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Joint Press Release with the Ministry of Foreign AffairsWTO Panel Made a Decision that Ukraine’s Safeguard Measures on Motor Vehicles are Inconsistent with the WTO Agreement-Release of WTO Panel Report on Ukraine’s Safeguard Measures-

On June 26, 2015 (Geneva time), the World Trade Organization (WTO) released the panel report on Ukraine’s Safeguard Measures on Motor Vehicles.
This report presented a decision that the Measures were inconsistent with the General Agreement on Tariffs and Trade (GATT) and the WTO Agreement on Safeguards (SG Agreement) and recommended that Ukraine rectify its WTO-inconsistent measures.
This panel’s decision clarifies the requirements for imposing safeguard measures, and is expected to curb arbitrary or nontransparent imposition of safeguard measures.

1. Overview

The Government of Ukraine has been imposing additional duties on motor vehicles as safeguard measures (6.46% on vehicles with a 1,000–1,500 cc displacement and 12.95% on those with a 1,500–2,200 cc displacement). It is estimated that these measures have imposed additional duties of approximately 1.9 billion yen annually, taking into account only the import shipments of vehicles directly to Ukraine from Japan, which raised concerns regarding possible adverse impact on Japanese industry.

In October 2013, the Government of Japan requested that Ukraine hold bilateral consultations based on the WTO Agreements, claiming that Ukraine’s measures were imposed in violation of the provisions of the GATT and the SG Agreement due to defects in the approval of the conditions for imposing the measures (increased imports, serious injury to domestic industry, causal links, and the like) and defects in the procedural requirements for imposing the measures.

However, as Japan could not reach a satisfactory solution with Ukraine during the consultation phase, in February 2014, Japan requested that the WTO establish a panel under the WTO Agreements. And, in March 2014, the panel was established.

In September and November 2014, panel meetings (oral hearings) were held, and the WTO released this panel report which held that Ukraine’s safeguard measures were inconsistent with the GATT and the SG Agreement, and recommended that Ukraine correct its WTO-inconsistent measures and suggested that Ukraine revoke its measures as a way of implementing these recommendations.

2. Details of the decision

The report supported Japan’s claims and recommended that Ukraine bring the safeguard measures into conformity with the WTO Agreement. Furthermore, the report proposed that Ukraine revoke the current safeguard measures as a way of implementing these recommendations. Following are the main points of the panel’s ruling:

  1. Ukraine’s failure to make a proper determination on the existence of unforeseen developments and the effect of GATT 1944 obligations, including tariff binding, is inconsistent with Article XIX:1 (a) of the GATT.
  2. Ukraine’s failure to make a proper determination regarding increased imports is inconsistent with Article 2.1 of the SG Agreement.
  3. Ukraine’s failure to make a proper determination regarding threat of serious injury to the domestic industry is inconsistent with Article 4.2 (a) of the SG Agreement.
  4. Ukraine’s failure to demonstrate the existence of a causal link between increased imports and the serious injury and to conduct a proper non-attribution analysis is inconsistent with Article 4.2 (b) of the SG Agreement.
  5. Additionally, procedural violations by Ukraine, such as negligence of obligation to publish, that of obligation of notification, and that of holding prior consultations, are confirmed.

3. Significance

The Panel’s decision on this issue clarifies the requirements for imposing safeguard measures. The imposition of safeguard measures has been increasing recently in emerging countries. Such clarification of WTO rules, however, is expected to lead to the curbing of arbitrary or nontransparent imposition of safeguard measures.

4. Future schedule

Parties concerned may appeal to the WTO Appellate Body within sixty days from the release of the report. If no appeal is filed, the panel’s decision in the report will become the WTO’s final decision.

5. References

(1) Relevant METI News Releases

  1. Japan Requests a Consultation with Ukraine under the WTO Agreement Regarding Safeguard Measures on Motor Vehicles

    (News Release on October 30, 2013)
    http://www.meti.go.jp/english/press/2013/1030_01.html

  2. Japan Requested Establishment of a Panel under the WTO Agreement Regarding Ukraine’s Safeguard Measures on Motor Vehicles

    (News Release on February 13, 2014)
    http://www.meti.go.jp/english/press/2014/0213_01.html

(2) Safeguard measures

A safeguard measure is an emergency measure stipulated in the WTO Agreement, under which the importing country’s government is able to impose additional duties or quantitative restrictions against the imported products at issue in order to prevent serious injury to domestic industry from surging imports of such products.

(3) Panels under the WTO Agreement

If consultations between governments fail to settle a dispute, based on a request from the complaining party, a WTO panel (first instance), which is a quasi-judicial third party organization, examines the matter in question and gives rulings regarding its consistency with the WTO Agreement. If any violations are confirmed, the panel recommends correction of the measures. Any party which is not satisfied with the panel rulings may appeal to the WTO Appellate Body (second instance).

Release date

June 23, 2015

Division in Charge

  • General information on WTO dispute settlements: Multilateral Trade System Department & Office for WTO Compliance and Dispute Settlement, Trade Policy Bureau
  • Information on the automobile industry: Automobile Division, Manufacturing Industries Bureau
  • Information on the economic relationship between Japan and Ukraine: Europe Division, Trade Policy Bureau

Related Information

WTO

Ministry of Economy, Trade and Industry
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