On 2 March 2017, the latest WTO panel relating to a complaint involving Russia was composed since our last report on Russia-related WTO news. This follows Ukraine’s complaint against Russian measures affecting its imports of railway equipment.
In fact, in 2017, Russia’s dialogue with WTO partners continued in respect of seven disputes:
- the Appellate Body of the WTO dismissed the majority of Russia’s claims as part of the appeal filed by that state relating to its ban of the importation of live pigs and pork from the EU (we previously reported on this ban);
- Russia appealed the findings of a panel of arbitrators under the EU suit against the Russian anti-dumping measures imposed on light commercial vehicles (“LCV”). This followed the earlier panel’s recognition of a number of the claims against Russia;
- a panel was constituted to handle a complaint from Russia against anti-dumping measures imposed on ammonium nitrate exports to Ukraine;
- a panel was composed to hear Ukraine’s complaint against Russian measures affecting its imports of railway equipment;
- a panel was established to handle Russia’s claim against EU cost adjustment methodology and its extension of anti-dumping measures on welded tubes and pipe imports;
- Ukraine requested the establishment of a panel to examine its claims against Russia regarding several transit restrictions; and
- Russia filed a request for consultations with the EU in connection with anti-dumping measures restricting Russian import of cold-rolled flat steel products.
Russia’s complaints over measures imposed on its cold-rolled steel, welded tubes and pipes and ammonium nitrate exports bear significant similarities to the pork and LCV disputes, in which the WTO, so far, has not found in Russia’s favour. This may be a reasonable basis for predicting the outcome of the pending Russian claims.
In addition to trade disputes, Russia recently started preparatory works ahead of negotiations to accede to the WTO’s Government Procurement Agreement (the “GPA”).
Below, we outline the main issues on each of the disputes mentioned above and provide some background information on the GPA.
Appeal on the imports of pork decision
On 23 February 2017, the WTO Appellate Body dismissed the majority of Russian claims in relation to Russia’s ban on the exports of live pigs, pork and pork products from the EU illegal (WT/DS/475). That said, the Appellate Body also modified a few findings of the arbitrators with regards to the interpretation of a few provisions of Article 6 of the Agreement on the Application of Sanitary and Phytosanitary Measures Agreement (the “SPS Agreement”).
As we noted in our previous Alert, arbitrators ruled that the ban on the imports of pork from the EU imposed without conducting a risk assessment and without considering the territorial spread of the African swine fever (“ASF”) contravened the standards of the World Organisation for Animal Health and violated Article 3 of the SPS Agreement.
In its appeal Russia points out that the terms of the bilateral EU-Russia veterinary certificates that had been previously negotiated with WTO members cannot be considered national SPS measures attributable to Russia, as a result of which they do not fall within the scope of the SPS Agreement. The Appellate Body rejected these objections stating that the measure attributed to Russia was its decision to ban the importation from the EU of the products at issue, and it is irrelevant whether the measure was based on the Russian national legislation or not. Moreover, the fact that the bilateral EU-Russia veterinary certificates had been agreed upon prior to Russia’s accession to the WTO does not alter Russia’s ongoing obligations under Article 6 of the SPS Agreement to adapt its measures to regional SPS characteristics.
Russia also challenged the panel’s findings that the EU, pursuant to Article 6.3 of the SPS Agreement, had provided the necessary evidence objectively demonstrating that the areas in EU Member States (namely, Lithuania, Poland, Latvia and Estonia) are ASF-free and are likely to remain as such. Russia’s arguments in this regard have been dismissed as well.
However, the Appellate Body found that the panel erred in its interpretations of Articles 6.1 and 6.2 of the SPS Agreement. Thus, Russia challenged the panel’s finding that Russia, in violation of Article 6.1, had failed to adapt its SPS measures to the ASF-free areas within Latvia. The EU, in its turn, requested a review of arbitrators’ conclusions that Russia, in accordance with Article 6.2, recognises the concepts of pest- or disease-free areas and areas of low pest or disease prevalence in respect of ASF. The Appellate Body has identified grounds for both of these claims and modified the panel’s findings accordingly, which however did not affect the substantive part of the decision.
Officials of the Russian Ministry for Economic Development commented* that Russia intends to “implement this decision to bring the conflicting measures into conformity with the WTO rules”. It was specifically stressed that Russia and the EU would have to reconsider the bilateral veterinary certificates at issue.
Interestingly, deliveries of pork from the EU to Russia will remain banned due to the food embargo declared by Russia in August 2014 in response to the EU sanctions and which is still in force. Therefore, the WTO Appellate Body’s ruling has little practical impact.
Ruling on LCV
On 27 January 2017, the WTO’s arbitration panel issued a mixed report (WT/DS479/R) concerning the Russian anti-dumping duties on LCV which found the latter incompatible with a number of provisions of the General Agreement on Tariffs and Trade 1994 (the “GATT”) and the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the “Anti-Dumping Agreement”).
The import duties on LCV originating in Turkiye, Germany and Italy were introduced for a period of five years from 14 June 2013 by Decision No. 113* of the College of the Eurasian Economic Commission (the “EAEC”) of 14 May 2013. The duties were imposed in all member countries of the EAEC (i.e. Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan) and applied to motor vehicles weighing between 2.8 and 3.5t, with a cylinder capacity not exceeding 3,000cm3 and van-type body designed for the transportation of cargo of up to 2t, or combined transportation of cargo and passengers. The anti-dumping determination amounted to 29.6% of the customs value for LCV from Germany, 23% for LCV from Italy, 11.1% for LCV from Turkiye. The measures affected many European car manufacturers.
The EU failed to prove the illicitness of the anti-dumping measure as such: most EU claims were dismissed by the panel. Only nine of 31 alleged violations were deemed to have good grounds. The panel ruled in favour of the EU with respect to incompatibilities with WTO rules of a number of aspects of the anti-dumping investigation.
More specifically, the panel agreed that the Department for Internal Market Defence of the EEC (the “DIMD”) improperly defined “domestic industry” as consisting of a single producer accounting for 87% of domestic production, which, consequently, distorted the definition of injury to the domestic industry. Moreover, in breach of Articles 3.1 and 3.2 of the Anti-Dumping Agreement, in its price suppression analysis, the DIMD did not take into account the impact of the financial crisis. Lastly, the DIMD disregarded the overcapacity in the Russian LCV sector which at that time was seven times greater than what was sold on the Russian market. The arbitrators also found that the DIMD acted inconsistently with a number of procedural requirements regarding the treatment of information received during the investigation, unreasonably withholding it from the interested parties.
