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Getting The Deal Through

Eurasian Economic Union

Edward Borovikov, Bogdan Evtimov, Igor Danilov and Taras Povorozniuk

Dentons

Thursday 15 August 2019


Domestic legislation

1 What is the main domestic legislation as regards trade remedies?

The legal basis for trade defence instruments (TDI) (ie, anti-dumping (AD), countervailing (CV) and safeguards (SG)) is the founding Treaty on the Eurasian Economic Union of 29 May 2014 between the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation as amended upon accessions of the Republic of Armenia and the Kyrgyz Republic (EAEU Treaty) and, specifically, Annex 8 thereof, which contains Protocol No. 8 on Application of Safeguards, Anti-dumping and Countervailing Measures in Respect of Third Countries (TDI Protocol). A number of secondary acts of the Eurasian Economic Commission (EEC) regulate specific aspects of TDIs, including confidentiality matters, cooperation among the EAEU and member states’ authorities, internal decision-making procedures and methodological materials for domestic producers aimed at facilitating the preparation of complaints. The EAEU Treaty and the secondary acts are available at the EAEU Law Portal at https://docs.eaeunion.org/en-us/. All documents are in Russian, while selected legal acts are also translated into Armenian, Belarusian, Kazakh, Kyrgyz and English. Specifically, the database provides an unofficial translation of the EAEU Treaty, including the TDI Protocol.

TDIs of the Eurasian Economic Union (EAEU) are imposed on imports into the single customs territory of the EAEU. For the purposes of the legal framework of TDIs, the domestic industry of the EAEU is defined by reference to producers in all EAEU member states.

International agreements

2 In general terms what is your country’s attitude to international trade?

The primary external trade policy objectives of the EAEU members have been to liberalise regional trade and promote deeper economic integration among the Commonwealth of Independent States (CIS) countries. Those goals were pursued with the Customs Union (CU) of Russia, Kazakhstan and Belarus, which was formed in 2010; and more recently, the CU was complemented and overtaken by the more comprehensive regime of economic integration within the EAEU as of 1 January 2015. The new EAEU has the legal status of an international organisation vested with legal personality, which was not the case for the CU.

The EAEU is open to accessions by other countries. Armenia and Kyrgyzstan became new member states of the EAEU on 2 January 2015 and 12 August 2015, respectively. There are certain transitional arrangements in the areas of import tariffs and foreign trade regulation that apply to these newly acceded member states. No other EAEU accession negotiations are currently ongoing.

On 22 August 2012, Russia acceded to the World Trade Organization (WTO). This is considered to be the beginning of a process of gradual liberalisation, particularly with regard to import tariffs, of the CU/EAEU’s trade with the rest of the world in accordance with WTO rules. In joining the WTO as a member of the CU, Russia committed to ensure compliance of the CU (and its successor, the EAEU) TDI regimes with Russia’s WTO obligations and commitments. A number of Russian industries have regularly expressed concerns regarding the potential negative effects of Russia’s WTO accession and have asked for increased protection of their trade interests.

Since accession to the WTO, Russia has been involved in a number of disputes, including seven cases as complainant and nine cases as respondent. In four disputes – Measures on the Importation of Live Pigs, Pork and Other Pig Products from the European Union (DS475), Tariff Treatment of Certain Agricultural and Manufacturing Products (DS485), Anti-Dumping Duties on Light Commercial Vehicles from Germany and Italy (DS479) and Russia — Measures affecting the importation of railway equipment and parts thereof (DS499) – Russian policies and measures were found partially inconsistent with the WTO Agreements. While the disputed measures in DS479 and DS485 had already been brought into conformity in accordance with the Panel’s findings, the disputed measure in DS499 is under appeal and the disputed measure in DS475 is still at the implementation stage, with a risk of retaliatory actions against Russia. In another dispute – Measures Concerning Traffic in Transit (DS512) – the Panel dismissed the claims against Russia and found no breaches of the WTO Agreements.

At the time of writing, two of the complaints that Russia brought to the WTO have reached the stage of WTO Panel report and were under appeal.

