Date of publication: 30 October 2018
Olena Omelchenko, Partner, Attorney at Law, Head of International Trade Practice
Source: Who’s Who Legal 2018
Many countries are now widely using anti-dumping, anti-subsidy and safeguard investigations and measures to defend their trade interests. Ukraine is no exception. Ten years of WTO membership have given Ukraine a valuable opportunity to sharpen its skills in practical application of the trade defence instruments, although transparency and simplification of investigation procedures remain an issue.
In Ukraine, as in many other countries, the use of trade defence instruments is backed by economic and legal rationales. However, there are instances when political muscle comes into play.
The signing of the EU-Ukraine Association Agreement has significantly complicated Ukraine’s application of trade defence instruments with respect to imports from the EU despite that the agreement provides a trade defence framework based on WTO rules.
Although Ukraine’s safeguard measures have become few and far between these days, a safeguard duty on the imports of certain products is still used.
Ukraine’s loss of the WTO case Ukraine – Definitive Safeguard Measures on Certain Passenger Cars (DS468) and revocation of the safeguard measures on imports of passenger cars regardless of the country of their origin has added difficulty to initiating safeguard investigations. However, Ukraine’s automotive industry was given an impetus to initiate an anti-subsidy investigation that resulted in the imposition of countervailing measures against imports of passenger cars from Russia and launch another anti-subsidy investigation into imports from the Republic of Uzbekistan. In contrast to many countries that apply countervailing measures against subsidised imports, Ukraine had never resorted to these measures up until that time.
Over the past five years, most of Ukraine’s trade defence actions have taken the form of anti-dumping measures. Of 16 anti-dumping measures currently applied by Ukraine, 10 target products from Russia, two are imposed against products from Belarus and three are launched against products from China.
In addition, there are 11 anti-dumping investigations currently in progress, which target imports from not only Russia and Belarus, but also Moldova, China, Poland, India and Turkey.
Among all the trade defence measures resorted to by Ukraine, only two have been brought before the WTO’s Dispute Settlement Body: definitive safeguard measures on imports of certain passenger cars and anti-dumping measures on imports of ammonium nitrate originating from Russia.
Although foreign law firms and legal counsels involved in the investigation process in Ukraine usually engage local legal advisers, they can also manage by themselves.
What foreign counsel needs to know about Ukraine’s investigation process
Designated authorities
The decision to either initiate or terminate an investigation and take the relevant action falls within the remit of the Interdepartmental Commission on International Trade (the Commission). The Commission is chaired by the first vice prime minister – the minister of economic development and trade of Ukraine, who is mandated to set out its composition. The Commission is to be made up of deputy ministers of the principal ministries and representatives of Ukraine’s Presidential Administration, Security Service and Anti-Monopoly Committee. The composition of the Commission is approved by the Government; its membership is rotated annually or semi-annually. Resolutions of the Commission are decided by a simple majority vote of the members present. The Commission has no secretariat and it is the Ministry of Economic Development and Trade (the Ministry) that is responsible for the organisation of its work.
The Ministry handles a complaint prior to tabling a proposal before the Commission to initiate an investigation. It also acts as an investigative body which submits a draft decision to the Commission based on the investigation’s findings.
Under Ukrainian law, the State Fiscal Service may also carry out investigations. However, this is never the case, so relationships in the investigation context are confined to interacting with the Ministry.
Since the Commission is not a legal entity, the Ministry represents the Commission before the court and the WTO’s Dispute Settlement Body when Ukraine’s trade remedies are challenged at the WTO.
Investigation time frames and schedule
Under Ukrainian law, the Commission and the Ministry have the authority to set forth, extend or resume the investigation time frames subject to WTO agreements.
As a rule, the Commission sets the time frames for commencement and completion of investigations as well as for application or extension of measures.
Other deadlines are set by the Ministry on an ad hoc basis during official correspondence with interested parties. The investigation schedule is the Ministry’s internal document which depends on its workload in each individual case and is not publicly disclosed.
Filing and access to case files
Investigations are held in the Ukrainian language only. All necessary documents, including technical specifications, contracts, invoices, etc, must be translated into Ukrainian. As the language of the hearings and verification visits is also Ukrainian, interested parties have to ensure the presence of an interpreter. Otherwise, the investigative body might leave an interested party’s information out of consideration.
