DISPUTE SETTLEMENT

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

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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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by Ukraine.

On 21 October 2015, Ukraine requested consultations with the Russian Federation concerning certain measures imposed by the Russian Federation on the importation of railway equipment and parts thereof.

Ukraine claims that the measures are inconsistent with:

  • Articles I:1, III:4, X:3(a), XI:1 and XIII:1 of the GATT 1994; and
     
  • Articles 2.1, 2.2, 2.5, 5.1.1, 5.1.2, 5.2.1, 5.2.2, 5.2.3, 5.2.5 and 5.2.6 of the TBT Agreement.

 

Panel and Appellate Body proceedings

On 10 November 2016, Ukraine requested the establishment of a panel. At its meeting on 23 November 2016, the DSB deferred the establishment of a panel.

At its meeting on 16 December 2016, the DSB established a panel. Canada, China, the European Union, India, Indonesia, Japan, Singapore and the United States reserved their third-party rights. Following agreement of the parties, the panel was composed on 2 March 2017.

On 18 July 2017, the Chair of the panel informed the DSB that the panel expected to issue its final report to the parties in April 2018, in accordance with the timetable adopted after consultation with the parties. On 24 April 2018, the Chair of the panel informed the DSB that, due to the complex procedural and factual nature of the dispute, and after consultations with the parties, the panel expected to issue its final report to the parties in May 2018. In its communication, the Chair also informed the DSB that the report would be available to the public once it was circulated to the Members in all three official languages, and that the date of circulation depends on completion of translation.

On 30 July 2018, the panel report was circulated to Members.

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.

On 27 August 2018, Ukraine notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report and filed a Notice of Appeal and an appellant's submission. On 3 September 2018, the Russian Federation notified the DSB of its decision to cross-appeal and filed a notice of other appeal and an other appellant's submission.

On 24 October 2018, upon expiry of the 60-day period provided for in Article 17.5 of the DSU, the Appellate Body informed the DSB that it would not be able to circulate the Appellate Body report in this appeal by the end of the 60-day period, nor within the 90-day time-frame provided for in Article 17.5 of the DSU. The Appellate Body referred to the size of the panel record and the complexity of issued that had been appealed. The Appellate Body also noted the backlog of appeals pending with the Appellate Body at that time, and the overlap in the composition of all divisions resulting in part from the reduced number of Appellate Body members. In its communication the Appellate Body indicated that it would not be possible for the Division to focus on the consideration of this appeal for some time. Proceedings gathered pace in June 2019. The oral hearing in this appeal was held on 17 and 18 September 2019. On 9 December 2019, the Chair of the Appellate Body informed the Chair of the DSB that the Report in this appeal would be circulated no later than 4 February 2020.

On 4 February 2020, the Appellate Body report was circulated to Members.

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.

At its meeting on 28 February and 5 March 2020, the DSB adopted the Appellate Body report and panel report, as modified by the Appellate Body report.

 

Implementation of adopted reports

On 19 March 2020, the Russian Federation requested the Chair of the DSB to circulate to Members a communication indicating that it had revoked certain requirements for the recognition of conformity assessment procedures and informed relevant Ukrainian producers of requirements they should comply with to obtain a certificate of conformity. In its communication, the Russian Federation observed that by taking these actions, it considered to have fully implemented the DSB's rulings and recommendations in this dispute. On 23 March 2020, Ukraine requested the Chair of the DSB to circulate a communication indicating that it respectfully asked the DSB to request the Russian Federation to elaborate on the requirements that Ukrainian producers have to comply with in order to obtain the certificates of conformity, in particular, those related to safety of the employees of the certification body. Ukraine also observed that it believed that the issue of the implementation of the DSB's rulings and recommendations could be considered only after reviewing and analysing the requested information.

 

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