Not having consented to certain findings of the panel, on 20 February 2017 Russia filed an appeal with the WTO Appellate Body. As a general rule, the appeal proceedings must not exceed 60 days from the date of submission of the notification, and in no case may the proceedings exceed 90 days. The report of the Appellate Body is drafted in closed sessions based on the documents presented by the parties. The Appellate Body may uphold, modify or reverse the findings of the panel. The report of the Appellate Body is final and mandatory for the parties, unless the Dispute Settlement Body votes by consensus not to adopt the report within 30 days following its circulation to the parties.
Russia’s complaint against Ukraine’s anti-dumping measures on ammonium nitrate
A panel was constituted on 2 February 2017 at Russia’s request, after consultations with Ukraine over measures imposing anti-dumping duties on imports of ammonium nitrate from Russia failed (WT/DS493/1). Russia claims that Ukraine breached WTO rules when it carried out expiry and interim reviews of the measures and subsequently decided that they would remain in force.
In May 2008, Ukraine imposed anti-dumping measures under Decision No. AD-176/2008/143-47 of the Intergovernmental Commission on International Trade of 21 May 2008 “On the Application of the Definitive Anti-Dumping Measures on Import into Ukraine of Ammonium Nitrate Originating in the Russian Federation”, as amended by Decision No. AD-245/2010/4403-47 of 25 October 2010.
Ukraine then initiated an expiry review (24 May 2013) and an interim review (2 July 2013) on these measures under Decision No. AD-294/2013/4423-06 of the Intergovernmental Commission on International Trade and Decision No. AD-296/2013/4423-06 of the Intergovernmental Commission on International Trade respectively. As a result of these reviews it was decided that the anti-dumping measures imposed on Russian imports of ammonium nitrate would continue for another five years effective from 8 July 2014 (see Decision No. AD-315/2014/4421-06 of the Intergovernmental Commission on International Trade of 1 July 2014).
Russia alleges breaches of the GATT and the Anti-Dumping Agreement in, broadly, three categories: improper procedure and disclosure of information, improper application of cost-adjustment methodology and improper determination of injury. As a result Russia alleges that the benefits that should accrue under these agreements have been nullified.
Firstly, in terms of complaints about procedure, Russia alleges, among other things, that when carrying out the expiry and interim reviews, Ukraine failed to give Russian exporters and producers a full opportunity to defend their interests, failed to disclose sufficient information about its decision making process or reasons for the decisions it reached, and in taking its decisions, failed to take into account all relevant evidence and did not inform Russian exporters and producers of why their evidence was not accepted or allow them to provide further explanations.
Russia claims in general that the reviews were initiated without substantiated evidence that these were necessary.
Russia alleges that these failures violated in a number of respects, Articles 5.8, 6.1, 6.2, 6.4, 6.5.1, 6.8, 6.9, 11.1, 11.2, 11.3, 12.2 and 12.2.2 and paragraphs 3, 5 and 6 of Annex II of the Anti-Dumping Agreement.
Russia claims, therefore, that any measures imposed as a result of the reviews are contrary to Articles 1 and 18.1 of the Anti-Dumping Agreement and Article VI of the GATT, which state that no anti-dumping measures are to be imposed other than in accordance with the agreements.
Secondly, Russia claims that the dumping margins and normal values of goods were improperly calculated. Russia alleges that in determining dumping margins Ukraine did not compare the export price of ammonium nitrate from Russia with the price of a like product designed for consumption in Russia. It also claims that when constructing the normal value of ammonium nitrate products, Ukraine (among other errors) disregarded domestic sales figures that should have been included because they were in the normal course of trade and rejected figures in records kept by Russian producers despite the fact that they were kept in accordance with generally accepted accounting principles in the country of origin. This meant that the constructed normal value that Ukraine relied on was incorrect.
Russia alleges that these failures (and others) violated Articles 2.1, 2.2, 2.2.1, 2.2.1.1, 2.4, 11.1, 11.2 and 11.3 of the Anti-Dumping Agreement.
Lastly, Russia claims that Ukraine improperly determined its injury because it failed to take into account all the relevant factors that had a bearing on the state of the domestic industry and, instead, relied only on the allegedly dumped imports. Russia further claims that Ukraine did not base its calculation of the impact these allegedly dumped products had on prices on its domestic market on positive evidence.
Russia alleges that these failures violate Articles 3.1, 3.4, 3.5, 11. 1, 11.2 and 11.3 of the Anti-Dumping Agreement.
Now that a panel has been composed, deadlines for written submissions will be communicated to the parties. Under the WTO dispute settlement rules, the proceedings will take from three to nine months.
Ukraine’s complaint against Russian measures restricting certain railway equipment imports
On 2 March 2017, the WTO confirmed that a panel had been composed following Ukraine’s request of 10 November 2016. On 21 October 2015, Ukraine had filed a request for consultations relating to measures imposed by Russia on the import of certain railway equipment and parts from Ukraine (WT/DS499/1), but the subsequent consultations failed to resolve the dispute. In its claim, Ukraine identifies certain practices and technical regulations that it alleges have effectively banned imports of railway equipment from Ukraine to Russia.
On 15 July 2011, the Commission of the Customs Union approved Decision No. 710* adopting Technical Regulations No. 001/2011*, No. 002/2011*, and No. 003/2011*, which set safety and technical requirements for certain railway equipment entering the market. These were to come into force after three years, i.e. on 2 August 2014, after which time there would be new procedures in force for conformity assessment certificates (“Certificates”). However, an amendment to the decision on 2 December 2013 by the College of the Eurasian Economic Commission added a transitional period, to be in place until 1 August 2016. In this transitional period, Certificates issued before 2 August 2014 were to be still valid.
Ukraine claims, however, that since 2014 Russia has suspended Certificates of Ukrainian producers issued by Ukrainian authorities under the old regime and has not allowed Ukrainian producers to obtain Certificates from Russian authorities under the new regime. Russian authorities have also refused to recognise Certificates issued to Ukrainian producers under the new regime by Kazakh and Belarusian authorities, on the basis that one of the technical regulations forming the legal framework for the new regime (Technical Regulations No. 001/20112) only applies to goods produced in other member countries of the Customs Union.
As a result, certain Ukrainian producers have been effectively banned from exporting railway products to Russia, and exports of such products from Ukraine to Russia decreased from USD 1.7bn in 2013, to USD 600m in 2014 and then to just USD 110m in 2015.
