DS: Russia — Measures affecting the importation of railway equipment and parts thereof

Ukraine challenged Russia's application of its conformity assessment procedures for railway products to suppliers from Ukraine of rolling stock, railroad switches and other railroad equipment (railway products).

More specifically, Ukraine challenged three categories of measures. The first category concerns (a) 14 instructions through which Russia's certification body suspended certificates of conformity issued to suppliers of Ukrainian railway products before the entry into force of the CU (suspension instructions), due to the (alleged) impossibility of carrying out the required yearly inspection of the suppliers in Ukraine given the security situation there; and (b) three decisions through which Russia's certification body rejected applications for new certificates submitted by suppliers of Ukrainian railway products pursuant to CU Technical Regulations 001/2011 and 003/2011 (rejection decisions), due to the (alleged) impossibility to carry out inspections in Ukraine or incomplete applications.

Another measure is the requirement applied by certain Russian authorities not to recognize the validity of certificates of conformity issued by other CU countries pursuant to CU Technical Regulation 001/2011 for railway products produced in a non-CU country (non-recognition requirement). Because of this requirement, Ukrainian suppliers in possession of valid certificates of conformity issued in Belarus or Kazakhstan for railway products produced in Ukraine were not allowed by Russia to export their products to Russia using the certificates issued in those other CU countries.

The final measure is the alleged systematic prevention of imports of Ukrainian railway products into Russia by way of (a) suspending valid certificates of conformity held by suppliers of Ukrainian railway products, (b) rejecting applications for new certificates submitted by suppliers of Ukrainian railway products, and (c) not recognizing the validity in Russia of certificates issued by other CU countries if the certificates covered products not produced in a CU country.

Ukraine raised claims against these measures under different provisions of the Agreement on Technical Barriers to Trade and the GATT 1994.

Regarding the suspension instructions, the panel found that:

1. Ukraine did not establish that, contrary to Article 5.1.1 of the TBT Agreement, Russia applied its conformity assessment procedure in a manner that granted Ukrainian suppliers of railway products access under conditions less favourable than those granted to Russian and European suppliers of like railway products, in a comparable situation. The Panel reached this conclusion based on its determination that due to the risks to the life and health of Russian inspectors arising from the security situation in Ukraine, the situation in Ukraine was not comparable to that in other exporting countries and that Russia was therefore justified in not sending its inspectors there to carry out inspections;
2. Ukraine did not establish that, contrary to Article 5.1.2 of the TBT Agreement, Russia applied its conformity assessment procedure more strictly than necessary to give Russia adequate confidence that Ukrainian railway products conformed with the relevant technical regulations. More specifically, the Panel concluded that to obtain adequate confidence that the Ukrainian railway products (whose certificates had been suspended) conformed with the relevant substantive technical requirements, Russian inspectors had to inspect the relevant facilities and products in Ukraine. However, due to the security situation in Ukraine, Russian inspectors were justified in not conducting the required inspections. Ukraine did not demonstrate that there were less trade restrictive manners of applying Russia's conformity assessment procedure that would make an equivalent contribution to ensuring that suppliers of Ukrainian railway products conformed with the relevant technical regulations and were reasonably available to Russia (such as off-site inspections);
3. Ukraine established, in respect of 13 of the 14 suspension instructions at issue, that Russia's certification body did not transmit the results of the assessment in a precise and complete manner to the applicant, contrary to the third obligation in Article 5.2.2 of the TBT Agreement. However, Ukraine did not establish that this was also the case for the other suspension instruction at issue, as that instruction provided information on the reasons for the failure to conduct the relevant inspections of the products at issue at the facilities of the relevant Ukrainian supplier.

Regarding the rejection decisions, the Panel found that:

