Trade Defence Remedies in Conditions of Full-Scale War

Russia’s full-scale war has considerably changed all spheres of economic and social life in Ukraine. The field of trade defence remedies is no exception. The years 2022-2023 forced the Ministry of the Economy of Ukraine (i.e. a state body responsible for conducting investigations) (the Ministry) and the Interdepartmental Commission on International Trade (i.e. a state body responsible for adopting key decisions following the results of the investigations) (the Commission) to invent new approaches to cope with challenges brought by the war into trade remedies proceedings. This article is focused on the benchmark trends of 2022-2023 related to this field.

Statistics

From 2022 to 2023, Ukraine initiated only one sunset review of anti-dumping duties related to imports into Ukraine of rebars with origin in Russia.[1]

As for the measures, Ukraine has applied measures that only follow the results of the investigations and reviews that were initiated before the war. Particularly, in November 2022, Ukraine applied preliminary anti-dumping measures on the import of glass containers with origin in Belarus.[2] In August 2023, Ukraine applied anti-dumping duties against imports of galvanised steel and steel with other coatings with origin in China[3]; some types of products made of asphalt or similar material with origin in Belarus[4]; silicon-manganese steel wire from China[5]; and definitive anti-dumping duties on imports of glass containers from Belarus[6].

Ukraine has also amended anti-dumping duties applied to imports into Ukraine of rebars originating in Belarus. Particularly, after the initial anti-dumping investigation, the Commission applied a 0% anti-dumping duty on imports of certain Belarussian companies. However, following the results of the interim review, the said 0% duty was replaced by a 47.31% duty.[7]

Safeguards: to be or not to be

Since the commencement of the war, Ukraine has de facto refused to safeguard investigations and remedies. This was due to objective reasons. Namely, the Ministry and the Commission could not complete investigations within the set deadlines. Moreover, the circumstances have considerably changed. That is, imports have completely stopped or decreased considerably; some producers have been destroyed, etc. As a result, all safeguard investigations initiated before the war have been terminated without measures. However, it is worth emphasizing that the Ministry and the Commission have used different justifications while terminating cases.

In two investigations (regarding imports of cheese[8] and three-cone chips[9]), the Ministry and the Commission referred to the fact that the application of duties would not comply with national interests and, based on this only, terminated investigations without applying measures.

However, in two other cases, the substantiation was completely different because, in addition to the conclusion that the application of safeguards will contradict national interests, the Commission also found other reasons for not applying safeguards and highlighted them in its decisions, namely:

• following the results of the investigation regarding imports of sodium hypochlorite, it was revealed that there was no causal link because (a) the increase in imports mainly resulted from the suspension of production by domestic industry; (b) import prices were higher than the cost of production of the domestic industry.[10]

• following the results of the investigation re PVC-profile, it was revealed that (a) an increase in imports was a result of a decrease of production and sales by the domestic industry; (b) import prices were higher than both prices and the cost of production of the domestic industry; (c) the causal link was absent because the significant reasons for deterioration of economic indexes of the domestic industry were problems with access to raw materials and increase in prices of such raw materials; (d) the term of investigation has expired.[11]

Taking into account the extraordinary nature of safeguards and their applicability to all exporting countries (with very limited exceptions), it is most probable that Ukraine will not apply safeguards in the near future, especially because our trading partners have granted additional liberalisation in return for Ukraine’s refusal to apply new measures or increase existing measures against imports with origin in the relevant countries (e.g. Article 2 (b) of Regulation (EU) 2023/1077 of the European Parliament and of the Council of 31 May 2023 on temporary trade-liberalisation measures supplementing trade concessions applicable to Ukrainian products under the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part).

Suspension of trade remedies or even termination of proceedings due to war

Notably, Ukrainian legislation in trade defence remedies does not detail the procedure and grounds for suspending measures. The full-scale war has had a negatively influence on various domestic industries. Some have been completely destroyed, while others have had difficulties with access to raw materials, stable energy supply, constant shelling, etc. In such circumstances, of course, there is an issue with the necessity to suspend some of the measures. In 2022, Ukraine suspended only one safeguard measure applied to imports into Ukraine of polymer materials, regardless of the country of origin and export. The reason for this suspension was termination of production by the domestic industry. So, the Commission suspended safeguards for martial law until the domestic industry demonstrates (with convincing evidence) that it renewed the production of products and was ready to satisfy demand on the Ukrainian market in full.

Moreover, the Commission has terminated the interim review of anti-dumping duties applied to salt imports into Ukraine from Belarus. This is because the domestic industry is located on the territory of active hostilities, and so it’s very difficult for it to participate in the review because of the war.