Ukraine alleges ten breaches of the Technical Barriers to Trade Agreement 1994 (“TBT Agreement”) and the GATT. It argues that the practices and measures have resulted in Ukrainian products being treated less favourably than like domestic products or products from other countries contrary to Articles 5.1.1 and 2.1 of the TBT Agreement and Articles I:1 and III:4 of the GATT.
It also claims that Russia’s actions amount to imposing restrictions other than the “duties, taxes or other charges” allowed by Article XI:1 of the GATT and that these are applied to Ukrainian products and not to imports from other counties contrary to Article XIII:1 of the GATT. These measures, it argues, are not applied in a uniform, impartial or reasonable manner, in violation of Article X:3(a) of the GATT.
Ukraine also alleges various breaches of the procedural requirements of the TBT Agreement relating to the allowable information requirements imposed by the importer (Russia) and the procedure followed and communication with the applicant during the process of applying for Certificates, specifically Articles 5.2.2 and 5.2.3.
Finally, Ukraine alleges that Russia’s procedures for assessing conformity are applied with a view to or with the effect of creating unnecessary obstacles to international trade, contrary to Article 5.1.2 of the TBT Agreement.
After the panel is composed, deadlines for written submissions will be communicated to the parties. Under the WTO dispute settlement rules, the proceedings will take from three to nine months.
Panel established for EU cost adjustment methodology as well as welded tubes and pipe imports anti-dumping measures
On 16 December 2016, the WTO announced that it had established a panel (which has not yet been composed) to deal with Russia’s complaint over the EU’s cost adjustment methodologies and certain anti-dumping measures on welded tubes and pipes of iron or non-alloy steel imported from Russia. The latter filed a request to establish the panel (WT/DS494/4) on 7 November 2016 after two rounds of consultations failed. Russia identifies underlying principles in the EU’s methodology as incompatible with WTO rules and also challenges both the way that the EU reviewed its existing anti-dumping measures on the tubes and pipes in order to extend their application, and the way it applied the measures in practice.
Russia challenges the compatibility “as such” of certain aspects of Article 2(3) and Article 2(5) of Council Regulation (EC) No. 1225/2009 of 30 November 2009 (the “Regulation”) and of certain cost adjustment methodology used by the EU in anti-dumping procedures with the Anti-Dumping Agreement.
In particular Russia claims that the methods for determining the “normal value” of a like product provided for in Articles 2(3) and 2(5) of the Regulation are inconsistent with Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement because (i) they provide that when using the cost of production in the country of origin these prices must be representative in more situations that envisaged in the Anti-Dumping Agreement; (ii) they extend the grounds for using alternative methods of determining normal value beyond those envisaged by the Anti-Dumping Agreement and Article VI of the GATT; and (iii) they provide for the use of costs other than the “cost of production in the country of origin” when determining normal value in certain circumstances without ensuring that such adjusted or established costs represent the cost of production in the country of origin.
In relation to cost adjustment methodology, Russia challenges the EU’s methodology for rejecting the costs recorded by exporters on the basis that they are “artificially or abnormally low” due to alleged “distortions” or “market impediments” and for replacing or adjusting these costs with reference to “representative markets” unaffected by such “distortions” or “market impediments”. Russia argues that the methodology is inconsistent with Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement because it allows the EU to (i) reject an exporters’ costs that are kept in accordance with generally accepted accounting procedures in the country of origin; (ii) use costs other than costs of production or sale in the country of origin (reasonably reflected in the records kept by the exporter or producer in accordance with generally accepted accounting principles in the country of origin).
Russia objected, in particular, to the measures actually taken by the EU in relation to anti-dumping measures on imports of certain welded tubes and pipes of iron or non-alloy steel imported from Russia.
On 19 December 2008, the European Union imposed such anti-dumping measures (Council Regulation (EC) No 1256/2008). On 27 January 2015, as a result of an expiry review the European Union extended these measures for another five-year period (Commission Implementing Regulation (EU) 2015/110).
Russia argues that the decision to extend these measures is inconsistent with Articles 2.2.1.1, 2.2.1 and 11.3 of the Anti-Dumping Agreement because when it applied the ordinary course of trade test, the EU failed to calculate the cost of production of welded tubes and pipes properly. and used alternative costs that did not comply with the applicable requirement to calculate costs of production.
After the panel is composed, deadlines for written submissions will be communicated to the parties. Under the WTO dispute settlement rules, the proceedings will take from three to nine months.
Ukraine’s complaint against Russia’s traffic in transit restrictions
On 9 February 2017, Ukraine filed a request for the establishment of a panel (WT/DS512/3) concerning “multiple restrictions” imposed on traffic in transit of goods from Ukraine through the territory of Russia to third countries (WT/DS512/1). This followed the failure of the consultations Ukraine had requested on 14 September 2016 with Russia to settle the dispute. In its claim, Ukraine identifies two groups of allegedly illegal measures adopted by the Russian Federation in 2014 and 2016.
On 1 January 2016, the EU-Ukraine Deep and Comprehensive Free Trade Area as part of the Association Agreement between the EU and the Republic of Ukraine came into force. On the same date Decree No. 628 of the Russian President dated 16 December 2015* suspended the Treaty on a Free Trade Area between members of the Commonwealth of Independent States with respect to Ukraine. The subsequent Presidential Decrees No. 1 dated of 1 January 2016* and No. 319 dated 1 July 2016* imposed a ban on all road and rail transit of goods from Ukraine to Kazakhstan and the Kyrgyz Republic which are subject to non-zero import duties as well as goods included on the list of banned agricultural products, raw materials and food. All other cargo transits from the territory of Ukraine to the territories of Kazakhstan and the Kyrgyz Republic are to be transferred through the territory of Russia exclusively from the Republic of Belarus via the strictly defined routes, with the application of special identification methods (seals) functioning on the basis of the GLONASS technology. Moreover, drivers must at all times carry special registration cards that are distributed and returned at permanent or mobile checkpoints.
The second group of contested restrictions refer to earlier measures introduced by the Russian Federal Service for Veterinary and Phytosanitary Surveillance in November 2014 with respect to certain plant products imported via the territory of Belarus (see here* and Instruction No. FS-AS-7/22903 of Rosselkhoznadzor dated 21 November 2014). Since 24 November 2014, the transit of goods subject to veterinary and phytosanitary surveillance included in the list approved by the Russian Government Decree No. 778 dated 7 August 2014* has been prohibited through the checkpoints of the Republic of Belarus. The goods concerned destined for consignees in the Republic of Kazakhstan and third countries may only be transited through the checkpoints located in the Russian part of the external border of the Eurasian Economic Union.