1. Ukraine did not establish that, contrary to Article 5.1.1 of the TBT Agreement, Russia applied its conformity assessment procedure in a manner that granted suppliers of Ukrainian railway products access under conditions less favourable than those granted to suppliers of like Russian and European railway products, in a comparable situation. More specifically, the Panel determined that, regarding the two rejections decisions issued pursuant to CU Technical Regulation 001/2011, due to the risks to the life and health of Russian inspectors arising from the security situation in Ukraine, the situation in Ukraine was not comparable to that in other exporting countries and that Russia was therefore justified in rejecting the relevant applications for certificates of conformity. Regarding the rejection decision issued due to incomplete applications submitted by the Ukrainian supplier, the Panel determined that Ukraine did not establish that Russia granted Ukrainian suppliers of railway products less favourable access conditions to the procedure, because Russia's certification body could not accept and process incomplete applications;
2. Ukraine established that, contrary to Article 5.1.2 of the TBT Agreement and regarding one of the rejection decisions issued pursuant to CU Technical Regulation 001/2011, Russia applied its conformity assessment procedure more strictly than necessary to give Russia adequate confidence that Ukrainian railway products conformed with the relevant technical regulations. More specifically, the Panel determined, in respect of three of the four applications rejected through that particular rejection decision, that it was possible for Russia's certification body to inspect the relevant railway products outside Ukraine by testing samples, and that therefore there was a less strict manner of applying Russia's conformity assessment procedure that was also reasonably available to Russia;
3. Ukraine did not establish that, contrary to Article 5.1.2 of the TBT Agreement and regarding the other application rejected through the previously mentioned rejection decision as well as the other rejection decision issued pursuant to CU Technical Regulation 001/2011 and also the rejection decision issued pursuant to CU Technical Regulation 003/2011, Russia applied its conformity assessment procedure more strictly than necessary to give Russia adequate confidence that Ukrainian railway products conformed with the relevant technical regulations. More specifically, the Panel concluded, regarding the rejection decisions issued pursuant to CU Technical Regulation 001/2011, that to obtain adequate confidence that the Ukrainian railway products conformed with the relevant substantive technical requirements, Russian inspectors had to test the products in Ukraine. However, due to the security situation in Ukraine, Russian inspectors were justified in not conducting the required tests there. Regarding the rejection decision issued pursuant to CU Technical Regulation 003/2011, the Panel concluded that under the applicable procedures Russia's certification body had to reject incomplete applications. Therefore, Ukraine did not demonstrate that there were less trade-restrictive manners of applying Russia's conformity assessment procedure that would make an equivalent contribution to ensuring that suppliers of Ukrainian railway products conformed with the relevant technical regulations and were reasonably available to Russia (such as off-site testing of samples or the processing of incomplete applications);
4. Ukraine did not establish that, contrary to the second obligation in Article 5.2.2 of the TBT Agreement and regarding the three rejection decisions, Russia's certification body did not promptly examine the completeness of the documentation and inform the applicant in a precise and complete manner of all deficiencies in the applications. More specifically, the Panel found that through the rejection decisions issued pursuant to CU Technical Regulation 001/2011, Russia's certification body informed the applicants of the impossibility to conduct testing of samples, which it had to do as soon as possible as a consequence of the third obligation of Article 5.2.2, even if it required additional time to examine the completeness of the applications. Moreover, through the rejection decision issued pursuant to CU Technical Regulation 003/2011, Russia's certification body informed the applicant that the applications did not contain the required documents, thus informing the applicant of all deficiencies in its applications in a precise and complete manner;
5. Ukraine established that, contrary to the third obligation in Article 5.2.2 of the TBT Agreement and in respect of the two rejection decisions issued pursuant to CU Technical Regulation 001/2011, Russia's certification body did not transmit the results of the assessment in a precise and complete manner to the applicants. More specifically, the Panel found that through the relevant communications, Russia's certification body did not provide the applicants precise and complete information as to why the applications were rejected; and
6. Ukraine did not establish that, contrary to the third obligation in Article 5.2.2 of the TBT Agreement and in respect of the rejection decision issued pursuant to CU Technical Regulation 003/2011, Russia's certification body did not transmit the results of the assessment in a precise and complete manner to the applicant. More specifically, the Panel found that this rejection decision was outside the scope of the third obligation in Article 5.2.2 because it did not transmit the result of any part of the conformity assessment procedure.

Regarding the non-recognition requirement, the Panel found that:

1. Ukraine did not establish that the non-recognition requirement falls within the scope of Article 2.1 of the TBT Agreement, because the non-recognition requirement concerns conformity assessment, which is distinct from the substantive technical requirements with which a conformity assessment procedure seeks to verify compliance;
2. Ukraine established that, contrary to Article I:1 of the GATT 1994, through the non-recognition requirement Russia discriminated between Ukrainian railway products and like railway products from other countries. More specifically, the Panel found that Russian authorities did not recognize the validity in Russia of certificates of conformity issued for Ukrainian railway products by certification bodies in other CU countries, whereas it did recognize the validity of certificates of conformity issued by CU certification bodies for like railway products produced in other CU countries; and
3. Ukraine established that, contrary to Article III:4 of the GATT 1994, through the non-recognition requirement Russia discriminated between Ukrainian railway products and like domestic railway products. More specifically, the Panel found that Russian authorities did not recognize the validity in Russia of certificates of conformity issued for Ukrainian railway products by certification bodies in other CU countries while recognizing the validity of certificates of conformity issued by CU certification bodies for like railway products produced in Russia.

