REUTERS
Ukraine has the right to appeal.
The World Trade Organization (WTO) on July 30 should release a report to sum up a second trade dispute between Ukraine and Russia regarding restrictions on Ukrainian exports of railway equipment, where Ukraine was defeated by Russia.
Unexpectedly, the latest ruling was even more defeat than the first one, the Ukrainian media outlet Europeiska Pravda wrote, referring to several sources in the government.
As was earlier reported, results on a case brought by Russia against Ukraine on anti-dumping measures imposed on imported ammonium nitrate were announced a week ago.
The WTO stated the violation of the anti-dumping investigation, but recognized Kyiv has the right to conduct a new investigation.
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However, the WTO's decision on new case No. DS499, title "Russia – Measures Affecting the Importation of Railway Equipment and Parts Thereof" turned out to be worse.
Noteworthy, in 2014, Russian certification authorities without sufficient justification began to massively suspend the actions of compliance certificates previously issued to Ukrainian producers, as well as also limited the issuance of new certificates. In addition, Russia refused to recognize the certificates issued to Ukrainian producers in Belarus and Kazakhstan, although according to the regulations of the Customs Union, all its members must recognize such certificates.
Ukraine's government says, as a result of these restrictions, the Ukrainian export of railway products to Russia in 2012-2016 shrank by over 90% from $2.6 billion to $95 million. Now only Ukrainian businessman Victor Pinchuk's Interpipe integrated pipe and wheel company exports such goods to Russia.
Ukraine's Economic Development and Trade Ministry regarded these steps as a flagrant violation of the WTO principles, as well as the WTO agreement on technical barriers to trade. Therefore, after all the necessary procedures, the government initiated a trade dispute.
According to the publication, the result of considering Ukraine's claim, which will be officially unveiled on Monday, is disappointing, as the panel rejected the key demands and arguments of Ukraine. The only issue that was considered in favor of Ukraine is that the WTO called illegal the refusal of Russians to recognize the certificates issued by Belarus and Kazakhstan. In addition, experts have taken our side, recognizing some procedural violations by Russia, it said.
At the same time, WTO experts recognized Russia's refusal to certify Ukrainian products legitimate. Their arguments seem to be rather inconsistent. The World Trade Organization stated that security in Ukraine in 2014-2016 differed from the general one in the region. So, Russia had grounds to ban its certification specialists from traveling to Ukrainian enterprises, fearing for their safety. At the same time, the expert commission not only went beyond its powers, assessing political risks, but also rejected Ukrainian arguments about alternative possibilities for verification procedure that do not require visits to enterprises, the publication wrote.
Moreover, which is also important, the expert group refused to see the systemic nature of violations by Russia. Such recognition would be extremely important for Ukraine, because if Russia refused to remove the violations, Ukraine would have the possibility of introducing reciprocal restrictions to compensate its losses.
Read alsoUkraine loses to Russia in WTO dispute for the first time – media
Theoretically, Ukrainian producers have an opportunity to return to the Russian market, using Belarusian and Kazakh certificates, but most likely Russia will continue the policy of their non-recognition, journalists said.
Unlike the dispute over ammonium nitrate, where independent experts initially pointed to problems in Ukraine's position, the case of railway restrictions seemed to be very promising for Ukraine.
In view of the decision taken, there are grounds to talk about the illegal influence of the Russian Federation on the commission, the publication added.
The current loss of the case is not final. Ukraine has the right to appeal. Most likely, Kyiv will take advantage of this opportunity.
As was earlier reported, Kyiv and Moscow filed against each other two claims each. The decisions on two of them have already been handed down. The rulings over the two remaining will be the most fundamental.
Somewhere around December, the WTO should publish a report on Ukraine's claim over restrictions imposed by Russia on the transit of goods. If the decisions regarding ammonia and railway equipment is of a niche nature, then the transit business concerns all Ukrainian exports. Indeed, the blocking of transit actually made Ukrainian exports to the east, primarily to Central Asia, impossible. Moreover, despite all attempts, Ukraine has not found a real alternative to this transit for more than two years.
A little later (most likely, as early as 2019), a decision will be made on Russia's comprehensive lawsuit against Ukraine regarding sanctions and restrictions imposed in response to Russian aggression. This dispute should become a historic one for the WTO as the Russian Federation is trying to challenge the restrictions that were imposed for political reasons. Thus, any decision in this case should become a precedent for other political sanctions.
At the same time, if the case of sanctions was initially considered as one, the decisions on which are difficult to predict in advance, Ukraine seemed to have a rather strong position in the case on goods transit.
Now, after the decision on the case of the railway equipment, there are quite many grounds for pessimism, the journalists concluded.
The government unofficially says that due to the importance of the transit case, the expert panel in this case will include experts whose reputation should be an obstacle to the pressure of the Russian Federation.