According to Ukraine, both groups of measures are inconsistent with Russia’s WTO obligations, violating Articles V.2, V.3, V.4, V.5, X.1, X.2, X.3(a), XI.1 of the GATT. For instance, the ban on the transit of certain goods as well as the requirement that the transit be carried out exclusively via Belarus contradict the provisions of Article V.2 of the GATT establishing the freedom of transit through the territories of contracting parties via the routes most convenient and without any distinction based on the place of origin, departure, entry, exit or destination of goods. The measures adopted also lead to unnecessary delays and restrictions (Article V.3 of the GATT) and cannot be considered as reasonable, having regard to the conditions of traffic (Article V.4 of the GATT). Ukraine generally argues that, contrary to its obligations, Russia failed to accord Ukraine (as its WTO partner) a traffic in transit treatment no less favourable than that accorded to traffic in transit from/to third countries (Article V.5 of the GATT).
After the panel is composed, deadlines for written submissions will be communicated to the parties. Under the WTO dispute settlement rules, the proceedings will take from three to nine months.
Request for consultations on cold-rolled steel anti-dumping measures
On 27 January 2017, Russia filed a request (WT/DS521/1) for consultations with the EU with respect to anti-dumping measures imposed by the EU in August 2016 on imports of certain cold-rolled flat steel products originating in Russia.
On 14 May 2015, pursuant to the Regulation and following a complaint of the European Steel Association (Eurofer), the European Commission initiated an anti-dumping investigation on imports into the Union of cold-rolled flat steel products originating in Russia and China. The investigation resulted in the adoption of several Commission Implementing Regulations imposing anti-dumping duties on imports of the abovementioned products (please see here, here and here). The sanctions were introduced on 5 August 2016 for a period of five years and affected the key players in the Russian metallurgical sector. Thus, the duties for Magnitogorsk Iron & Steel Works OJSC were defined at 18.7%, for PAO Severstal – 34%, and for other companies (including PJSC Novolipetsk Steel) – 36,1%.
Russia claims that these measures violate WTO rules – namely, Article IV of the GATT and a number of provisions of the Anti-Dumping Agreement. Russia’s 23 complaints refer to three groups of alleged violations: an improper determination of dumping, an improper determination of injury, and incompliance with procedural rules envisaged for anti-dumping investigations.
Firstly, Russia alleges violations of Articles 2.1 and 2.2 of the Anti-Dumping Agreement. It points out that, in establishing the existence of dumping, the EU failed to take account the relevant records of the companies under investigation, although these records were in accordance with the generally accepted accounting principles in the country of origin and reasonably reflected the financial information. As a result of an artificial inflation of the selling, general and administrative costs actually incurred by the Russian producers the EU failed to determine the correct normal value of the products. Consequently, the EU failed to make a fair comparison between the export price and the normal value as required by Articles 2.3 and 2.4 of the Anti-Dumping Agreement, and the export price was miscalculated.
Secondly, in its investigation the EU failed to properly determine the injury suffered by the EU’s industry. In accordance with Article 3.1 of the Anti-Dumping Agreement, a determination of injury must be based on positive evidence and involve an objective examination of the volume of the dumped imports, the impact of the dumped imports on prices in the domestic market for like products, and the consequent impact of these imports on domestic producers of such products. According to Russia, the EU failed to сarry out such an objective examination and erred in its determination of the effect of the imports on the domestic industry. Lastly, the EU disregarded all relevant economic factors and indices factors having a bearing on the state of the domestic industry – particularly, market share, productivity, utilisation of capacity, etc. (Article 3.4 of the Anti-Dumping Agreement).
Thirdly, the EU is alleged to have breached a number of procedural rules governing anti-dumping investigations. Thus, certain Russian producers were not granted a full opportunity to defend their interests and were denied the right to submit evidence, to examine the relevant information, etc. (Article 6 of the Anti-Dumping Agreement). Lastly, Russia questions the legitimacy of the Commission’s investigation as such, since there was not sufficient evidence of dumping, injury and causal link that would justify the initiation of the investigation pursuant to Articles 5.2, 5.3 and 5.8 of the Anti-Dumping Agreement.
In accordance with the WTO dispute settlement practice, at the initial stage the Parties must enter into consultations with a view to reaching a mutually satisfactory solution. If the Parties fail to enter into consultations within 30 days from the receipt of the request, or if they fail to settle a dispute within 60 days from the same date, Russia is entitled to request the establishment of a panel. In the course of the consultations, Russia reserves the right to address additional claims in respect of the mentioned issues.
In accordance with the Anti-Dumping Agreement, a legitimate anti-dumping measure implies a valid determination of dumping, of an injury to the domestic industry and an establishment of causation between these two factors. In its application Russia focuses on the procedural incompatibilities. However, as demonstrated by the LCV dispute and other relevant WTO practice (e.g. see cases DS482, DS473 and, DS464), for the claims to be upheld, the complainant would have to establish the deficiency of the investigation in respect of all three abovementioned elements.
Thus, Russia will have to prove the erroneousness of the original findings by the European Commission regarding the very existence of dumping, the lack of real injury to the European industry and the decisive influence on the European market of factors other than the Russian cold-rolled imports. It appears that this might turn out to be quite difficult, since in its findings the European Commission presents all the evidence to the contrary.
Interestingly, on 28 October 2016, PJSC Novolipetsk Steel and PAO Severstal had already challenged these anti-dumping measures before the European Court of Justice. The respective cases No. T-752/16 and T-753/16 are still pending before the Court.
Russia and preparatory works to its accession to the GPA
In February 2017, the Russian Ministry for Economic Development signaled* that it had prepared a proposal to be addressed to the Russian Government on entering negotiations with the WTO to accede to its GPA. Russia has been an observer to the agreement since 29 May 2013.
The GPA aims to make government procurement markets open internationally to its parties. Not all government procurement projects are covered by the GPA, for example the project must exceed a specific value threshold and there are conditions for the type of entities, goods and services that are covered. The GPA can be enforced through two mechanisms: the domestic review mechanism at the national level and the WTO dispute settlement mechanism at the international level.
The accession process starts with negotiations between the acceding member and parties of the GPA on what the acceding member will offer to be covered by the GPA. There is then a process of verifying that the acceding member’s procurement legislation is consistent with the GPA’s requirements – for example, regarding transparency and procedural fairness for suppliers.
