade remedy measures in Ukraine) against the imports of nitrate ammonium originating in Russia. The dispute implies alleged omissions taking place in the course of the anti-dumping investigation that was carried out by the Ministry of Economic Development and Trade of Ukraine (hereinafter – “the Ministry”).
 
Ukraine has been applying the antidumping measures against imports of Russian nitrate ammonium since May 2008at aduty rate of 36.03 %(specific rate of 20.51%applied to LSC “Dorogobuzh”). Following the sunset review, antidumping measures were extended until July 2019.In March 2017 however, the Ministry of Agrarian Policy and Food of Ukraine insisted on an interim review of the measures in light of a crisis on the domestic market of nitrogen fertilisers. In their turn, domestic ammonium nitrate producers also advocated on the interim review claiming that the anti-dumping duties as applied do not suffice to prevent damage caused to domestic industry by dumped imports from Russia.
 
Taking into account both positions, 13 April 2017, the Interdepartmental Commission on International Trade initiated theinterim reviewthat normally lasts for one year. Likewise, according to the WTO Panel, its final report on the pending WTO case is expected to be issued to the parties not before the first quarter of 2018.
 
DS525:Ukraine – Measures relatedto Trade of Goods and Services
 
On 19 May 2017,Russia initiated a WTO dispute against Ukraine over certain measures (challenged both as such and as applied) imposed by Ukraine due to protection of national security interest. Russia’s request for consultations covers inter alia import ban on certain Russian products as well as economic sanctions against Russian individuals and companies. If Ukraine invokes security exception clause as justification before the Panel, this case will be a landmark to shed light on a legal test under Article XXI of the GATT 1994.
 
Since 1 January 2016, Ukraine has been applying import ban on certain products originating from Russia. The list of products that are prohibited from importing into Ukraine include inter alia, confectionery,small grains, soy sauce, tomato sauce, fresh and preserved fish and fish roe. The import ban was introduced under the “fast-track” procedure prescribed in Article 37 of the Law of Ukraineon Foreign Economic Activity.
 
Other trade-restrictive measures challenged by Russia, were predominantly imposed on the basis and light of Ukraine’s Sanctions Act dated of 14 August 2014. This group of claims encompasses blocking the trade operations; asset freezing; partial restriction or full suspension of transit, flights and shipment of goods through the Ukrainian territory; cancellation or suspension of licenses; ban on use of radio frequencies and telecommunication services; additional ecological, sanitary and phytosanitary, veterinary requirement; ban on participation in government procurement procedures, privatisation procedures and lease hold of public property etc.
 
It is noteworthy however that some claims raised by Russia reflect its owntrade policymeasures, for instance trade embargo on food and agricultural products from other WTO members under the Resolution № 778, or arbitrary TBT and SPS restrictions on certain products from Ukraine and EU members. Russia seems to be “testing waters” in order to develop a litigation strategy before being challenged for the same actions in future by other WTO Members. On the other hand, the final outcome of this dispute will have tangible implications not only for Ukraine, but other major trade players that have been applying economic sanctions against Russia.
 
Therefore, the current WTO disputes between Ukraine and Russia deal with different types of trade-restrictive measures that range from, on the one hand, specific bilateral trade issues such as trade remedies and technical barriers to trade, to, on the other hand, restriction of freedom of transit, trade embargo and economic sanctions affecting trade of goods and services that have a far-reaching impact on multilateral trade system.
 
Nataliia Isakhanova
 
Nataliia Isakhanova is a Partner of Sergii Koziakov & Partners specialising in International Trade Law, Antitrust & Competition Law, and Foreign Investments.
 
Nataliia has extensive experience representing the interests of foreign investors in major investments projects in manufacturing, oil-and-gas industry, commercial, agricultural and telecommunication sectors in Ukraine and abroad.
Nataliia provides legal advice to local and foreign clients regarding various issues of international trade regulation and the WTO law, including: advising on the WTO law, including tariff and non-tariff barriers, regional integration, customs valuation, sanitary and phytosanitary measures, technical barriers in trade, dispute settlement, trade in services, etc; advising as to compliance of legal acts and governmental measures with the WTO rules; academic expertise in international trade law.
 
Nataliiahas extensive experience in representing and advisingGeneral Motors Company, Opel Southeast Europe LLC, Chevrolet Central and Eastern Europe LLC,DELPHI France SAS, TP-LINK Technologies Co. Ltd, Bunge, Lenovo Group, HyundaiCorporation, Samsung Electronics Co., Ltd, ECO Eastern Europe Real Estate AG, Mohamed Abdulmohsin Al Kharafi & Sons General Trading, General Contracting & Industrial Structures Co W. L. L., AE Nibulon Ltd (the largest Ukrainian agricultural exporter of grain), Scanroc (the largest Ukrainian producer of an energy-saving system for building’s thermal protection), Ukreximbank and many others.
 
Nataliia Isakhanova was an Adviser on Foreign Investments of the Government of the Autonomous Republic of Ajara (Georgia) from January 2009 to October, 2012.
 
