Ukraine Renegotiation Request on Tariff Lines, Russia’s Ban on Live Animals and Automobile Recycling Fee under Fire

Ukraine’s recent request to renegotiate several tariff lines came under scrutiny at a WTO committee meeting this past Monday, with 23 members jointly voicing concerns over the systemic and commercial implications of such a move. Meanwhile, newly-minted WTO member Russia also faced questions during the 26 November meeting, specifically regarding recent policies that some of its trading partners fear are protectionist.

Ukraine renegotiation request

Ukraine’s recent announcement that it would be seeking to revise its tariff schedule in its accession protocol came under fire at Monday’s meeting of the WTO’s Goods Council, with 23 members jointly urging Kiev to withdraw its request.

The members who signed onto the 26 November statement, which was introduced by Australia, included Brazil, Canada, Chile, Colombia, Croatia, the EU, Guatemala, Hong Kong, Iceland, Japan, Liechtenstein, Malaysia, Mexico, New Zealand, Norway, Oman, Paraguay, Singapore, South Korea, Switzerland, Turkey, and the US.

Ukraine had submitted a notice late last year alerting members that it would seek to invoke a provision in the General Agreement on Tariffs and Trade (GATT) - Article 28 - that indeed allows for renegotiating accession terms. However, recent news regarding the proposed size of the request has alarmed other WTO members over the past few months, some of whom had already raised questions about the move at a meeting of the General Council - the WTO’s highest decision-making body outside the ministerial conference - this October.

Kiev’s notification covers 371 tariff lines, the group backing the statement said, adding that both the intent of the proposed action - as well as the large number of products and sectors, both agricultural and industrial - are a source of “serious concern.” Brazil reportedly noted that the tariff lines cover US$4.6 billion in trade.

The timing of the proposal - coming just a few years after Ukraine became a WTO member in 2008 - has also sparked unrest among delegations. “Binding of tariff levels is one of the basic principles of the WTO, and serves to guarantee the security and predictability of the multilateral trading system,” they said. “Ukraine’s notification, coming so soon after its WTO accession, challenges that basic principle,” the group added.

Recent comments by Ukrainian officials have further fuelled these concerns, some members noted. The country’s prime minister, Nikolai Azarov, said last week that the talks are indeed geared to revise Kiev’s accession terms, according to local press reports. “We are very concerned about this since Article 28 was never meant to be used for this kind of purpose,” the EU said in response to these reports.

The members backing the statement also stressed that Ukraine’s notification comes during a difficult period for the global economy, one where leaders have regularly argued that countries must avoid resorting to trade protectionism. “Ukraine has previously claimed its notification is not protectionist in nature, but the high number of tariff lines involved places such assertions in serious doubt,” they argued.

Members also raised concern over whether Ukraine would be able to compensate members for the concessions that they wish to change in their tariff schedule, and noted a “lack of transparency” regarding both the changes Kiev is seeking and the process they plan to follow in doing so.

Ukraine, for its part, defended the request as normal practice in the WTO, and one that does not constitute protectionism, adding that it is confident in the ability of the global trade body to accommodate its members’ needs.

Russia questioned on ban on live animal imports from EU, automobile recycling fee

Russia - whose membership to the Geneva-based trade body took effect just this past August, following nearly two decades of negotiations - also faced questions during the Goods Council meeting, specifically over a ban on the import of live animals from the EU, as well as a recycling fee for automobiles.

The EU added that Moscow’s March ban on live animal imports from the 27-member bloc - specifically on slaughter pigs - as well as the applied recycling fee legislation, are among those measures causing concern over whether Russia is heeding its WTO commitments.

EU Trade Commissioner Karel De Gucht has publicly criticised the live animal import ban in recent months, having referred to it during a September speech in Helsinki as a “clear case of a regulatory measure acting as a tool of trade protection” and as the wrong type of signal to send “at a time when liberalisation is set to be moving forward.”

Meanwhile, the automobile recycling fee in question imposes a fee of €420 on small cars to €150,000 for heavy construction vehicles, while not imposing any fee for domestic automobiles as long as they have a recycling guarantee. The policy, which entered into force on 1 September, leads to discrimination between locally-produced and imported vehicles, the EU said on Monday.

The EU’s concerns over the impact of the recycling fee on foreign car producers were also shared by Japan and the US, sources confirmed to a News Agency.

Ukraine is also planning to implement its own recycling fee for vehicles, the EU noted during the meeting, adding that the measure is similar to Russia’s and could also pose problems.