Once the terms of accession have been agreed between the GPA parties and the acceding WTO member, the Committee on Government Procurement adopts a decision inviting the member to accede to the GPA. The decision specifies the agreed terms and provides a timeframe for the acceding member to file its instrument of accession with the WTO Director-General (typically three to six months).
Russia’s accession to the GPA would be a significant development as this would reverse the latest trend of excluding foreign manufacturers and service providers from public procurement in light of the country’s import substitution policy. We have been reporting on such measures previously (please see here or here).
* In Russian
03/2017
On 2 March 2017, the latest WTO panel relating to a complaint involving Russia was composed since our last report on Russia-related WTO news. This follows Ukraine’s complaint against Russian measures affecting its imports of railway equipment.
In fact, in 2017, Russia’s dialogue with WTO partners continued in respect of seven disputes:
Russia’s complaints over measures imposed on its cold-rolled steel, welded tubes and pipes and ammonium nitrate exports bear significant similarities to the pork and LCV disputes, in which the WTO, so far, has not found in Russia’s favour. This may be a reasonable basis for predicting the outcome of the pending Russian claims.
In addition to trade disputes, Russia recently started preparatory works ahead of negotiations to accede to the WTO’s Government Procurement Agreement (the “GPA”).
Below, we outline the main issues on each of the disputes mentioned above and provide some background information on the GPA.
Appeal on the imports of pork decision
On 23 February 2017, the WTO Appellate Body dismissed the majority of Russian claims in relation to Russia’s ban on the exports of live pigs, pork and pork products from the EU illegal (WT/DS/475). That said, the Appellate Body also modified a few findings of the arbitrators with regards to the interpretation of a few provisions of Article 6 of the Agreement on the Application of Sanitary and Phytosanitary Measures Agreement (the “SPS Agreement”).
As we noted in our previous Alert, arbitrators ruled that the ban on the imports of pork from the EU imposed without conducting a risk assessment and without considering the territorial spread of the African swine fever (“ASF”) contravened the standards of the World Organisation for Animal Health and violated Article 3 of the SPS Agreement.
In its appeal Russia points out that the terms of the bilateral EU-Russia veterinary certificates that had been previously negotiated with WTO members cannot be considered national SPS measures attributable to Russia, as a result of which they do not fall within the scope of the SPS Agreement. The Appellate Body rejected these objections stating that the measure attributed to Russia was its decision to ban the importation from the EU of the products at issue, and it is irrelevant whether the measure was based on the Russian national legislation or not. Moreover, the fact that the bilateral EU-Russia veterinary certificates had been agreed upon prior to Russia’s accession to the WTO does not alter Russia’s ongoing obligations under Article 6 of the SPS Agreement to adapt its measures to regional SPS characteristics.
Russia also challenged the panel’s findings that the EU, pursuant to Article 6.3 of the SPS Agreement, had provided the necessary evidence objectively demonstrating that the areas in EU Member States (namely, Lithuania, Poland, Latvia and Estonia) are ASF-free and are likely to remain as such. Russia’s arguments in this regard have been dismissed as well.
However, the Appellate Body found that the panel erred in its interpretations of Articles 6.1 and 6.2 of the SPS Agreement. Thus, Russia challenged the panel’s finding that Russia, in violation of Article 6.1, had failed to adapt its SPS measures to the ASF-free areas within Latvia. The EU, in its turn, requested a review of arbitrators’ conclusions that Russia, in accordance with Article 6.2, recognises the concepts of pest- or disease-free areas and areas of low pest or disease prevalence in respect of ASF. The Appellate Body has identified grounds for both of these claims and modified the panel’s findings accordingly, which however did not affect the substantive part of the decision.
Officials of the Russian Ministry for Economic Development commented* that Russia intends to “implement this decision to bring the conflicting measures into conformity with the WTO rules”. It was specifically stressed that Russia and the EU would have to reconsider the bilateral veterinary certificates at issue.
Interestingly, deliveries of pork from the EU to Russia will remain banned due to the food embargo declared by Russia in August 2014 in response to the EU sanctions and which is still in force. Therefore, the WTO Appellate Body’s ruling has little practical impact.
Ruling on LCV
On 27 January 2017, the WTO’s arbitration panel issued a mixed report (WT/DS479/R) concerning the Russian anti-dumping duties on LCV which found the latter incompatible with a number of provisions of the General Agreement on Tariffs and Trade 1994 (the “GATT”) and the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the “Anti-Dumping Agreement”).
The import duties on LCV originating in Turkiye, Germany and Italy were introduced for a period of five years from 14 June 2013 by Decision No. 113* of the College of the Eurasian Economic Commission (the “EAEC”) of 14 May 2013. The duties were imposed in all member countries of the EAEC (i.e. Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan) and applied to motor vehicles weighing between 2.8 and 3.5t, with a cylinder capacity not exceeding 3,000cm3 and van-type body designed for the transportation of cargo of up to 2t, or combined transportation of cargo and passengers. The anti-dumping determination amounted to 29.6% of the customs value for LCV from Germany, 23% for LCV from Italy, 11.1% for LCV from Turkiye. The measures affected many European car manufacturers.
The EU failed to prove the illicitness of the anti-dumping measure as such: most EU claims were dismissed by the panel. Only nine of 31 alleged violations were deemed to have good grounds. The panel ruled in favour of the EU with respect to incompatibilities with WTO rules of a number of aspects of the anti-dumping investigation.
More specifically, the panel agreed that the Department for Internal Market Defence of the EEC (the “DIMD”) improperly defined “domestic industry” as consisting of a single producer accounting for 87% of domestic production, which, consequently, distorted the definition of injury to the domestic industry. Moreover, in breach of Articles 3.1 and 3.2 of the Anti-Dumping Agreement, in its price suppression analysis, the DIMD did not take into account the impact of the financial crisis. Lastly, the DIMD disregarded the overcapacity in the Russian LCV sector which at that time was seven times greater than what was sold on the Russian market. The arbitrators also found that the DIMD acted inconsistently with a number of procedural requirements regarding the treatment of information received during the investigation, unreasonably withholding it from the interested parties.
Not having consented to certain findings of the panel, on 20 February 2017 Russia filed an appeal with the WTO Appellate Body. As a general rule, the appeal proceedings must not exceed 60 days from the date of submission of the notification, and in no case may the proceedings exceed 90 days. The report of the Appellate Body is drafted in closed sessions based on the documents presented by the parties. The Appellate Body may uphold, modify or reverse the findings of the panel. The report of the Appellate Body is final and mandatory for the parties, unless the Dispute Settlement Body votes by consensus not to adopt the report within 30 days following its circulation to the parties.
