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Legal Market Trends of 2015 in International Trade

Date of publication: 26 April 2016

Olena Omelchenko, Partner, Attorney at Law, Head of International Trade Practice

Source: Ukrainian Law Firms: Handbook for Foreign Clients 2016

Last year was filled with factors that had a clear-cut impact on foreign trade. On the one hand, any impulse to trade remained out of the question due to ongoing economic downturn, drastic devaluation of Ukrainian hryvnia and the imposition of import duties, embargoes and trade restrictions. As a consequence, the legal services market had no alternative but to lose ground amid Ukraine’s trade slump. On the other hand, legal analysis, assessment of risks and the search for new solutions are strongly sought-after to address challenges that face businesses.

However, legal advice with respect to customs regulation and special foreign trade sanctions remained as relevant as ever.

Domestic market saw significant efforts focused on finding solutions to balance the interests of metallurgists and scrap metal exports. As far as foreign markets are concerned, success was made to avoid the imposition of Egyptian import duty for metal mountings and fittings, helping Ukrainian exporters retain a USD 210 million market.

There was an increase in the number of anti-dumping investigations between Ukraine and the Russian Federation. In particular, the Eurasian Economic Commission handled five anti-dumping investigations into Ukrainian metallurgical products whose total exports was worth USD 1.567 mln. For its part Ukraine initiated six investigations into import of a broad range of products worth approximately USD 1.367 mln.

Ukraine imposed special measures in response to unfriendly and discriminatory actions of the Republic of Belarus and the Republic of Uzbekistan.

The Russian Federation launched WTO dispute against Ukraine regarding anti-dumping measures imposed by Ukraine on imports of ammonium nitrate, while Ukraine requested consultations with Russia concerning certain measures imposed by the Russian Federation on importation of railway rolling stock and railroad switches.

Legal framework – practice area/ industry impact

Last year saw significant changes in the legal regulation of trade relations necessitating law firms to further sharpen their tried and tested practices. Trilateral negotiations held by the EU, Ukraine and Russia resulted in Russia’s suspension of CIS Free Trade Agreement. As a countermeasure, Ukraine raised the rates of duties on goods originating from Russian Federation up to the level of tariff bindings in the WTO. The European Union and Ukraine started applying the Deep and Comprehensive Free Trade Area, which forms part of the Association Agreement and constitutes a milestone in EU-Ukraine bilateral relationship. Negotiations between Ukraine and Canada over conclusion of the free trade area neared completion. Similar negotiations were revived with Turkey and Israel.

Role of the legal counsel

In the light of the above developments, the role of legal counsel gains in importance as businesses have began seeking ways to protect their interests including those that imply the use of new instruments of trade protection and promotion of products.

Prospects of practice development

This year is likely to see a surge in demand of domestic producers for the mechanisms of protection of internal market from the EU imports. Foreign market will see the pressure on businesses related to transit of cargo through the Russian Federation continued; the possibility exists that Moldova can impose restrictions on some Ukrainian imports worth USD 31 million.

This year’s landmark legal event, however, is the establishment of legal mechanism to involve legal counsels to protect Ukraine’s interests at the WTO Dispute Settlement Body and selection of arbitrators to set up arbitration groups as part of the EU-Ukraine Association Agreement.