TWN Info Service on WTO and Trade Issues (Dec12/02)
3 December 2012
Third World Network

Ukraine's tariff renegotiation request raises concerns
Published in SUNS #7461 dated 18 October 2012

Geneva, 17 Oct (Kanaga Raja) -- A meeting of the WTO Committee on Market Access on Tuesday saw many Members again expressing strong concerns over a request by Ukraine to renegotiate some 350 tariff lines that had been approved during its accession negotiations around four years ago.

The concerns over Ukraine's request, under Article XXVIII of the GATT, surfaced at a meeting of the General Council on 3 October, where Ukraine's proposal was first discussed under the agenda item of "Other Business" (see SUNS #7452 dated 5 October 2012).

These concerns were reiterated at the meeting of the Market Access Committee, where according to trade officials, some 58 Members including Canada, the European Union (on behalf of its members and of Croatia), the United States, Brazil, Guatemala, Chile, Malaysia (on its own behalf and that of ASEAN countries), Colombia, Uruguay, Turkey, Argentina, New Zealand, Korea, Japan, El Salvador, Switzerland, Hong Kong-China, Australia, Norway, Mexico, China and Ecuador voiced their strong concerns at Ukraine's request.

Concerns were raised over the lack of transparency, lack of information, the unusually huge number of tariff lines being proposed to be changed and the unknown way in which Ukraine plans to compensate other Members as a consequence.

Trade officials said that virtually all of the Members asked Ukraine to reconsider its request.

According to information posted on the WTO's website, Ukraine's average tariff bindings for agricultural products are 10.66%, while for industrial goods, they are 4.95%.

The issue was placed on the agenda of the Committee's meeting at the request of Canada, the European Union and the United States.

According to trade officials, there was no statement made in support of Ukraine.

Some Members said that Ukraine's request goes beyond the spirit and the letter of Article XXVIII, while others said that it unsettles the balance achieved during the negotiations for the accession of Ukraine to the WTO. Views were also expressed that Ukraine's request would undermine the multilateral trading system, said trade officials.

According to trade officials, China said that tariff binding is one of the fundamental principles of the WTO which preserves the value of market access negotiated among Members and guarantees the security and predictability of the multilateral trading system.

Like other Members, China said that it is paying close attention to this matter and expressed hope that this issue will be dealt with in a manner consistent with WTO rules. As such, it expected Ukraine to provide promptly, detailed information for its proposal.

According to trade officials, Australia said that it would like to support the concerns raised by Canada, the EU, the US and other Members and register its "systemic and commercial" concerns over Ukraine's Article XXVIII request.

While Article XXVIII is an option available to all WTO Members, added Australia, it is concerned that Ukraine's request covers such a large number of tariff lines and sectors.

This decision by Ukraine comes at a time when the global leaders have called on all countries to resist increasing trade protectionism, said Australia, urging Ukraine to be transparent with its Article XXVIII request.

It called for the multilateral circulation of the proposed revised bound tariffs for each tariff line and further information to explain the rationale for Ukraine's request as soon as possible.

According to Australia, the Article XXVIII process requires Ukraine to "maintain a general level of reciprocal and mutually advantageous concessions not less favourable to trade."

It asked Ukraine to identify in a transparent manner how it will provide compensation across the rest of its schedule of concessions to maintain the balance required by Article XXVIII.

The number of interventions today and at the General Council shows the high level of interest and the seriousness of concerns about this matter, which cannot be ignored, stressed Australia.

According to trade officials, Ukraine said that Article XXVIII is a legitimate instrument in the multilateral system, and that it had been created to allow for modifications and adjustments to be made by Members, in case there is such a need dictated by the circumstances of evolving global and internal factors.

"This flexibility is among not many that my country, as a Member, is entitled to today," said Ukraine.

It further said that it intends to modify certain concessions in its Schedule, like some of the Members had been doing in previous years, and intend to do so this time, since around 20 Members have reserved the right and may decide to open negotiations.

According to Ukraine, each Member decides on its own how to modify the schedule - the scope and coverage.

"We understand these decisions are individual and independent, taken under certain economic circumstances for reasonable trade policy objectives. This is our understanding of Article XXVIII GATT-94," it added.

It considered it technically better to enter into bilateral negotiations with due regard to country-specific interests, i. e. to negotiate with those who have the recognised rights and consultations with those Members, who are entitled to consultations.

Noting that its proposals will be circulated bilaterally, Ukraine underlined that its official notification does not state the intention of Ukraine to raise the bound rates, as some Members' general perception was.

Ukraine said that it has brought very much to the WTO - 100% binding, very liberalised Market Access for goods (simple average for NAMA of about 5%, and about 11% for agriculture), quite attractive services schedule, and no exemptions or prohibition lists, etc.

"That's a fact, another fact is that during these 4 years, we have been doing our best to implement our commitments - we gradually lowered the tariffs according to our commitments," it added.

Trade opening proposed by Ukraine is among the highest in the WTO, it said, adding that it does not perceive Article XXVIII as a protectionist tool in its nature.

"At the same time what we see in the WTO is completely stuck Doha negotiations, Members not able to reach compromise on further trade liberalisation. There are no signs that it is about to make a rapid headway."

Besides, there are WTO Members, whose binding coverage is 50% or even less, and there are also Members highly protected by applied rates due to high levels of bound rates.

Ukraine said that it is not going to challenge this asymmetry, which is existing for decades, but "we are saying, that there is space and potential in the system to accommodate Ukraine's trade policy adjustments, which can be sustainable for both Ukraine and the WTO."

"Ukraine de facto is a developing transition economy. Its highly liberalised market access is a tangible contribution to this system. However, in light of today's reality, we recognise the adjustments are necessary to strengthen our trade policy," it stressed. +