Russia’s complaint against Ukraine’s anti-dumping measures on ammonium nitrate
A panel was constituted on 2 February 2017 at Russia’s request, after consultations with Ukraine over measures imposing anti-dumping duties on imports of ammonium nitrate from Russia failed (WT/DS493/1). Russia claims that Ukraine breached WTO rules when it carried out expiry and interim reviews of the measures and subsequently decided that they would remain in force.
In May 2008, Ukraine imposed anti-dumping measures under Decision No. AD-176/2008/143-47 of the Intergovernmental Commission on International Trade of 21 May 2008 “On the Application of the Definitive Anti-Dumping Measures on Import into Ukraine of Ammonium Nitrate Originating in the Russian Federation”, as amended by Decision No. AD-245/2010/4403-47 of 25 October 2010.
Ukraine then initiated an expiry review (24 May 2013) and an interim review (2 July 2013) on these measures under Decision No. AD-294/2013/4423-06 of the Intergovernmental Commission on International Trade and Decision No. AD-296/2013/4423-06 of the Intergovernmental Commission on International Trade respectively. As a result of these reviews it was decided that the anti-dumping measures imposed on Russian imports of ammonium nitrate would continue for another five years effective from 8 July 2014 (see Decision No. AD-315/2014/4421-06 of the Intergovernmental Commission on International Trade of 1 July 2014).
Russia alleges breaches of the GATT and the Anti-Dumping Agreement in, broadly, three categories: improper procedure and disclosure of information, improper application of cost-adjustment methodology and improper determination of injury. As a result Russia alleges that the benefits that should accrue under these agreements have been nullified.
Firstly, in terms of complaints about procedure, Russia alleges, among other things, that when carrying out the expiry and interim reviews, Ukraine failed to give Russian exporters and producers a full opportunity to defend their interests, failed to disclose sufficient information about its decision making process or reasons for the decisions it reached, and in taking its decisions, failed to take into account all relevant evidence and did not inform Russian exporters and producers of why their evidence was not accepted or allow them to provide further explanations.
Russia claims in general that the reviews were initiated without substantiated evidence that these were necessary.
Russia alleges that these failures violated in a number of respects, Articles 5.8, 6.1, 6.2, 6.4, 6.5.1, 6.8, 6.9, 11.1, 11.2, 11.3, 12.2 and 12.2.2 and paragraphs 3, 5 and 6 of Annex II of the Anti-Dumping Agreement.
Russia claims, therefore, that any measures imposed as a result of the reviews are contrary to Articles 1 and 18.1 of the Anti-Dumping Agreement and Article VI of the GATT, which state that no anti-dumping measures are to be imposed other than in accordance with the agreements.
Secondly, Russia claims that the dumping margins and normal values of goods were improperly calculated. Russia alleges that in determining dumping margins Ukraine did not compare the export price of ammonium nitrate from Russia with the price of a like product designed for consumption in Russia. It also claims that when constructing the normal value of ammonium nitrate products, Ukraine (among other errors) disregarded domestic sales figures that should have been included because they were in the normal course of trade and rejected figures in records kept by Russian producers despite the fact that they were kept in accordance with generally accepted accounting principles in the country of origin. This meant that the constructed normal value that Ukraine relied on was incorrect.
Russia alleges that these failures (and others) violated Articles 2.1, 2.2, 2.2.1, 2.2.1.1, 2.4, 11.1, 11.2 and 11.3 of the Anti-Dumping Agreement.
Lastly, Russia claims that Ukraine improperly determined its injury because it failed to take into account all the relevant factors that had a bearing on the state of the domestic industry and, instead, relied only on the allegedly dumped imports. Russia further claims that Ukraine did not base its calculation of the impact these allegedly dumped products had on prices on its domestic market on positive evidence.
Russia alleges that these failures violate Articles 3.1, 3.4, 3.5, 11. 1, 11.2 and 11.3 of the Anti-Dumping Agreement.
Now that a panel has been composed, deadlines for written submissions will be communicated to the parties. Under the WTO dispute settlement rules, the proceedings will take from three to nine months.
Ukraine’s complaint against Russian measures restricting certain railway equipment imports
On 2 March 2017, the WTO confirmed that a panel had been composed following Ukraine’s request of 10 November 2016. On 21 October 2015, Ukraine had filed a request for consultations relating to measures imposed by Russia on the import of certain railway equipment and parts from Ukraine (WT/DS499/1), but the subsequent consultations failed to resolve the dispute. In its claim, Ukraine identifies certain practices and technical regulations that it alleges have effectively banned imports of railway equipment from Ukraine to Russia.
On 15 July 2011, the Commission of the Customs Union approved Decision No. 710* adopting Technical Regulations No. 001/2011*, No. 002/2011*, and No. 003/2011*, which set safety and technical requirements for certain railway equipment entering the market. These were to come into force after three years, i.e. on 2 August 2014, after which time there would be new procedures in force for conformity assessment certificates (“Certificates”). However, an amendment to the decision on 2 December 2013 by the College of the Eurasian Economic Commission added a transitional period, to be in place until 1 August 2016. In this transitional period, Certificates issued before 2 August 2014 were to be still valid.
Ukraine claims, however, that since 2014 Russia has suspended Certificates of Ukrainian producers issued by Ukrainian authorities under the old regime and has not allowed Ukrainian producers to obtain Certificates from Russian authorities under the new regime. Russian authorities have also refused to recognise Certificates issued to Ukrainian producers under the new regime by Kazakh and Belarusian authorities, on the basis that one of the technical regulations forming the legal framework for the new regime (Technical Regulations No. 001/20112) only applies to goods produced in other member countries of the Customs Union.
As a result, certain Ukrainian producers have been effectively banned from exporting railway products to Russia, and exports of such products from Ukraine to Russia decreased from USD 1.7bn in 2013, to USD 600m in 2014 and then to just USD 110m in 2015.
Ukraine alleges ten breaches of the Technical Barriers to Trade Agreement 1994 (“TBT Agreement”) and the GATT. It argues that the practices and measures have resulted in Ukrainian products being treated less favourably than like domestic products or products from other countries contrary to Articles 5.1.1 and 2.1 of the TBT Agreement and Articles I:1 and III:4 of the GATT.
