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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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: 30 July 2018

  

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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 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. On 3 September 2018, the Russian Federation notified the DSB of its decision to cross-appeal.

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 present, 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 Division members could currently spend only very little time preparing for this appeal and that it would not be possible for the Division to focus on the consideration of this appeal and be fully staffed for some time. The Appellate Body informed the DSB that the Appellate Body would communicate appropriately with participants and DSB Members as soon as it knew more precisely when the Division can schedule the hearing in this appeal.

 

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