Ukraine Promises to Lift Auto Safeguard Duties

The Ukraine government promises a World Trade Organization committee it will lift the controversial safeguard duties it has imposed on imports of passenger cars.

This follows the June victory by Japan in a WTO disputes proceeding, where a panel concluded Ukraine had broken 10 global trading rules in establishing the temporary duties and told Kiev they should be scrapped.

At a July 20 WTO disputes settlement body meeting in Geneva, a Ukraine diplomat said the duty would go, although the Ukraine government clearly is unhappy. The diplomat says the country has chosen “not to apply its right to appeal.”

However, the Ukraine government grumbles the WTO panel had found fault with alleged failings by Kiev over how it had justified levying these duties, which are supposed to give local industries time to react to an import boom and become competitive.

WTO rules allow importing countries to impose these, but its agreement on safeguards lays down detailed rules on allowable circumstances and on what proof governments must supply that an import boom is causing commercial damage to local manufacturers.

In its statement to the meeting, Ukraine objected that the panel had “seemed” to demand proof that an increase in auto imports would damage the future health of the Ukraine auto industry, and that it supply evidence linking the import boom directly to problems suffered by Ukraine automakers. This seemed to “add unnecessarily” to the proofs importing countries should be required to lodge, said an official.

Ukraine also rejected criticisms it had not properly consulted other WTO member countries, notably Japan, over the duties.

A Japanese official takes the opposite view, arguing the panel’s direct request that the duties be scrapped was extraordinary and rightly reflected the “nature and number of inconsistencies” with WTO agreements involved in the case.

“Japan agrees and urges Ukraine to take this genuine concern and suggestion by the panel very seriously,” the official says. The Japanese government said it was ready to talk with Ukraine to achieve “the immediate revocation of the safeguard measure.”

Ukraine had in April 2012 imposed safeguard duties ranging from 6.46% for cars with engine volumes between 1.0L and 1.5L, and 12.95% for cars with engine volumes between 1.5L and 2.2L. In February 2014, the Ukraine government cut these duties to between 4.3% and 2.15% for 1.0L-1.5L engine cars and between 8.63% and 4.32% for 1.5L-2.2L cars.