Nataliia was repeatedly invited as an independent expert. Nataliia Isakhanova developed the Concept of the Ukrainian Center for Foreign Investment Promotion and gave recommendations regarding Legislative Acts on establishment and activity of the Ukrainian for Foreign Investment Promotion as part of the grant of the Government of the Netherlands. Upon the World Bank request, Nataliia Isakhanova participated in the working group composed of leading EU lawyers on preparation of the reports on conformity of Ukrainian legislation with the WTO standards and agreements under the WTO framework and developed recommendations on harmonisation of Ukrainian legislation with the WTO standards and requirements. Nataliia Isakhanova participated in the working group on preparation ofthe National Export Strategy and Action Plan for Ukraine for the period of 2016-2020. These documentshave been prepared with financial support from Western NIS Enterprise Fund on the request of the Ministry of Economic Development and Trade of Ukraine.
 
Nataliia Isakhanova is recognised as a National expert in the sphere of Trade & Customs and in the sphere of Competition Law (Cartel Regulation) by Getting The Deal Through.
 
Nataliia Isakhanova is recommended as an exclusive Corporate Law expert in Ukraine by the Global Law Experts (GLE).
 
Nataliia Isakhanova authored numerous articles and publications on Competition Law, International Trade Law and Corporate Law.
 
Nataliia Isakhanova holds Master`s Degree in International Law from Kyiv National Taras Shevchenko University, Institute of International Relations.
 
Nataliia holds Ph.D. in International Law from Kyiv National Taras Shevchenko University, Institute of International Relations.
 
Nataliia is fluent in English, Russian and Ukrainian and admitted to the Ukrainian Association of Lawyers and Ukrainian National Bar Association.
 
Olesia Kryvetska
 
Olesia Kryvetska is aSenior Associate with Sergii Koziakov & Partners specialising in Trade Remedies, WTO Law, Preferential Trade Agreementsand Competition Law.
 
Olesia Kryvetska holdsLL.M from University of Barcelona, IELPO Programme(Spain)and a master’s degree from Taras Shevchenko National University of Kiev, Institute of International Relations (Ukraine).
 
Mrs. Kryvetska has a five-year experience in international trade, incl. representing business in anti-dumping proceedings, advising on market access, preferential trade regimes, technical barriers to trade and other aspects of international trade law.Mrs. Kryvetskaadvised on international trade Samsung Electronics Co., Ltd, Euroglas Polska sp. z.o.o., Zammler Ukraine LLC, Chinese Commercial Association andothers.
 
Mrs.Kryvetska is also aPhD candidateat Taras Shevchenko National University of Kiev, Institute of International Relations.She also serves as acoach of a team of Taras Shevchenko National University of Kyiv at theELSA Moot Court Competition on WTOLaw.
 
Olesia Kryvetska is recognised as a National expert in the sphere of Trade & Customs by Getting the Deal Through.
 
She was part of an expert group for developingthe National Export Strategy and Action Plan for the period of 2016–2020.
 
Mrs. Kryvetska regularly speaks at conferences and workshops, contributes to academic and professional publications on compelling issuesrelated to international trade law and Ukrainian trade policy. She is a member of the Ukrainian Bar Association (UBA).
 
Mrs. Kryvetskais fluent in Ukrainian, Russian, English and Spanish.
 
 
Sergii Koziakov & Partners
 
Sergii Koziakov & Partners, founded in 1994, is one of the leading law firms in Ukraine. Sergii Koziakov & Partners have earned a solid reputation for providing of excellent legal services and its lawyers have repeatedly been among the leaders of various national and international rankings.
 
Sergii Koziakov & Partners represented interests regarding and advised on: Antimonopoly investigations of a violation of legislation on protection of economic competition on different national markets; Safeguard and Anti-Dumping Investigations on imports to Ukraine of different products; M&A transactions including representation of interests in obtaining of approvals required for closing of the transactions in the Antimonopoly Committee; restructuring of the assets of the largest Ukrainian agricultural producers; acquisition of land plots and buildings for construction of largest network of food supermarket in Ukraine.
 
Sergii Koziakov & Partners worked and work for: UNDP, General Motors Company, Adam Opel GmbH, Chevrolet Central and Eastern Europe LLC, DELPHI France SAS, Lenovo, TP-LINK Technologies Co., Ltd., Hyundai Corporation, ECO Eastern Europe Real Estate AG; Samsung Electronics Group, Korean Electronics Association, Korean Textile Association, Zammler Ukraine LLC, Chinese Commercial Association, AE Nibulon Ltd (the largest Ukrainian agricultural exporter of grain); Amarant Ltd (one of the largest Ukrainian agricultural producers), OJSC Farmak (the largest Ukrainian pharmaceutical producer).
 
Through its expertise, knowledge of industries and legal experience Sergii Koziakov & Partners offers every client the best practical decisions and progressive academic legal expertise in a competitive environment.
International Trade lawyers of SergiiKoziakov & Partners participated in the working group on preparation ofthe National Export Strategy and Action Plan for Ukraine for the period of 2016-2020. These documentshave been prepared with financial support from Western NIS Enterprise Fund on the request of the Ministry of Economic Development and Trade of Ukraine. The Firm has repeatedly received awards in national and international rankings of law firms.

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