It also claims that Russia’s actions amount to imposing restrictions other than the “duties, taxes or other charges” allowed by Article XI:1 of the GATT and that these are applied to Ukrainian products and not to imports from other counties contrary to Article XIII:1 of the GATT. These measures, it argues, are not applied in a uniform, impartial or reasonable manner, in violation of Article X:3(a) of the GATT.
Ukraine also alleges various breaches of the procedural requirements of the TBT Agreement relating to the allowable information requirements imposed by the importer (Russia) and the procedure followed and communication with the applicant during the process of applying for Certificates, specifically Articles 5.2.2 and 5.2.3.
Finally, Ukraine alleges that Russia’s procedures for assessing conformity are applied with a view to or with the effect of creating unnecessary obstacles to international trade, contrary to Article 5.1.2 of the TBT Agreement.
After the panel is composed, deadlines for written submissions will be communicated to the parties. Under the WTO dispute settlement rules, the proceedings will take from three to nine months.
Panel established for EU cost adjustment methodology as well as welded tubes and pipe imports anti-dumping measures
On 16 December 2016, the WTO announced that it had established a panel (which has not yet been composed) to deal with Russia’s complaint over the EU’s cost adjustment methodologies and certain anti-dumping measures on welded tubes and pipes of iron or non-alloy steel imported from Russia. The latter filed a request to establish the panel (WT/DS494/4) on 7 November 2016 after two rounds of consultations failed. Russia identifies underlying principles in the EU’s methodology as incompatible with WTO rules and also challenges both the way that the EU reviewed its existing anti-dumping measures on the tubes and pipes in order to extend their application, and the way it applied the measures in practice.
Russia challenges the compatibility “as such” of certain aspects of Article 2(3) and Article 2(5) of Council Regulation (EC) No. 1225/2009 of 30 November 2009 (the “Regulation”) and of certain cost adjustment methodology used by the EU in anti-dumping procedures with the Anti-Dumping Agreement.
In particular Russia claims that the methods for determining the “normal value” of a like product provided for in Articles 2(3) and 2(5) of the Regulation are inconsistent with Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement because (i) they provide that when using the cost of production in the country of origin these prices must be representative in more situations that envisaged in the Anti-Dumping Agreement; (ii) they extend the grounds for using alternative methods of determining normal value beyond those envisaged by the Anti-Dumping Agreement and Article VI of the GATT; and (iii) they provide for the use of costs other than the “cost of production in the country of origin” when determining normal value in certain circumstances without ensuring that such adjusted or established costs represent the cost of production in the country of origin.
In relation to cost adjustment methodology, Russia challenges the EU’s methodology for rejecting the costs recorded by exporters on the basis that they are “artificially or abnormally low” due to alleged “distortions” or “market impediments” and for replacing or adjusting these costs with reference to “representative markets” unaffected by such “distortions” or “market impediments”. Russia argues that the methodology is inconsistent with Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement because it allows the EU to (i) reject an exporters’ costs that are kept in accordance with generally accepted accounting procedures in the country of origin; (ii) use costs other than costs of production or sale in the country of origin (reasonably reflected in the records kept by the exporter or producer in accordance with generally accepted accounting principles in the country of origin).
Russia objected, in particular, to the measures actually taken by the EU in relation to anti-dumping measures on imports of certain welded tubes and pipes of iron or non-alloy steel imported from Russia.
On 19 December 2008, the European Union imposed such anti-dumping measures (Council Regulation (EC) No 1256/2008). On 27 January 2015, as a result of an expiry review the European Union extended these measures for another five-year period (Commission Implementing Regulation (EU) 2015/110).
Russia argues that the decision to extend these measures is inconsistent with Articles 2.2.1.1, 2.2.1 and 11.3 of the Anti-Dumping Agreement because when it applied the ordinary course of trade test, the EU failed to calculate the cost of production of welded tubes and pipes properly. and used alternative costs that did not comply with the applicable requirement to calculate costs of production.
After the panel is composed, deadlines for written submissions will be communicated to the parties. Under the WTO dispute settlement rules, the proceedings will take from three to nine months.
Ukraine’s complaint against Russia’s traffic in transit restrictions
On 9 February 2017, Ukraine filed a request for the establishment of a panel (WT/DS512/3) concerning “multiple restrictions” imposed on traffic in transit of goods from Ukraine through the territory of Russia to third countries (WT/DS512/1). This followed the failure of the consultations Ukraine had requested on 14 September 2016 with Russia to settle the dispute. In its claim, Ukraine identifies two groups of allegedly illegal measures adopted by the Russian Federation in 2014 and 2016.
On 1 January 2016, the EU-Ukraine Deep and Comprehensive Free Trade Area as part of the Association Agreement between the EU and the Republic of Ukraine came into force. On the same date Decree No. 628 of the Russian President dated 16 December 2015* suspended the Treaty on a Free Trade Area between members of the Commonwealth of Independent States with respect to Ukraine. The subsequent Presidential Decrees No. 1 dated of 1 January 2016* and No. 319 dated 1 July 2016* imposed a ban on all road and rail transit of goods from Ukraine to Kazakhstan and the Kyrgyz Republic which are subject to non-zero import duties as well as goods included on the list of banned agricultural products, raw materials and food. All other cargo transits from the territory of Ukraine to the territories of Kazakhstan and the Kyrgyz Republic are to be transferred through the territory of Russia exclusively from the Republic of Belarus via the strictly defined routes, with the application of special identification methods (seals) functioning on the basis of the GLONASS technology. Moreover, drivers must at all times carry special registration cards that are distributed and returned at permanent or mobile checkpoints.
The second group of contested restrictions refer to earlier measures introduced by the Russian Federal Service for Veterinary and Phytosanitary Surveillance in November 2014 with respect to certain plant products imported via the territory of Belarus (see here* and Instruction No. FS-AS-7/22903 of Rosselkhoznadzor dated 21 November 2014). Since 24 November 2014, the transit of goods subject to veterinary and phytosanitary surveillance included in the list approved by the Russian Government Decree No. 778 dated 7 August 2014* has been prohibited through the checkpoints of the Republic of Belarus. The goods concerned destined for consignees in the Republic of Kazakhstan and third countries may only be transited through the checkpoints located in the Russian part of the external border of the Eurasian Economic Union.
