Sunday, February 01, 2015

U.S., EU To Negotiate With Ukraine On Tariff Changes, Maintain Opposition

Posted: December 13, 2012

The United States and European Union have submitted their claims of interest to enter into talks with Ukraine regarding that country's request to renegotiate its World Trade Organization bound tariff levels, although they continue to urge Ukraine to drop its request altogether, U.S. and EU officials said on Dec. 11.

They did so at a meeting of the WTO General Council, which was was held the same day as the deadline for affecting trading partners to submit their claims of interest to enter into negotiations with Ukraine on its request under Article XXVIII of the General Agreement on Tariffs and Trade.

"[T]he United States had no choice yesterday but to submit our claim of interest to Ukraine in order to reserve the rights of our stakeholders," Deputy U.S. Trade Representative Michael Punke said in prepared remarks for the meeting. "However, I want to be clear: in no way should the fact that we submitted a claim of interest be misread by Ukraine to mean that we have changed our views on its proposed action."

EU Ambassador to the WTO Angelos Pangratis delivered a similar message during the General Council meeting on behalf of the EU and Croatia, according to his prepared remarks. One Geneva source said that other WTO members that are affected by Ukraine's request, including Brazil, took the same position as the U.S. and EU.

Although Ukraine has not yet revealed how it proposes to modify its bound tariff levels on the 371 items included in the request, Punke signaled that the U.S. expects it do so in the upcoming bilateral talks. "With our claim of interest now submitted, we expect full and immediate transparency from Ukraine on precisely what it is seeking on a line-by-line basis," he said. "This transparency is long overdue."

At the General Council meeting, Ukraine said it would begin bilateral consultations with affected trading partners "promptly," and argued that Article XVIII was a much better way to adjust its tariff rates than a unilateral response, according to the Geneva source.

This source said Ukraine maintained that, despite the large number of WTO members that expressed opposition to its Article XVIII request, there is a "silent majority" of members that support it. But Japan sought to debunk that notion by asking any members that are in favor of Ukraine's move to indicate their support during the meeting, and none did, this source said.

Under Article XXVIII, WTO members that hold initial negotiating rights to the tariff lines Ukraine is seeking to modify, as well as members that are principal suppliers on a given line, are eligible to enter into negotiations with Ukraine for compensation.

According to Ukraine's request, the U.S. holds initial negotiating rights on 62 10-digit tariff lines and is also the principal supplier on 12 of those lines. The U.S. is the principal supplier on one additional tariff line on which it does not have initial negotiating rights. Overall, the biggest category of U.S. exports affected by Ukraine's request is agricultural machinery and equipment (Inside U.S. Trade, Dec. 7).

At the General Council meeting, roughly 30 delegations, representing a total of 130 countries, individually expressed their opposition to Ukraine's request on both systemic and commercial grounds, according to the Geneva source. Their objections were similar to those contained in a joint statement delivered by 23 WTO members at a Nov. 26 meeting of the Goods Council.

That statement argued that Ukraine's request goes beyond the intended scope of Article XXVIII; that it was unclear to what extent Ukraine would be able to compensate other WTO members in exchange for its proposed withdrawal of concessions; and that Kiev had pursued its request in an non-transparent manner (Inside U.S. Trade, Nov. 30).

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