In September 2016, for the first time since its accession, Russia went through the WTO Trade Policy Review Mechanism; other WTO members had an opportunity to examine in detail Russia’s trade and trade-related policies and pose their questions and express views.

Russia received over 700 questions and comments from over 50 WTO members. Many welcomed the tremendous liberalisation efforts and remarkable improvements in Russia’s trade policy, while others noted that there is still much for Russia to do to improve. Many WTO members demonstrated great interest in Russia’s investment regime and EAEU developments, and raised new concerns in the areas of sanitary and phytosanitary and technical barriers to trade (TBT), local content requirements, customs control and import restrictions, as well as the transparency of certain policies.

Kazakhstan, a member of the EAEU, also became a member of the WTO on 30 November 2015. According to Kazakhstan’s WTO tariff concessions, one-third of its import tariff lines for goods are bound at rates lower than those provided under Russia’s bound tariff rates in the WTO or in the EAEU’s common customs tariff. In response to this issue, as a transitional solution Kazakhstan undertook not to allow the re-export of goods imported into Kazakhstan at lower tariffs to other EAEU member states. Accordingly, to qualify for free circulation status within the EAEU, goods imported into Kazakhstan at lower rates should become subject to the higher EAEU import tariff. For this purpose, a special control system was introduced to monitor the movement of such goods, based on electronic customs declarations, invoicing and instant information exchange between the competent authorities of the EAEU member states. Kazakhstan is a respondent in one WTO dispute brought by Ukraine in September 2017 – Anti-Dumping Measures on Steel Pipes (DS530). At the time of writing, the dispute is at the consultation stage.

Armenia and Kyrgyzstan have been WTO members since 2003 and 1998, respectively. Their accession to the EAEU has triggered similar issues concerning tariff differences of their WTO tariff bindings with the EAEU common customs tariff. As a result, these countries also agreed temporary derogations (ie, lower tariffs) from the EAEU common customs tariff for certain goods imported for internal consumption. Such tariff derogations from the EAEU are only temporary; both new EAEU member states have announced their intention to enter into their respective tariff renegotiations in the WTO with the affected WTO members, while the actual renegotiations have not yet started.

WTO accession negotiations for Belarus formally started in 1993, but were suspended for decades until the accession process was resumed on 24 January 2017. Belarus has been invited to submit written replies to members’ questions, an updated Legislative Action Plan, copies of relevant draft and adopted legislation, and additional documentation such as updated information on domestic support to agriculture, state-trading enterprises and subsidies. The Working Party on accession remains active in 2019. Belarus expressed its strong commitment to conclude WTO accession negotiations by the 12th Ministerial Conference, which will take place in June 2020 in Nur-Sultan (previously Astana), Kazakhstan.

Government authorities

3 Which authority or authorities conduct trade defence investigations and impose trade remedies in your jurisdiction?

Since 1 July 2012, the authority for trade defence investigations in the EAEU is the EEC and the administrative service directly in charge of conducting trade defence investigations is the EEC’s Department for Internal Market Defence. The webpage of the Department for Internal Market Defence is available in the English language at www.eurasiancommission.org/en/act/trade/podm/Pages/default.aspx.

Final decisions to impose measures following investigations are made by the Board of the EEC, consisting of the EEC Ministers representing all the EAEU member states (www.eurasiancommission.org/en/Pages/structure.aspx).

Complaint filing procedure

4 What is the procedure for domestic industry to start a trade remedies case in your jurisdiction? Can the regulator start an investigation ex officio?

According to paragraph 186 of the TDI Protocol, an investigation can be initiated by the EEC on its own initiative or on the basis of a complaint lodged by the domestic industry manufacturing like products (relevant for AD and CV investigations) or like or directly competitive products (in the case of SG). In practice, so far all investigations have been initiated following domestic industry complaints.

A complaint can be lodged either by individual domestic producers or by a group or association of domestic producers manufacturing a major share of like products (for AD and CV) or like or directly competitive (for SG) products. The EAEU applies thresholds for domestic industry that are similar to those in other jurisdictions. In particular, the complainant must demonstrate that its complaint is expressly supported by at least 25 per cent of the total EAEU production, and, moreover, it must be supported by over 50 per cent of the volume of the like (or directly competitive) products manufactured by those producers which have expressed an opinion on the complaint.

