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Foreign Policy Research Institute

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Having lost the case in the WTO for the third consecutive time Ukraine should draw the appropriate conclusions

On 5 April, the World Trade Organization (WTO) released its final report in the case of DS512 "Russia — Measures Concerning Traffic in Transit", initiated by Ukraine. Ukraine's claims were not satisfied. That is, Ukraine has lost. As stated in the report, this dispute concerns various measures introduced by Russia on transit by road and rail through the territory of Russia. This is not the only lawsuit of Ukraine against Russia, which is considered by the WTO. In addition to the case DS512 "Russia — Measures Concerning Traffic in Transit", which was opened on September 14, 2016 there are still cases DS499 "Russia – Measures Affecting the Importation of Railway Equipment and Parts Thereof" dated October 21, 2015 and DS532 "Russia — Measures Concerning the Importation and Transit of Certain Ukrainian Products" dated October 13, 2017. Conclusions of the World Trade Organization on all three processes are not in favor of Ukraine. However, according to the WTO Rules, the party dissatisfied with the decision may appeal and expect a retrial. The final verdict in the DS512 case was issued – unfortunately, also not in favor of Ukraine. But the other two disputes will be considered again, so the Ukrainian side believes that it is still early to talk about failure.

The economist and the head of the Ukrainian analytical center Alexander Okhrimenko expressed the opinion that the current situation was provoked by the fact that Ukraine, in turn, carried out blocking the transit of Russian transport without official documents. "All started when one of the radical organizations began to block passage of the Russian trucks to the Ukrainian territory. As a result, Russia has banned the passage of Ukrainian trucks through its territory to Central Asia. Ukraine filed a lawsuit in the WTO, and the organization decided that Russia has the right to respond symmetrically. In fact, Ukraine was the first to violate the agreement, not allowing the passage for the transport from Russia. Not even with Russian, but with foreign goods. Moreover, neither the government nor the parliament then adopted any official documents – to adopt documents on what basis it is done. It was impossible to block in such a situation. If it were decided, for example, that the transit of military goods would be blocked, it would be at least some basis for such actions.

But this was not done, we blocked the passage of Russian transport unofficially", – says Alexander Okhrimenko, as informs «Segodnya».

Among other things is it worth to look for the reasons for the defeat of Ukraine in the fact that Russia have actively "worked" in the right direction in the WTO? Economic analyst, co-founder of the analytical center "Ukrainian Institute for the Future " Anatoly Amelin believes that this can not be excluded. "Russia is quite active in defending its positions in all international organizations. Russian diplomatic service works effectively. In addition, many Russians work in various institutions: in PACE, in the UN. These are students at practices and staff members. Therefore, it is possible that among the middle-level staff of the WTO, which, in fact, is engaged in the preparation of decisions, could be Russian agents of influence. At least in other international institutions such instruments were noticeable ", – Anatoly Amelin says, reports «Segodnya».[1]

The decision of the group of experts will come into force after being approved by the Dispute Settlement Body of the WTO. However, this will happen only if the Ukrainian side will not appeal. But the Ministry of Economic Development and Trade of Ukraine (MEDT) does not intend to surrender and plans to appeal the decision. "Now the MEDT is studying the case materials and developing a strategy for further protection of Ukraine's interests in the WTO," said Roksolana Pidlasa, as reported by "RBC-Ukraine". According to her, the WTO considers trade disputes in two stages – at meetings of the group of experts and in the Appellate Body of the WTO. The MEDT said that now Ukraine appeals against the decision on two disputes concerning anti-dumping duties on ammonia and restrictions on imports of railway vehicles. At the same time, RBC-Ukraine sources note that the consideration of the appeal is a process that can last from six months to several years.

According to the partner of Ilyashev & Partners Law Firm Olena Omelchenko (consultant in the field of trade defense and WTO), the WTO has defined the criteria that will deter the disputed parties in the application of measures to protect their security. "Now, in order to refer to the interests of national security in trade disputes, states will need to prove the objective of "emergency" and "integrity" when introducing measures. Namely – the direction of measures to protect the population and territory from external threats or to maintain law and order," Omelchenko explained.

Strategic adviser of the International Renaissance Foundation (IRF), international trade law specialist Taras Kachka says that the decision of the WTO for Ukraine is rather image loss. "Firstly, there are no unambiguous solutions in international disputes. Therefore, it is impossible to say that this is an absolute loss of Ukraine in the WTO. There is always another side of the coin, and thst is, for example, that our mirror sanctions are also recognized as legitimate. Secondly, we can use the positive elements of the decision for our country as an additional tool of pressure on the international community, explaining the need to impose sanctions against Russia and showing that this country violates international law," the expert explained, "RBC-Ukraine" reports.[2]

The decision of the WTO on the "transit dispute" with Russia means the legality of all sanctions imposed by Ukraine on the Russian Federation. This was stated in a comment to the "European truth" said the Advisor to the Minister of Economic Development and Trade of Ukraine Roksolana Pidlasa. Roksolana Pidlasa notes that the group of experts did not provide any recommendations to bring measures in accordance with the provisions of the WTO rules. "At the same time such conclusions of the group of experts mean that all actions of Ukraine in the trade and economic sphere aimed at countering the aggression of the Russian Federation are certainly justified in front of international law and the international community (sanctions, embargoes, restrictions in the field of monetary and financial regulation and other restrictions)," she explained, as reported by "European truth". Now the MEDT is studying the case materials and developing a strategy for further protection of Ukraine's interests within the framework of the WTO, Pidlasa said.[3]

The situation for Ukraine is extremely unpleasant, because the leverage of Russia was shown in action and the Ukrainian side could not win. One of the main reasons is that Ukraine has not recognized the state of war with Russia caused by Russian military aggression, and therefore in international courts Ukraine can not prove the existence of an external threat to its population and its territory. Nevertheless, the issue of blocking transit in favor of Ukraine requires a lot of effort to prove the case and coordination of joint actions with our partners to counter Russia.