DISPUTE SETTLEMENT

DS: Ukraine — Definitive Safeguard Measures on Certain Passenger Cars

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

  

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Current status

 

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Key facts

Short title:
Complainant:
Respondent:
Third Parties:
Agreements cited:
(as cited in request for consultations)
Request for Consultations received:
Panel Report circulated: 26 June 2015

  

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Latest document

  

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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by Japan.

On 30 October 2013, Japan requested consultations with Ukraine regarding the definitive safeguard measures imposed by Ukraine on imports of certain passenger cars and the investigation that led to the imposition of those measures.

Japan claims that the measures are inconsistent with:

  • Articles 2.1, 3.1, 4.1(a), 4.1(b), 4.2(a), 4.2(b), 4.2(c), 5.1, 7.1, 7.4, 8.1, 11.1(a), 12.1, 12.2 and 12.3 of the Agreement on Safeguards; and
     
  • Articles II:1(b) and XIX:1(a) of the GATT 1994.

On 13 November 2013, the European Union requested to join the consultations.  On 14 November 2013, the Russian Federation requested to join the consultations. Subsequently, Ukraine informed the DSB that it had accepted the request of the European Union and the Russian Federation to join the consultations. On 13 February 2014, Japan requested the establishment of a panel. At its meeting on 26 February 2014, the DSB deferred the establishment of a panel.

 

Panel and Appellate Body proceedings

At its meeting on 26 March 2014, the DSB established a panel. The European Union, India, Korea, the Russian Federation and Turkey reserved their third-party rights. Subsequently, Australia and the United States reserved their third-party rights.

On 10 June 2014, Japan requested the Director-General to compose the panel. On 20 June 2014, the Director-General composed the panel. On 1 October 2014, the Chair of the panel informed the DSB that the panel expected to issue its final report to the parties by March 2015.

On 26 June 2015, the panel report was circulated to Members.

This dispute concerns the definitive safeguard measure imposed by Ukraine on imports of certain passenger cars to Ukraine and the investigation that led to the imposition of this measure.

Japan submitted claims relating to both substantive and procedural requirements that must be met before imposing a safeguard measure. Regarding the substantive requirements, Japan brought claims relating to unforeseen developments and the effect of GATT 1994 obligations, increased imports, serious injury or threat thereof, and the causal link between increased imports and serious injury or threat thereof to the domestic industry. Japan also challenged the safeguard measure actually applied, including claims relating to its necessity, its progressive liberalization, and tariff bindings under Article II:1(b) of the GATT 1994. Regarding the procedural requirements, Japan brought claims concerning the safeguard investigation, the resulting investigation report and obligations to notify the WTO and consult with affected exporting Members.

The Panel's main findings are:

  • Regarding unforeseen developments and the effect of GATT 1994 obligations (Article XIX:1(a)): Ukraine acted inconsistently with this provision because the Ukrainian competent authorities did not provide in their published report a demonstration of the circumstances — unforeseen developments and the effect of GATT obligations — that must be satisfied before a safeguard measure can be imposed.
     
  • Regarding increased imports (Article 2.1): Ukraine acted inconsistently with this provision because it did not adequately analyse and explain the intervening trends and failed to demonstrate that the increase in imports was recent, sudden, sharp and significant enough.
     
  • Regarding the threat of serious injury (Article 4.2(a)): Ukraine failed to evaluate all relevant factors affecting the domestic industry, in particular because it did not properly assess the likely development of the injury factors in the very near future and their likely effects on the situation of the domestic industry. Ukraine therefore failed to make a proper determination regarding threat of serious injury to the domestic industry under Article 4.2(a).
     
  • Regarding the existence of a causal link (Article 4.2(b)):  Ukraine acted inconsistently with this provision by failing to demonstrate the existence of a causal link and to conduct a proper non-attribution analysis.
     
  • Regarding the level of concessions and other obligations (Article 8.1): Ukraine acted inconsistently with this provision by failing to endeavour to maintain a substantially equivalent level of concessions and other obligations between it and affected exporting Members.
     
  • Regarding publication and notification requirements (Articles 4.2(c), 12.1, 12.2 and 12.3): Ukraine acted inconsistently with its obligations to: (i) publish promptly a detailed analysis of the case under investigation and a demonstration of the relevance of the factors examined (Article 4.2(c)); (ii) notify the WTO Committee on Safeguards immediately after initiating a safeguard investigation (Article 12.1(a)) and immediately after making a finding of serious injury or threat thereof caused by increased imports (Article 12.1(b)); (iii) provide, in its notification of 21 March 2013, “all pertinent information” (Article 12.2); and (iv) provide Japan with adequate opportunity for prior consultations with a view to reviewing all pertinent information (Article 12.3).

In addition, the Panel rejected Japan's claims involving the obligations to: provide reasonable public notice and public hearings (Article 3.1, second sentence); publish the investigation report (Article 3.1, last sentence); provide a timetable for progressive liberalization (Articles 3.1 and 4.2(c)); apply the safeguard measure as necessary to facilitate adjustment (Articles 5.1 and 7.1); progressively liberalize the safeguard measure at regular intervals (Article 7.4, first sentence); and notify the Committee on Safeguards immediately after taking the decision to apply a safeguard measure (Article 12.1(c)).

Following a request from Japan under Article 19 of the DSU for a suggestion regarding the implementation of the Panel's rulings and recommendations and bearing in mind the nature and number of inconsistencies with the Agreement on Safeguards and the GATT 1994 found by the Panel, the Panel suggested that Ukraine revoke its safeguard measure on passenger cars.

At its meeting on 20 July 2015, the DSB adopted the panel report.

 

Reasonable period of time

On 17 August 2015, Ukraine informed the DSB that it intended to implement the DSB's recommendations and rulings in a manner that respects its WTO obligations, and that it would need a reasonable period of time to do so. On 6 October 2015, Ukraine informed the DSB that the Interdepartmental Commission on International Trade adopted Decision No. SP-335/2015/4442-06 of 10 September 2015 revoking the safeguard measures on imports of passenger cars. This Decision entered into force on 30 September 2015.

 

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