UJBL With rising tensions and trade wars between the United States, EU and China, how can this affect Ukraine's trade policy? Do you see any threats for our country?
Anzhela Makhinova: It goes without saying that the "trade war" begun in March 2018 by the US via adoption of import tariffs on steel (25%) and aluminum (10%) had a negative impact on the entire international trade environment as it caused a wave of various protectionist measures around the world. Specifically, the EU, Canada, Turkey, and the Eurasian Economic Union have all initiated safeguard and anti-dumping investigations against steel products that have already resulted in application of provisional and/or definitive measures.
As a world-leading steel supplier, Ukraine has inevitably been heavily hit by additional quotas and duties applied in major export markets. This is not the only negative consequence. There is another side of the coin. When acceding to the WTO, Ukraine considerably decreased import duties applied to different industrial products. Steel products were no exception, with 0% import duties applied to most of them. This situation is very dangerous for Ukrainian steel producers because the Ukrainian market could be flooded with exports of steel products from third-party closed export markets. Hence, Ukrainian steel producers will protect their internal market as soon as possible.
Unfortunately, as of today, it is quite difficult to do this efficiently in view of the fact that effective trade defense laws were adopted in 1998. Thus, they are outdated and do not allow Ukraine to overcome new international trade challenges. Particularly, in almost all cases there are no evident dumping or prohibited/actionable subsidies. Instead, most of them are hidden and, in order to be efficiently counteracted, it is crucial to apply different adjustments. While Ukrainian law is silent on how to counteract the above situations, other countries have already amended their legislation quite considerably. For instance, the EU has set out precisely cases when investigating authorities can apply higher anti-dumping or countervailing duty rates in the event of different market distortions (e.g. government intervention, export duties and bans influencing prices of raw materials); the necessity to take into account differences in labor standards, requirements in the field of environment protection, etc. The hope exists that the Ukrainian Parliament will soon follow the above approach and grant efficient trade defense instruments to domestic industry.
UJBL Ukraine is a member of the WTO working group on the accession of Belarus. How can the state support its exporters focused on this market?
A. M.: The WTO is usually associated by businesses just with the dispute settlement system, but this is not true. The WTO stipulates many other opportunities for business to protect its interests in export markets. One is the participation of Ukraine in WTO working groups on the accession of other countries to the WTO.
The accession process begins with the submission by the relevant state of a written application to the WTO. Based on this application, a working group is established that will further analyze in detail the legislation of the country and its implementation in terms of compliance with WTO rules. Thereafter, multilateral and bilateral negotiations take place. In the course of negotiations, participating countries negotiate the elimination of different barriers to trade. For instance, during its own accession process, Ukraine abolished many tax privileges applied in the field of autoproduction, minimum prices applicable to agricultural products, etc.; Russia was obliged to abolish its duel-pricing policy in the field of natural gas; Georgia was obliged to eliminate discrimination in application of taxes to tobacco products. Notably, it will be impossible for a state to accede to the WTO until the elimination of all barriers in trade, as the decision on accession is adopted by consensus of all WTO members and WTO members whose requirements plied the relevant proceedings. However, the situation changed when the EU initiated the first dispute in Ukraine's history with respect to an export ban applied to unprocessed wood and potential replacement thereof by export duties under the DCFTA.
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