Russia was forced to lift them in 2017, but because of the contracti the import of pork from the EU remains under the ban. Now the EU demands from WTO to impose a fine in the amount of $1.39 billion for failure to comply with the requirements of the organization. In Russia, even began to talk, but do we need the WTO, and why we’ve been trying to join since 1993.
Another famous case – the ban on import of live pigs and pork from the EU. Russia introduced it in early 2014 in connection with flash of the African plague of pigs. According to the results of the hearing, the panel of the WTO decided that the Russian side has unreasonably imposed restrictions, the court of appeal only confirmed it.
And that’s just the known cases, but such examples in six years, have accumulated. Right now Russia is a party to some 40 WTO disputes, many of which are very important for the economy of the country. Losing such cases can be a painful blow. But in the middle of 2018 there has been a reversal in the bad trend. A decision on the three cases resulted in favor of Russia. However, one of them is the famous dispute between Russia and the European Union’s “Third energy package” – each side interprets as a victory. However now there is every reason to expect that Russia, as a WTO member, having received a positive experience, will be able to complete the disputes in the organization in the right direction. It is important to know how to do it.
Chronologically, the first “winning” cases to the WTO for Russia began proceedings against arch-neighbour, Ukraine. In 2015, the Ukrainian party filed a complaint with the WTO on Russia, accusing it of “systematic exclusion” of railway products – switches, cars, locomotives and other railway equipment to the Russian market. Russia stopped issuing new certificates of compliance in 2014, explaining that it was unable to come to the production and certification of the security situation in the country. “Systematic exclusion” is particularly severe violation of the WTO. If the panel agreed with the validity of the Ukrainian claims that Russia would have to change their legislation to allow Ukrainian goods to the market. Perhaps, in the first place it would hurt the political pride of Russia.
The case lasted almost three years is a traditional time for WTO disputes. According to the Ukrainian Ministry of economic development and trade (MEDT), in 2013 only the export of locomotives to Russia amounted to $1.7 billion or 11.8% of total exports of Ukraine to Russia. In 2017 the whole Ukrainian exports of locomotives totaled only $220 million, while exports of passenger and freight cars decreased by 8 times. So for Ukraine it is extremely important.
From the Russian side it involved the Ministry of economic development and the Ministry of transport. The most important thing was to provide for conclusive arbitration of the WTO panel evidence that Russia’s actions, first, comply with the norms and principles of WTO, and, secondly, was not aimed at restricting imports from Ukraine. In the end, the Russian side quite unexpectedly won the case. Surprise, because before publication of the final decision of the Arbitration panel, the chances of Russia was estimated as not very high.
But disputes within the WTO there is a special feature: there is a significant emphasis on procedural rules (i.e. the provision and evaluation of evidence), as well as earlier decisions on similar cases. This allows arbitration to WTO panels to make objective decisions, and, on the other hand, clear rules enable parties to properly prepare for any business. However, on 27 August Ukraine has filed an appeal against the WTO ruling that will be at least three months.
Anti-dumping duties and the “Third energy package”
In 2015 Russia initiated a dispute in the WTO over anti-dumping duties, imposed by Ukraine on imports of Russian ammonium nitrate. In July 2014, fees were increased from 11.91% to of 36.03%. The Ukrainian side motivates their recalculation of cost of the Russian products through the methods of “energy adjustments” when considered from the Russian prices for gas and electricity required in production and prices in third countries. In the end, the panel of the WTO has recognized the majority of the Russian claims to be reasonable, including about the methodology “energy adjustments”.
From an economic point of view for Russia specifically, this case is not critical: according to representatives of the Department of trade negotiations Ministry of economic development, it is only about $50 million a year. But a precedent, because right now Russia is a party to a similar dispute, where he performs against the EU. The claims are the same – incorrect, according to Moscow, “energy adjustments” methodology applied by the EU when calculating anti-dumping duties on imports of Russian goods. Russia is trying to deal with them since 1994 and is now probably closer than ever to victory. And commercial significance of the dispute is significantly above $50 million a year.
Finally, the third case, the evaluation of which differs in the Russian and Western media, Russia’s current challenging of normative legal acts, ostensibly aimed at the implementation of the Third energy package (“TEP”). In the opinion of our authorities, these acts are aimed at tightening and centralization of control over the energy market of the EU, and the “TEP” unreasonably restricts the import of Russian natural gas and, in General, is discriminatory in nature.
Russia won three of the six points: the WTO declared illegal quantitative restrictions on Russian gas supplies via the gas pipeline OPAL, some rules of certification of operators of gas networks, as well as the empowerment of infrastructure projects, which deliver gas from Russia, the status of “project common areas”. Representatives of the MAYOR and “Gazprom” have declared that are satisfied with the solution. Although the WTO has upheld the item “TEP”, in which one company can produce, sell and transport gas for all three operations must be separation at the ownership level. This item is by many experts considered key to the dispute. However, the WTO is rarely “full victory”. As a rule, the plaintiff alleges violations of articles of the normative documents of the WTO, and by the end of the dispute of the requirements can be met and some not. Therefore, each side often interpreterpath the decision as he wants.
The winning tradition
Three (or two) victory in the courts, the WTO made clear that if you do business with a reasonable argument, and in strict accordance with the procedural rules of WTO, the chance if not to win, on acceptable conditions is very high. This postulate concerns including the recent claim of Russia to the US because of additional duties on steel and aluminum. Russian authorities estimate the damages at $537,6 million a year. However, if the case goes to court, the decision on it is unlikely before 2020 and even 2021. To predict the outcome of such cases is always difficult, but the chances of Russia is high, especially as a claim against the United States filed a and other countries.
To win such disputes, it is important both from economic and political points of view. The arbitration court of the WTO is known for his impartiality, and because the WTO can become a platform for strengthening the international authority of Russia, and understanding within the country that the proper approach international courts are ready to listen to any direction and to make an adequate decision.