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Implementation of WTO Agreements Is a Crying Need

Date of publication: 21 August 2015

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

Source: Business

Olena Omelchenko considers that Ukraine has practically no opportunities for engagement of experts and legal advisors to resolve trade disputes in the WTO

Ukraine has been a member of the World Trade Organization (WTO) for more than seven years. However, it has little experience of settlement of trade disputes – it was the plaintiff in three cases that were not even addressed at the level of the group of experts (the second stage of dispute resolution, followed by the third – appeal against the decision of the panel. – Ed.). Surely, a small number of cases does not prove reluctance of the Ukrainian businesses to protect their interests through the WTO mechanisms. It is prevented by a range of, so to say, internal problems.

Firstly, there is no domestic legislation that ensures implementation of agreements between the WTO members regarding dispute resolution in this organization. The main body protecting rights and interests of Ukraine in the trade and economic sphere using WTO mechanisms is the Ministry of Economic Development. Hitherto, no regulations on the decision-making procedure regarding initiation of proceedings by the designated authorities have been drafted. There are no requirements to approve such decision with the Cabinet of Ministers, the Ministry of Foreign Affairs and other government agencies, no criteria and algorithm of actions of the authorized body. The issues of confidentiality, collaboration between business and government in such disputes also remain unsettled.

In addition, no legal act envisages obligations of organizations, enterprises and government agencies on immediate delivery on request of the Ministry of Economic Development of documents, confidential information, etc. Problems can arise even when receiving, e.g. customs statistics from the SFS. Thus, lack of legal regulation of the above procedures makes it impossible to respond quickly to the emergence of problem situations and effectively protect the interests of Ukrainian businesses in the WTO. That is why these regulations should be approved immediately! Secondly, Ukraine has almost no opportunity to engage experts and legal advisors in such disputes. The state budget-2015 does not provide for the appropriate costs. Therefore, only the Ministry of Economic Development is entrusted with elaboration of the defense tactics and interest representation in trade disputes. As many as three employees are working in the relevant department of the Ministry. Moreover, the Ministry of Economic Development can not engage legal counsels free of charge or at the expense of business – it is prohibited by the Law “On Combating Corruption”. However, many countries engage legal counsels of domestic and international specialized companies. For example, legal service by an international law firm with high ratings can cost $0.5-1 mln, with a lower rating – $0.3-0.5 mln. Services of the Advisory Centre on WTO Law are estimated at $150-250 thous. The situation can be improved as follows. First of all, the state budget-2016 should provide for financing of legal support of cases in the WTO. Further, it is necessary to join the aforementioned Advisory Center. The appropriate fee can be paid from the funds allocated to Ukraine as technical assistance. To develop the defense tactics, it also should be allowed to engage legal counsels representing interests of the Ukrainian businesses.

Thirdly, particular attention should be paid to the institutional mechanism of representation of Ukraine in the WTO. Thus, it is important to have the Permanent Mission of Ukraine to the United Nations and other international organizations (located in Geneva), which would regularly take part in meetings of the Dispute Settlement Body. However, in view of decline of Ukrainian foreign missions only two diplomats, who are physically unable to attend all events of the organization, are involved in the WTO issues. For example: the Russian Federation opened a separate permanent mission in the WTO with 33 employees on the staff. It is therefore an urgent need to strengthen the permanent representation of Ukraine in Geneva.

Certainly, resolution of all above problems takes time and requires support of the Cabinet of Ministers. However, it should be remembered that Ukraine’s image and systematic protection of its economic interests are at stake.