International Trade News. September-December 2017

WTO NEWS

11th Ministerial Conference of the World Trade Organization

On 10-13 December 2017, the 11th Ministerial Conference of the World Trade Organization (“WTO”) took place in Buenos Aires.

The Ministerial Conference of the WTO ended with a decision by WTO members to continue negotiations on the fisheries subsidies ban. Members agreed to make the final decision by the next Ministerial Conference in 2019. The Ministerial decision contained also a Work Program on Electronic Commerce. Additionally, delegates raised questions about the extension of the ban on TRIPS non-violation and situation complaints. WTO Members also agreed on a Work Program on Small Economies and the creation of a working group on the accession for South Sudan. [1]

Ukraine was represented by a delegation composed of the Minister of Economic Development and Trade Stepan Kubiv, his Deputy – Trade representative of Ukraine – Nataliya Mykolska, and the Deputy Minister of Agrarian Policy and Food for European integration Olga Trofimtseva.[2] The Ukrainian delegation supported the decision on continuance of the moratorium on customs fees for electronic transactions. Together with other countries, it worked on the draft decision for the fisheries subsidies ban, and discussed the refusal of domestic support for the agricultural sector by WTO Member-States.[3]

At the closing ceremony of the Ministerial Conference, Roberto Azevedo stressed, “…the system is not perfect, but it is the best we have and we are all going to regret very deeply should it ever cease to function.[4]

Ukraine launched two news WTO disputes

In autumn 2017, Ukraine exercised its right for recourse to the Dispute Settlement Body of the World Trade Organization and initiated two new disputes:

  • Kazakhstan — Anti-Dumping Measures on Steel Pipes

On 19 September 2017, Ukraine requested consultations with Kazakhstan with respect to the anti-dumping measures applied to certain types of steel pipes on the customs territory of Kazakhstan. These measures came into force according to the Decision of the Board of the Eurasian Economic Commission No. 48 of 2 June 2016.[5]

Ukraine considers that Kazakhstan failed to comply with its WTO obligations by following the Decision of the Board of the Eurasian Economic Commission based on the report: “On the results of the sunset review of anti-dumping duties on certain types of steel pipes originating in Ukraine”.

In its request for consultations, Ukraine stated that during the sunset review of anti-dumping measures, the Eurasian Commission made a few procedural violations preventing Ukrainian producers from properly protecting their interests. Ukraine is sure that imposition of these anti-dumping duties is a clear violation of the provisions of the Agreement on Application of Article VI of the GATT.[6]

  • RussiaMeasures Concerning the Importation and Transit of Certain Ukrainian products - Request for Consultations by Ukraine

On 13 October 2017, Ukraine filed a request for consultation with the Russian Federation regarding measures on the importation and transit of certain Ukrainian products.[7] The dispute concerns a range of non-transparent measures taken by the Russian Federation during 2013-2015 and severely restricting the import of certain Ukrainian products to the customs territory of Russia and the Eurasian Economic Union. 

Ukraine complains that these discriminatory measures are not consistent with the obligations of the Russian Federation under its Protocol of Accession to the WTO as well as under the General Agreement on Tariffs and Trade of 1994, Trade Facilitation Agreement, Agreement on Tariff Barriers in Trade, and Agreement on Sanitary and Phytosanitary Measures.[8]

TRADE LIBERAZATION

Ukraine continues to develop its trade connections

Throughout September–December 2017, Ukraine made significant efforts to extend its trade ties. In September 2017, the Minister of Economic Development and Trade of Ukraine held a meeting with the PlenipotentiaryAmbassador of Argentina in Ukraine Alberto José Alonso. During the meeting, the parties discussed the current state andfuture prospects of bilateral trade and economic cooperation between Ukraine and Argentina.[9]

The Ministry also visited India with a trade missionDuring the trade mission, the parties discussed questions of tariffs and the diversification of Ukrainian exports by supplying machinery, shipbuilding and food products to the Indian market along with existing supplies of oil, wheat and metal products.[10]

Ukraine and Israel held the seventh round of negotiations on a possible Free Trade Agreement during which the parties reached preliminary agreement on trade liberalization in the field of industrial goods.[11] As a part of cooperationwithIsrael, there arealsoplanstoincrease the level of trade in the agricultural sector. [12]

Negotiations on further cooperationalsotook place with Vietnam[13], Azerbaijan[14] and Turkey [15].

Turkey and Ukraine exchanged new ideas on the trade liberalization in goods and services within the framework of a future Free Trade Agreement.

The Canada-Ukraine FTA became effective in August 2017. Both parties are now planningexpansionof the format[16]. In the first eight months of 2017, the Ukrainian export of goods to Canada increased by 70.9%, reaching $ 31.2 million. Thisquestionwason the agenda during the Canada-Ukraine business forum on 30-31 October during the official visit of the Ukrainian Prime Minister to Canada. [17]

During the governmental visit of a Ukrainian delegation to Georgia in November 2017, the parties discussed cooperation aimed at boosting the export of Ukrainian goods andservicesandconvenienttransportconnectionsbetweenthecountries.[18]  

In earlyDecember2017, a Ukraine-China action plan wassigned, whichisapartofthe broader Beijing-led “OneBelt, OneRoad” initiative. The main trade sectors of this plan include technological support, investment cooperation in the aviation sphere, transport, energy, machine building, food and chemical industries, customs cooperation, as well as cooperation in the space sector.