Filing in Ukraine has its own specifics. A document is deemed filed if it has been registered by the Ministry within the prescribed time limits. Therefore, the interested parties have to make sure that documents are filed not only with the investigative department, but also, and most importantly, with the document control department and are properly processed and registered in the Ministry’s document and records management system. Therefore, it is very unlikely that email correspondence with the investigative body will be included in a case file.
Unfortunately, there is no electronic document repository in Ukraine similar to EDIS in the USA or TRON in the EU. As the Ministry does not generate a case file, an interested party is unable to promptly review a list of documents handled by the Ministry. This makes accessing case papers a rather difficult task.
At the same time, an interested party may request that it can scrutinise case papers and photograph documents on the Ministry’s premises. Further to an interested party’s request the investigating body selects the set of documents, that it deems necessary to provide to the requesting party, and appoints the date and time of the visit. This is extremely time-consuming as one has to repeatedly request the Ministry to provide documents for review and copying in order to generate an own case file.
Confidentiality
Notice of commencement, completion or extension of the investigation is published by the Commission in Ukrainian in the Official Gazette of the Cabinet of Ministers. The Commission’s decision is classified as restricted and it is, therefore, impossible to read its full text or check whether a voting quorum was present.
Although Ukrainian legislation stipulates that interested parties’ legal counsels may access a confidential version, this provision is hardly ever applied in practice, and legal counsels have to get by with non-confidential version and evidence they have collected.
Interested parties are bound by law to submit their entire non-confidential correspondence to the interested parties. Otherwise, the investigating body may leave this information out of consideration. The Ministry requests the delivery of the information by mail and, if necessary, the confirmation of the delivery by a postal receipt.
Investigation procedure
The first step in the investigation procedure is the registration of interested parties within 30 days of the date of publication of the Commission’s investigation commencement notice. The complaint shall be provided only to those companies that expressed their interest in the investigation and requested the complaint. In addition, the Ministry gives a 60-day period for comments and observations on the investigation. These are usually comments to facts stated in the complaint. However, in practice an investigation is hardly ever terminated at its launch because of the contestation of facts.
While in most countries the investigative authorities send a questionnaire to interested parties immediately after initiation of the investigation, in Ukraine companies receive questionnaires two to three months at the earliest after investigation has been commenced. In addition, they generate PCN codes during this period. A questionnaire may be completed within a standard period of 37 days. In Ukraine, unlike other countries, the investigative body easily makes concessions to interested parties and extends a questionnaire filing period for more than seven days. During investigation the Ministry makes enquiries not only with the registered interested parties, but also with well-known consumers and the relevant government authorities.
Parties to an investigation interested in hearings must inform the Ministry thereof at the beginning of the investigation. Members of the Commission do not participate in the hearing held by the Ministry. All duly registered parties are admitted to the hearing. The agenda, whereby each interested party is entitled to speak for 10 minutes on each item, is distributed one week before the hearing. A written statement and comments are provided after the hearing.
Provisional duties are rarely imposed in Ukraine as questionnaires are sent with delay, and the procedure for repayment of customs duties is rather complicated if the investigation results in application of no final measures.
The Ministry makes random verification visits to both domestic manufacturers and exporters, as well as foreign manufacturers. These are usually three-day visits to confirm information stated in the questionnaire. Upon completion of the verification visit the Ministry prepares a verification report. Recent cases show that interested parties have been able to obtain a verification report upon respective request.
In addition, in the last three cases the Ministry has provided the interested parties with anti-dumping margin calculations for review, verification and comments, which allays concerns about restrictions of the right to defence. In calculating the anti-dumping margin, the investigating body may adjust prices as necessary. At times the Ministry imposes various anti-dumping duties on certain subtypes of products of a particular enterprise or country. Acceptance of the voluntary price commitments approved by the Commission upon the Ministry’s recommendation is seldom the case.
Out of all types of review of measures, the review upon the expiration of measures (the ‘sunset review’) is most frequently applied and the procedure used mostly does not differ from the investigation procedure.
The Commission’s decision may be challenged in a court of law, although judgements in favour of the plaintiff are rare.
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The use of trade defence instruments in Ukraine keeps gaining traction in line with international trends, although there is still a need to further harmonise legislation and improve procedures.
