Ukraine has lost Russia to the WTO. What does it mean

Украина проиграла России в ВТО. Что это значит

The world trade organization has already issued two decisions on disputes between Ukraine and Russia, both in Moscow’s favour. Two of the dispute remains pending in the WTO.

The confrontation between Ukraine and Russia is developing not only in front but in the economic sphere. Moreover, a trade war is also uncompromising.

Over the past four years the country has imposed a lot of restrictions against each other. Some of them became the subject of litigation in the world trade organization, which is intended to govern disputes in international trade. While the WTO, Ukraine loses. understand, than such a state of Affairs in the world trade organization threatens Ukraine.

First defeat

Only four WTO is the Ukrainian-Russian Affairs. Two filed Kiev and Moscow, respectively.

The first decision was issued on the complaint of Russia on the Ukrainian protective measures against ammonia. The WTO declared illegal the Ukrainian duties for Russian ammonia.

Anti-dumping duties on ammonium nitrate originating from Russia were introduced in 2014 and should be valid until July 2019. In 2017 introduced additional duties against Russian carbamide and carbamide-ammonia mixture (of 31.84%). In March of this year, Kiev has revised the rate of protective duties on Russian ammonium nitrate until it is of 42.96% (for JSC “Dorogobuzh” – 29,25%).

The WTO recognized that the anti-dumping investigation by Ukraine was held with violations. If they are eliminated, it will be possible to hold new. The Ukrainian Ministry of economy considers that a victory.

“This is an important decision because it recognized the right to hold the adjustment when calculating the normal value of goods in case of its “non-market” nature. This practice allows you to create conditions for the functioning of a competitive market with equal conditions for all participants” – commented Deputy Minister of economic development and trade – trade representative of Ukraine Natalia Mykolskiy.

The Ministry acknowledged that the group of experts adopted the decision on satisfaction of requirements of Russia concerning certain aspects of the procedure of the investigation, and in part supported the position of Ukraine.

However, the solution of ammonia matter in the context of other trials in Ukraine and Russia. Ukraine builds its line on the assertion that RF systematically introduces us against restrictions, guided by a political logic. But now it turns out it is proved that Ukraine imposes unwarranted restrictions against Russia.

Second defeat

Second defeat in a dispute with Russia has become Ukraine is even more painful. It was our appeal to ban exports to Russia of railway equipment. Starting in 2014 the Russian certification authorities have begun to suspend the previously issued certificates of conformity of Ukrainian producers, and also restricted the issuance of new certificates. Moreover, in Russia Ter refused to recognize the certificates issued by the Ukrainian producers in Belarus and Kazakhstan, although the regulations of the Customs Union such certificates must be accepted by all members of this Association.

The loss of Ukraine from such measures Russia billions – according to the government, the government’s restrictions on Ukrainian exports of railway products in Russia from 2012 to 2016 fell by more than 20 times – from 2.6 billion dollars to $ 95 million.

Such moves in Ukraine was interpreted as a gross violation of the principles of the WTO and of the WTO agreement on technical barriers to trade. Therefore, after all necessary procedures the government has initiated a trade dispute.

But in this matter, the WTO took the side of Russia. WTO experts declared lawful the withdrawal of certification of Ukrainian products. Their arguments – in the Ukraine it is dangerous to the Russian experts of certification. The WTO say that the level of security in Ukraine in 2014-2016 differed from the total in the region, the Russian Federation had reason not to let the departure of its certification specialists on the Ukrainian enterprises, fearing for their safety.

The only plus is the recognition of the illegality of non-recognition of certificates issued by Belarus and Kazakhstan. Theoretically, the Ukrainian producers an opportunity to return to the market of the Russian Federation, Belarus and Kazakhstan using certificates, but it is likely Russia will continue their policy of non-recognition.

For Ukraine, this decision means not only monetary losses, but also problems in the future. The expert group has refused to see the systematic violations by Russia.

Prospects are vague

The two remaining dispute with the WTO – the most important for Ukraine. In December, the WTO should publish a report on the complaint of Ukraine on the restriction of the Russian cargo transit.

Blocking the transit of Russian actually makes it impossible for Ukrainian exports to the East, primarily in Central Asia. First and foremost, Kazakhstan and Kyrgyzstan.

According to government estimates, losses of economy of Ukraine – $ 1 billion per year, or 2% of GDP.

Vladimir Putin recently extended the ban on the transit of Ukrainian goods. Despite all attempts, the real alternative to this transit more than two years, Ukraine has not found.

Also yet to be decided on the integrated claim of the Russian Federation against Ukraine on sanctions and restrictions imposed by Ukraine in response to Russian aggression. These things Ukraine can not afford to lose.

However, according to media reports, the administration of Donald trump was on the side of Russia in case against Ukrainian transit. The decision of the panel of WTO, which is expected this year, could have implications for a number of cases against the United States because of the use of the trump duty on steel and aluminium, as concerns the right of the organization to make a decision in the case of restrictions imposed for reasons of national security.

The case against Russia for entirely different question, namely, transit restrictions that Moscow has put Kiev in January of 2016, cutting off the Ukrainian exporters from the key markets in Central Asia and the Caucasus.

Although the United States supports Ukraine in its territorial conflict with Russia, Washington and Moscow insist that the WTO has no right to consider the Ukrainian case against the transit constraints.

Russia States that have imposed restrictions, in accordance with article 21 of the General agreement on tariffs and trade, which allows WTO members to resort to actions that violate their commitments to the organization, guided by considerations of national security.

The US government argues that “a dispute which concerns security, is political and therefore beyond the competence of the WTO.”

The same argument the administration trump uses to justify this spring introduced tariffs on steel and aluminum.

Other WTO members, in particular Canada, insist that the country should at least argue why they apply such measures.