Ukraine becomes a member of the Convention of pan-Euro-Mediterranean preferential rules of origin

Startingfrom1 February 2018, Ukraine will become a full member of the regional Convention of pan-Euro-Mediterranean preferential rules of origin. The countries of the EU, EFTA, Turkey, Albania, Bosnia and Herzegovina, Macedonia, Serbia, Montenegro, Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestine, Syria, Tunisia, the Faroe Islands and the Republic of Moldova are all members of this Convention.[19] The Convention enables Ukraine to enter into a new trade level in the Mediterranean region. By creating preferential rules of trade,exporters will have the opportunity to avoid paying unnecessary customs duties.[20]

TRADE REMEDIES

EAEU has imposed anti-dumping measures with respect to hot-rolled steel angles from Ukraine

On 4 October 2017, based on an anti-dumping investigation conducted with respect to hot-rolled steel angles originating from Ukraine and imported into the customs territory of the Eurasian Union, the Eurasian Commission imposed anti-dumping duties on the abovementioned products at the rate of 37.89% for the period of 4 years and 8 months. [21]

Ukraine initiated a number of anti-dumping investigations

On 2-3 November 2017, the Intergovernmental Commission on International Trade published a number of notifications on the initiation of certain anti-dumping investigations, including:

  • anti-dumping investigation on syringes made from polymeric materials, with or without needles, two-component and three-component, which may be classified under Ukrainian HS Code 9018 31 10 00:

-          of volume of 2ml. and 5ml. originating from People’s Republic of China;

-          of volume of 2ml. and 5ml. originating from Turkey;

-          of volume of 2ml., 5ml. and 10ml. originating from India.[22]

  • anti-dumping investigation  on import into Ukraine of ‘extra’ grade table salt obtained by evaporation originating from the Republic of Belarus.[23]
  • the expiry review of anti-dumping measures on the import into Ukraine of asbestos-cement corrugated sheets classified under Ukrainian HS Code 6811 40 00 10 originating from the Republic of Belarus.[24]

Moreover, on 29 December 2017, the Intergovernmental Commission on International Trade published a notice on the initiation of an anti-dumping investigation concerning conventional incandescent lamps of power not exceeding 200W and  voltage exceeding 100 volts, classified under Ukrainian HS Code 8539 22 90 10originating from the Republic of Belarus.[25]

PHARMACEUTICALS

Filing of applications for inclusion into the national list of essential medicines is simplified

On November 27, the Expert Committee on Selection and Use of Essential Medicines issued a Letter of Assessment on the Statement of Changes to the National List of Essential Medicines, confirming the transparency of the procedure for reviewing applications for amending the National List by Expert Committee. The letter shall facilitate completion of a complex application form for inclusion of a medicinal product into the National List, as the applicants will now know which criteria of the application they were able to satisfy.

VAT on medical products is now 7% instead of 20%

On November 7, the Verkhovna Rada of Ukraine adopted amendments to the Tax Code of Ukraine[26]. In line with these changes, starting from 1 January 2018, the supply and import into the customs territory of Ukraine of medical products included in the State Register of medical equipment and medical products, or compliant with the technical regulations, is subject to taxation at a rate of 7% instead of 20%.[27]

OTHER TRADE ISSUES

The procedure of provision of additional tariff quotas is published

On 29 November 2017, the European Commission published the procedure for granting additional duty-free tariff rate quotas for Ukrainian wheat, maize and barley, which became available for Ukrainian exporters from 1 January 2018.[28]

Changes to requirements governing chocolate products

From 1 January 2018, European cocoa and chocolate product quality requirements entered into force in Ukraine.[29] According to these requirements, chocolate should contain not less than 35% of cocoa product, milk chocolate shall contain not less than 25% of cocoa product and at least 14% of dairy products, and white chocolate - at least 20% of cocoa butter and not less than 14% of dairy products.[30]

New tariff classification

On November 15, the Cabinet of Ministers of Ukraine supported the bill "On the Customs Tariff of Ukraine", introducing a new classification of goods under UKTZED (HS). The new product descriptions and codes correspond to the Harmonized Commodity Description and Coding System 2017 and the Combined Nomenclature of the EU.[31]

‘Buy Ukrainian’ draft law passes first hearing

On December 7, thedraft law No. 7206 "Buy Ukrainian"[32] was passed in the first reading.[33] The day before, the Ministry of Economic Development and Trade of Ukraine, having analyzed the bill, revealed a number of provisions that contradict Ukraine's obligations under the Ukraine-EU Association Agreement the WTO Government Procurement Agreement, to which Ukraine is a party. In fact, the draft law envisages providing preferences to a local component in the public procurement procedure and proposes a complex formula for calculating the so-called "reduced price" – the price that accounts for the local component in the product or service to be procured.[34]

International sanctions

In early September 2017, the European Union extended for six months the sanctions in place since 2014 against Russian individuals and companies because of aggression against Ukraine.[35]

The Russian Federation reacted accordingly and expanded the scope of the food embargo in force since 2014 by additionally prohibiting the import of live pigs and cattle from the EU, the USA, Canada and some other countries, including Ukraine.

Notably, in December 2017, Russia reported that it had implemented the rulings and recommendations of the WTO Dispute Settlement Body in the Russia - Pigs dispute and opened the import of live pigs, fresh pork and other pig products following a block due to alleged insufficient veterinary control of suppliers and the threat of the spread of African swine fever.[36] However, due to the almost simultaneous introduction of the aforementioned sanctions concerning imports of pork, actual imports of pigs from the EU to the Russian Federation remain banned.[37]

At the end of December 2017, Ukraine extended the ban on imports of certain goods originating in the Russian Federation into the customs territory of Ukraine, and expanded the list of such goods banned from import.[38] In response, the Russian Federation has extended the transit ban for Ukrainian goods destined to the territory of Kazakhstan and the Kyrgyz Republic, effective from 1 January 1 2016, for an additional six months.[39]

For more information, please contact Anzhela Makhinova.