The EEC will decide whether to open an investigation within 30 calendar days from the date when the complaint is deemed to have been submitted. This deadline may be extended where the EEC decides to request additional information or evidence; however, any such extension will not exceed 60 calendar days from the date of submission of the complaint.

The requirements for the preparation of a complaint are also similar to those in other jurisdictions: namely the complainants must provide a detailed description of the product concerned and the like or directly competitive products; detailed data on domestic capacity and production; an estimate of domestic consumption; trade data; data on the indicators relevant for injury analysis; available data on dumping by the imports from or specific subsidies in the targeted third country; and evidence on trends in imports and factors that may interfere with the analysis of a causal link with material or serious injury or threat thereof. The complaint must also contain a proposal on the form, amount and duration of the measures, and adjustment plans (if relevant, usually in the case of SG). Normally, all the data should cover a period of three calendar years preceding the year of submission of the complaint as well as data on further periods where representative statistics are available. All written submissions must be accompanied by non-confidential and relatively detailed summaries.

Contesting trade remedies

5 What is the procedure for foreign exporters to defend a trade remedies case in your jurisdiction?

The notice of initiation of a specific TDI investigation is published on the website of the EEC (www.eurasiancommission.org). The date of publication on the website is the first day of the new investigation.

Notifications are also sent to interested parties identified in the complaint and reasonably known to the investigating authorities. Notifications are also usually sent through diplomatic channels to the respective foreign governments of the affected countries. In recent practice, written notifications have occasionally reached their addressees with delays, causing difficulties for interested parties to comply with further procedural deadlines.

Interested parties (exporting producers, importers, consumer associations and authorities of exporting countries) can participate in the investigation in person or can appoint legal representatives. There are currently no restrictions on foreign attorneys acting as representatives of interested parties before the EEC. All investigations are, however, conducted in Russian and all documents must be submitted in Russian or accompanied by a Russian translation.

Within 25 days from the publication on the EEC’s website, interested parties must submit a letter to the EEC to be registered as participants in the investigation. Only registered interested parties (namely, participants) may obtain access to the non-confidential files, including a copy of the complaint. Participants must also request public hearings within 45 days and then subsequently submit their memorandum with defensive arguments and data relevant to the investigation within 60 calendar days from the date of initiation. The same deadlines apply to all types of TDI investigations in the EAEU.

Questionnaires must be answered within 30 days from their receipt (extensions are possible). The same deadline applies to all information requests in the course of the investigation.

Public hearings are normally scheduled within six to seven months after initiation. Within 15 days after the hearings interested parties are entitled to submit information in writing as provided orally in the course of the public hearings.

Safeguard investigations are normally concluded within nine months, with a possible extension of no more than three months. The respective periods for AD and anti-subsidy investigations are 12 months for conclusion and six months for extension.

Upon completion of the investigation and before the final decision, the EEC will send to the participants for comments a draft report on the main findings and conclusions of the investigation. The EEC Board will decide on the imposition of measures usually within 30 to 45 days from receipt of the report on the investigation and of a draft decision from the investigating authority.

WTO rules

6 Are the WTO rules on trade remedies applied in national law?

The EAEU is not in itself a WTO member; Russia has been a WTO member since 2012, Kazakhstan since 2015, Armenia since 2003 and Kyrgyzstan since 1998. Belarus is still negotiating its terms of accession.

According to the terms of accession of Armenia and Kyrgyzstan to the EAEU, their individual WTO accession commitments do not extend to other EAEU member states or to the EAEU as a whole.

All definitions of terms, procedural requirements and time limits that apply pursuant to the TDI Protocol and that are actually applied by the EEC in TDI investigations aim to follow the respective WTO rules on TDIs.