According to Ukraine, both groups of measures are inconsistent with Russia’s WTO obligations, violating Articles V.2, V.3, V.4, V.5, X.1, X.2, X.3(a), XI.1 of the GATT. For instance, the ban on the transit of certain goods as well as the requirement that the transit be carried out exclusively via Belarus contradict the provisions of Article V.2 of the GATT establishing the freedom of transit through the territories of contracting parties via the routes most convenient and without any distinction based on the place of origin, departure, entry, exit or destination of goods. The measures adopted also lead to unnecessary delays and restrictions (Article V.3 of the GATT) and cannot be considered as reasonable, having regard to the conditions of traffic (Article V.4 of the GATT). Ukraine generally argues that, contrary to its obligations, Russia failed to accord Ukraine (as its WTO partner) a traffic in transit treatment no less favourable than that accorded to traffic in transit from/to third countries (Article V.5 of the GATT).
After the panel is composed, deadlines for written submissions will be communicated to the parties. Under the WTO dispute settlement rules, the proceedings will take from three to nine months.
Request for consultations on cold-rolled steel anti-dumping measures
On 27 January 2017, Russia filed a request (WT/DS521/1) for consultations with the EU with respect to anti-dumping measures imposed by the EU in August 2016 on imports of certain cold-rolled flat steel products originating in Russia.
On 14 May 2015, pursuant to the Regulation and following a complaint of the European Steel Association (Eurofer), the European Commission initiated an anti-dumping investigation on imports into the Union of cold-rolled flat steel products originating in Russia and China. The investigation resulted in the adoption of several Commission Implementing Regulations imposing anti-dumping duties on imports of the abovementioned products (please see here, here and here). The sanctions were introduced on 5 August 2016 for a period of five years and affected the key players in the Russian metallurgical sector. Thus, the duties for Magnitogorsk Iron & Steel Works OJSC were defined at 18.7%, for PAO Severstal – 34%, and for other companies (including PJSC Novolipetsk Steel) – 36,1%.
Russia claims that these measures violate WTO rules – namely, Article IV of the GATT and a number of provisions of the Anti-Dumping Agreement. Russia’s 23 complaints refer to three groups of alleged violations: an improper determination of dumping, an improper determination of injury, and incompliance with procedural rules envisaged for anti-dumping investigations.
Firstly, Russia alleges violations of Articles 2.1 and 2.2 of the Anti-Dumping Agreement. It points out that, in establishing the existence of dumping, the EU failed to take account the relevant records of the companies under investigation, although these records were in accordance with the generally accepted accounting principles in the country of origin and reasonably reflected the financial information. As a result of an artificial inflation of the selling, general and administrative costs actually incurred by the Russian producers the EU failed to determine the correct normal value of the products. Consequently, the EU failed to make a fair comparison between the export price and the normal value as required by Articles 2.3 and 2.4 of the Anti-Dumping Agreement, and the export price was miscalculated.
Secondly, in its investigation the EU failed to properly determine the injury suffered by the EU’s industry. In accordance with Article 3.1 of the Anti-Dumping Agreement, a determination of injury must be based on positive evidence and involve an objective examination of the volume of the dumped imports, the impact of the dumped imports on prices in the domestic market for like products, and the consequent impact of these imports on domestic producers of such products. According to Russia, the EU failed to сarry out such an objective examination and erred in its determination of the effect of the imports on the domestic industry. Lastly, the EU disregarded all relevant economic factors and indices factors having a bearing on the state of the domestic industry – particularly, market share, productivity, utilisation of capacity, etc. (Article 3.4 of the Anti-Dumping Agreement).
Thirdly, the EU is alleged to have breached a number of procedural rules governing anti-dumping investigations. Thus, certain Russian producers were not granted a full opportunity to defend their interests and were denied the right to submit evidence, to examine the relevant information, etc. (Article 6 of the Anti-Dumping Agreement). Lastly, Russia questions the legitimacy of the Commission’s investigation as such, since there was not sufficient evidence of dumping, injury and causal link that would justify the initiation of the investigation pursuant to Articles 5.2, 5.3 and 5.8 of the Anti-Dumping Agreement.
In accordance with the WTO dispute settlement practice, at the initial stage the Parties must enter into consultations with a view to reaching a mutually satisfactory solution. If the Parties fail to enter into consultations within 30 days from the receipt of the request, or if they fail to settle a dispute within 60 days from the same date, Russia is entitled to request the establishment of a panel. In the course of the consultations, Russia reserves the right to address additional claims in respect of the mentioned issues.
In accordance with the Anti-Dumping Agreement, a legitimate anti-dumping measure implies a valid determination of dumping, of an injury to the domestic industry and an establishment of causation between these two factors. In its application Russia focuses on the procedural incompatibilities. However, as demonstrated by the LCV dispute and other relevant WTO practice (e.g. see cases DS482, DS473 and, DS464), for the claims to be upheld, the complainant would have to establish the deficiency of the investigation in respect of all three abovementioned elements.
Thus, Russia will have to prove the erroneousness of the original findings by the European Commission regarding the very existence of dumping, the lack of real injury to the European industry and the decisive influence on the European market of factors other than the Russian cold-rolled imports. It appears that this might turn out to be quite difficult, since in its findings the European Commission presents all the evidence to the contrary.
Interestingly, on 28 October 2016, PJSC Novolipetsk Steel and PAO Severstal had already challenged these anti-dumping measures before the European Court of Justice. The respective cases No. T-752/16 and T-753/16 are still pending before the Court.
Russia and preparatory works to its accession to the GPA
In February 2017, the Russian Ministry for Economic Development signaled* that it had prepared a proposal to be addressed to the Russian Government on entering negotiations with the WTO to accede to its GPA. Russia has been an observer to the agreement since 29 May 2013.
The GPA aims to make government procurement markets open internationally to its parties. Not all government procurement projects are covered by the GPA, for example the project must exceed a specific value threshold and there are conditions for the type of entities, goods and services that are covered. The GPA can be enforced through two mechanisms: the domestic review mechanism at the national level and the WTO dispute settlement mechanism at the international level.
The accession process starts with negotiations between the acceding member and parties of the GPA on what the acceding member will offer to be covered by the GPA. There is then a process of verifying that the acceding member’s procurement legislation is consistent with the GPA’s requirements – for example, regarding transparency and procedural fairness for suppliers.
Once the terms of accession have been agreed between the GPA parties and the acceding WTO member, the Committee on Government Procurement adopts a decision inviting the member to accede to the GPA. The decision specifies the agreed terms and provides a timeframe for the acceding member to file its instrument of accession with the WTO Director-General (typically three to six months).
Russia’s accession to the GPA would be a significant development as this would reverse the latest trend of excluding foreign manufacturers and service providers from public procurement in light of the country’s import substitution policy. We have been reporting on such measures previously (please see here or here).
* In Russian