The Panel made no findings regarding Ukraine's claims under Articles 5.1.1 and 5.1.2 of the TBT Agreement because they concerned aspects of the non-recognition requirement that the Panel found were not properly before the Panel. The alleged requirement that the Panel found to be outside its terms of reference is that Russian authorities would only recognize as valid in Russia CU certificates of conformity issued to applicants registered in the same place where the certification body to which the application was submitted is located.

The Panel exercised judicial economy in respect of Ukraine's claims of inconsistency with Article X:3(a) of the GATT 1994.

Regarding the alleged systematic prevention by Russia of imports of Ukrainian railway products, the Panel found that Ukraine had not established its claims of inconsistency with Russia's non-discrimination obligations (Articles I:1 and XIII:1 of the GATT 1994) and Russia's obligation not to impose restrictions on international trade (Article XI:1 of the GATT 1994), because Ukraine had not demonstrated the existence of the alleged systematic prevention of imports of Ukrainian railway products into Russia.

Russia's claims regarding the Panel's preliminary ruling under Article 6.2 of the DSU

The Appellate Body rejected Russia's claim that the Panel erred in its preliminary ruling. In particular, the Appellate Body held that the Panel properly analysed the linkages between the measures challenged by Ukraine and the WTO provisions allegedly infringed based on the text of the panel request. Moreover, the Appellate Body agreed with the Panel that Ukraine had properly identified the measures at issue in its Panel Request.

Ukraine's claims under Article 5.1.1 of the TBT Agreement (“comparable situation”)

The Appellate Body agreed with the Panel that the assessment of whether access is granted under conditions no less favourable “in a comparable situation” within the meaning of Article 5.1.1 of the TBT Agreement should focus on factors having a bearing on the conditions for granting access to conformity assessment in that specific case and the ability of the regulating Member to ensure compliance with the requirements in the underlying technical regulation or standard. At the same time, the Appellate Body found that, in examining factors relevant for establishing the existence of a “comparable situation” in the particular circumstances of this case, the Panel did not focus sufficiently on aspects specific to the suppliers who were claimed to have been granted access under less favourable conditions or to the location of the suppliers' facilities and instead relied on information concerning the security situation in Ukraine generally. Accordingly, the Appellate Body reversed the Panel's application of Article 5.1.1 to the facts of the present case.

Ukraine's claims under Article 5.1.2 of the TBT Agreement (necessity test)

The Appellate Body found that the Panel erred in its application of the burden of proof under Article 5.1.2 of the TBT Agreement in requiring Ukraine to provide evidence that the requirements of one specific provision under Russian law were fulfilled, for purposes of demonstrating that its proposed less trade restrictive alternative measure was reasonably available. In particular, the Appellate Body disagreed with the Panel that it was for Ukraine to establish that there had not been any non-conformities or consumer complaints relating to the products at issue.

Ukraine's claims regarding the existence of systematic import prevention under Article 11 of the DSU

The Appellate Body found that the Panel properly considered whether the individual components of the alleged unwritten measure formed part of a common plan to prevent imports of Ukrainian products into Russia. The Appellate Body therefore rejected Ukraine's allegation that the Panel had failed to make an objective assessment of the matter in finding that Ukraine had failed to demonstrate that Russia systematically prevented the importation of Ukrainian railway products into Russia.

Russia's claims under Article 11 of the DSU

Russia raised several claims under Article 11 of the DSU in relation to Panel's findings concerning the alleged requirement that Russia's authorities must not recognize certificates issued in other Eurasian Economic Union countries if the certified railway products were not produced in the Eurasian Economic Union (Russia's third measure). The Appellate Body rejected these claims. In particular, the Appellate Body held that the third measure was properly within the Panel's terms of reference for the same reasons that the Appellate Body had provided in relation to Russia's claim concerning the Panel's preliminary ruling. Moreover, the Appellate Body found no error in the Panel's assessment of whether the third measure existed. The Appellate Body also disagreed with Russia that the Panel had erred by making findings with respect to a measure it had previously found to be not within its terms of reference.