According to the generally accepted understanding, specific provisions in the WTO Agreements and the respective WTO accession commitments of the EAEU member states that have been implemented by the EAEU as part of the international agreements among its member states become an integral part of the EAEU’s legal order and should prevail over other laws that conflict with it. This position follows from the Treaty on the Functioning of the Customs Union in the Context of the Multilateral Trading System of 19 May 2011, which remains in force upon creation of the EAEU (Annex 31 of the EAEU Treaty). However, the WTO Agreements on TDIs do not have direct effect with respect to legal entities and individuals in the EAEU, and the latter cannot directly invoke the provisions of these WTO Agreements before the Court of the Eurasian Economic Union (EAEU Court). Arguably, such legal claims can be done by reference to the provisions of the EAEU Treaty and other international agreements within the EAEU that implement the respective WTO provisions.

Under the TDI Protocol all third countries are treated as market economy countries.

Appeal

7 What is the appeal procedure for an unfavourable trade remedies decision? Is appeal available for all decisions? How likely is an appeal to succeed?

As of 1 January 2015, the EAEU Court is the sole competent institution for judicial review of TDI measures adopted by the EEC Board. All acts and actions (inactions) that allegedly violate provisions of the EAEU Agreements and individual rights provided under those Agreements can be challenged before the EAEU Court. Since its establishment, the EAEU Court has issued only one judgment dismissing claims submitted by an exporting producer from Ukraine in relation to AD measures on steel rebar. Notably, this was the first proceeding under the enhanced rules of procedure, which required a report from a specially appointed expert group.

In 2012–2014, the EurAsEC Court (the predecessor of the EAEU Court, but limited to CU matters only) had considered three TDI cases (all three concerned AD measures). In its practice, the EurAsEC Court demonstrated a reasoned approach and willingness to interpret the rules of the CU in light of specific WTO provisions and, particularly, with due regard to the judicial practice of the Court of Justice of the European Union, including, to a certain extent, the applicability of the relevant WTO rules in the domestic legal order. However, the EurAsEC Court did not uphold any of the above three legal actions lodged against TDI measures.

Review of duties/quotas

8 How and when can an affected party seek a review of the duty or quota? What is the procedure and time frame for obtaining a refund of overcharged duties? Can interest be claimed?

The EAEU respects all relevant WTO disciplines on reviews and refunds, and there is a legal possibility to request minimum price undertakings and interim/administrative, newcomer and expiry/sunset reviews, as well as refunds of AD or CV duties paid, in accordance with the TDI Protocol. In 2016–2019, the EEC initiated a number of review proceedings, including interim reviews, expiry reviews and an anti-circumvention inquiry.

In 2015, the EEC accepted the very first minimum price undertaking from several cooperating exporting producers in the AD investigation on oil country tubular goods from China. In the following years, one Chinese producer failed to comply with the conditions of the price undertaking, which was consequently withdrawn with respect to this company. In 2018, the EEC also accepted price undertakings from two cooperating exporting producers in the AD investigation on herbicides from the European Union (EU).

Under the TDI Protocol, reviews may be initiated upon the request of an interested party (an exporting producer, complainants). The EEC may also initiate an ex officio interim review, for example, as a result of an amicable out-of-court settlement or implementation of the EAEU Court’s rulings. In particular, a similar development took place in the course of one judicial proceeding within the EAEU Court, where, as a result of an agreement with the complainant, the judicial proceeding was suspended, and the EEC agreed to initiate an interim review limited to the determination of dumping. The review resulted in a minor revision of the AD duties imposed. After reopening of the judicial case on the complainant’s initiative, the EAEU Court found the revised duties to be consistent with the CU legal order and dismissed the action.

Therefore, interested parties are encouraged to request reviews and refunds where this is warranted by evidence.

Compliance strategies

9 What are the practical strategies for complying with an anti-dumping/countervailing/safeguard duty or quota?

The EAEU and the EEC’s practice in this respect remains rather limited. Parties have the right to request minimum-price undertakings, reviews and refunds as discussed under question 8. While it has already happened in practice, in general, the EEC is often reluctant to accept price undertakings. Where a measure or decision of the EEC in this respect is deemed unlawful, it may be challenged before the EAEU Court.

It is noted that the TDI Protocol provides for anti-circumvention investigations and measures. In 2017, the EEC completed an anti-circumvention proceeding regarding original measures on seamless tubes and pipes of stainless steel originating from China, which were extended to products originating from Malaysia.

Normal rates and notification requirements

10 Where are normal customs duty rates for your jurisdiction listed? Is there an exemption for low-value shipments, if so, at what level? Is there a binding tariff information system or similar in place? Are there prior notification requirements for imports?

The normal (most-favoured nation – MFN) customs duty rates on import of goods into the common customs territory of the EAEU are listed in the Unified Customs Tariff of the Eurasian Economic Union (ETT). The ETT is revised annually in accordance with the Eurasian Economic Union’s Single Commodity Nomenclature of Foreign Economic Activities (TN VED EAEU), which in turn is based on the Harmonized System of the World Customs Organization. The authority empowered to adopt and amend the ETT and the TN VED EAEU is the EEC Board.

Information on import duty rates is available in Russian on the EEC website (www.eurasiancommission.org/ru/act/trade/catr/ett/Pages/default.aspx). This section of the website is updated regularly and contains generally correct information on duty rates; however, it is made available for information purposes only and is not legally binding.

However, certain tariff lines for goods destined solely for domestic consumption in Kazakhstan, Armenia and Kyrgyzstan are temporarily exempt from the common ETT tariff rates (see question 2), while Russia and Belarus apply ETT rates to all imported goods. If the exempt goods are to be released for free circulation within the EAEU, they become subject to the common ETT rates.

On 1 January 2018, the Customs Code of the Eurasian Economic Union (CC EAEU) replaced the previously applied Customs Code of the Customs Union.

The EAEU member states have concluded a separate accord concerning export duties. According to this accord, each member state of the EAEU establishes its own list of certain goods in respect of which export duties may apply, which is communicated to the EEC. On that basis, the EEC maintains a consolidated list of products subject to export duties for all member states of the EAEU. Member states retain the power to adopt and amend the export duty rates applied on export of goods, contained in the consolidated list and originating in their territories. Similar rules are reflected in the CC EAEU. Export duty rates are subject to periodic amendments by decisions of governments of the member states. There is no single official public database at the EAEU level where up-to-date export duty rates can be consulted.

Customs authorities of EAEU member states have a system of issuing preliminary customs classification decisions that may affect the customs duty rate applicable to a product for which such a decision has been requested (similar to the systems of issuing binding tariff information practised in other jurisdictions). Preliminary decisions taken at the national level are reported to the EEC and listed in a special database, which is available in Russian at the website of the EEC at www.eurasiancommission.org/ru/docs/Lists/List/AllItems.aspx.

According to article 22 of the CC EAEU, the EEC may also adopt decisions and clarifications on customs classification of certain goods upon respective proposals or requests from customs authorities of EAEU member states. There is no unified database of such decisions or clarifications.

According to the CC EAEU, all imported goods are subject to a prior notification procedure; however, only part of the information, which relates to risk assessment and choice of customs control form, is mandatory for prior submission, while other information remains optional, aimed at facilitating customs clearance. Prior notification may be done electronically at the websites of national customs authorities of the EAEU member states.

EAEU member states maintain a duty-exemption regime for low-value shipments, including for e-commerce, in accordance with Decision of the EEC Council N107 of 20 December 2017. The authorities decided to proceed with the gradual reduction of the maximum value and weight thresholds applied to duty exemptions. Therefore, from 1 January 2019 the threshold for international postal deliveries is set at €500 or 31 kg during one calendar month, while from 1 January 2020 it will be €200 or 31 kg per package. No further reductions are envisaged by the current EAEU legislation.

Note that while EAEU legislation defines the maximum threshold for duty exemptions, the CC EAEU allows each EAEU member state to introduce even lower limits, as provided above.

Special rates and preferential treatment

11 Where are special tariff rates, such as under free trade agreements or preferential tariffs, and countries that are given preference listed?

There is no single database at the EAEU level that lists duty rates applicable under preferential arrangements or preferential trade agreements.

The EAEU applies a Unified System of Tariff Preferences (USTP, analogous to the EU Generalised Scheme of Preferences) to promote economic growth and welfare in developing and least developed countries. Articles 36 and 37 of the EAEU Treaty specify tariff preferences granted to developing countries (75 per cent and 0 per cent of the MFN rate, for developing and least developed countries, respectively) and refers to preferential rules of origin applied to such imports.

The USTP preferences apply to goods included in a special list of goods and a list of countries eligible for such preferences. These lists are established by the EEC. The respective lists as well as the relevant legislation are available on the EEC’s website (www.eurasiancommission.org/ru/act/trade/dotp/commonSytem/Pages/normatBaza.aspx).

There is no official list or unified database for the existing preferential trade agreements of the EAEU member states with third countries. The agreements are numerous; however, the most noteworthy is the multilateral Agreement on a Free Trade Area of the CIS Countries (FTA CIS), which has been in force among the majority of the CIS countries since 2012. The FTA CIS has been suspended between Russia and Ukraine since 1 January 2016 due to exceptional national security reasons.

Traditionally, most CIS countries continue to maintain a network of bilateral free trade agreements (FTAs) between themselves.

In addition to the above multilateral FTA CIS, Russia currently maintains bilateral preferential trade agreements with Azerbaijan, Georgia, Serbia, Tajikistan, Turkmenistan and Uzbekistan. Kazakhstan has bilateral preferential trade agreements with Azerbaijan, Georgia, Serbia and Tajikistan. Belarus maintains preferential trade agreements with Azerbaijan, Serbia, Tajikistan, Turkmenistan and Uzbekistan; and Armenia with Georgia, Tajikistan and Turkmenistan. Kyrgyzstan has a bilateral preferential trade agreement with Uzbekistan.

Many of these agreements have specific product exclusions. The EEC is currently taking steps to encourage the EAEU member states to renegotiate existing bilateral trade agreements and conclude new ones so that the EAEU may become a party to them.

Notably, in its capacity of an international organisation vested with legal personality, the EAEU signed an FTA with the Socialist Republic of Vietnam, including a protocol on investment facilitation. This is the first ever FTA established between the EAEU and a third country, and it entered into force on 5 October 2016. Recently, the EAEU concluded FTA negotiations with Serbia and the signature of the respective agreement is expected in October 2019.

In 2018–2019, the EAEU signed an agreement on trade and economic cooperation with China and a temporary agreement aiming at the establishment of a free trade zone with Iran, as well as a memorandum of cooperation with the largest regional associations – ASEAN and Mercosur.

12 How can GSP treatment for a product be obtained or removed?

According to articles 36 and 45 of the EAEU Treaty, the EEC administers the USTP and is responsible for maintaining and updating the following lists:

  • a list of eligible developing countries entitled to the general tariff preference (currently 102 countries);
  • a list of eligible least developed countries entitled to the special tariff preference (currently 49 countries); and
  • a list of eligible goods originating from developing countries and least developed countries that fall within the scope of the USTP.

The eligibility criteria for the inclusion of countries in the above lists are set out in the Regulation on Conditions and Procedure for the Application of EAEU Unified System of Tariff Preferences adopted on 6 April 2016. This Regulation specifies the country-related criteria, which are complex and include not only relative volume of import and level of country income criteria, but also a number of other requirements, some of which can be regarded as policy or discretionary criteria. The EEC adopts a list of eligible goods at its own discretion unless the products are considered to be sensitive for domestic industry or subject to the tariff quotas.

13 Is there a duty suspension regime in place? How can duty suspension be obtained?

The EEC is empowered to adopt decisions on tariff suspensions upon requests from the EAEU member states.

Given the recent delegation of respective powers from the EAEU member states to the EEC, there is not yet an established formal procedure for requesting tariff suspensions. Therefore, economic operators may be advised to address substantiated requests for tariff suspensions to their national competent ministries, which in turn can refer the request to the EEC.

The possibility for EAEU member states to provide unilaterally customs privileges in the form of partial or complete reduction of normal customs duty rates for specific tariff lines or end uses is provided for in article 43 and Annex 6 of the EAEU Treaty (ie, Protocol on Common Customs Tariff Regulation). These customs privileges may not benefit individual companies and shall not depend on the origin of the goods.

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