Measures against Russia

Ukraine has not elaborated yet on how to treat Russia in trade defence investigations.

Since 2014, Ukraine has applied an import ban on certain products with their origin in Russia (please see the Resolution of the Cabinet Ministers of Ukraine On Ban of Importation into the Customs Territory of Ukraine of Goods with Origin in Russia No. 1147 dated 30 December 2015). Notwithstanding the above, Ukraine has applied anti-dumping duties on imports into Ukraine of certain products that have already been subject to an import ban. For example, some types of chocolate and other ready-made food products containing cocoa, as well as certain cables and ropes.

However, since commencement of the war, the Commission has not applied anti-dumping duties against imports of products made of asphalt or similar material with origin in Russia, even though the Ministry has established all circumstances necessary for the application of measures. While substantiating its decision, the Commission has referred to the fact that Russia has completed imports into Ukraine under the Resolution of the Cabinet Ministers of Ukraine “On Application of Ban on Importation of Products from Russia” No. 426 dated 9 April 2022 and thus, has concluded that there is no need to apply anti-dumping measures.

At the same time, the Commission has initiated the sunset review of anti-dumping duties related to rebar imports into Ukraine, which originated in Russia. However, as of the date of this article, the Commission had not yet completed the review.

The above examples demonstrate that the Ministry and the Commission had not yet elaborated well-established practice on the matter. Considering the fact that there will be more sunset reviews regarding anti-dumping duties applied to different products with origin in Russia shortly, it is crucial to adopt a constant approach. In our opinion, there is a possibility of extending anti-dumping duties following the results of sunset reviews. This is because, under Ukrainian law and WTO rules, duties can be extended even if there is no import while the sunset review is being conducted. Still, the investigating authorities have concluded that expiry of the duty would likely lead to the recurrence of dumping imports. Moreover, the Eurasian Economic Union (of which Russia is a member) extended all anti-dumping measures against imports from Ukraine at the end of 2022 and 2023, even though Ukraine halted all exports to Russia and imports to other countries that belong to the EAEU have dropped considerably due to logistics issues.

Applied measures

It is worth underlining that all measures adopted during the war were applied with considerable delay. For instance, even though both Ukrainian law and the WTO rules stipulate that anti-dumping investigations shall last for a maximum of 18 months, anti-dumping investigations against imports of galvanised steel and steel with other coating with origin in China have lasted 32 months; an anti-dumping investigation against some types of products made of asphalt or similar material with origin in Belarus has lasted 28 months; an anti-dumping investigation against silicon-manganese steel wire from China has lasted around 28 months; anti-dumping investigation against imports of glass containers from Belarus lasted 20 months.

Moreover, the Ministry and the Commission have not analysed any war-related developments and adopted measures on the basis of pre-war statistics. For instance, the decision of 2 August 2023 on the application of anti-dumping duties on imports of galvanised steel and steel with other coating with origin in China was adopted based on statistics that were current as of 30 June 2020. So, more than three years have passed between the last statistics collection date and the date of the decision’s adoption.

Moreover, several investigations have not been terminated yet, even though there is a considerable delay in their conducting. For instance, the anti-dumping investigation into steel seamless cold-drawn and cold-rolled pipes from China was initiated in September 2021 and has not been terminated yet, even though 30 months have passed.

Termination/suspension of trade defence remedies by the third countries in respect of Ukraine

Because of the war, major Ukrainian trading partners have terminated or suspended the application of trade defence remedies against Ukraine.

Initially, the EU, through Regulation 2022/870 dated 30 May 2022 and further by Regulation 2023/1077 dated 31 May 2023, has suspended both anti-dumping duties and global safeguard measures introduced against Ukrainian imports. As a result, the measures applicable to Ukrainian hot-rolled flat products and Ukrainian seamless pipes and tubes were suspended until 6 June 2024.

Meanwhile, on 4 July 2022, the European Steel Association requested an expiry review of anti-dumping duties against the importing of hot-rolled flat products from Ukraine, Russia, Serbia, Brazil, and Iran.[12] Furthermore, on 23 November 2022, the European Steel Association withdrew the application regarding imports from Ukraine.[13] Following the assessment, the expiry review for Ukrainian imports and anti-dumping duties on Ukrainian imports were terminated on 13 February 2023.[14]

Anti-dumping duties applied on seamless pipes and tubes expired on 3 October 2023 since no request for review for Ukrainian imports was submitted. Meanwhile, an expiration review of the anti-dumping duties against Russian seamless pipes and tubes is being conducted.

Similarly to the EU, Canada temporarily, for a period of one year with further extension, eliminated both customs duties and anti-dumping, safeguard, and countervailing measures by Customs Notice 22-12: Ukraine Goods Remission Order since 9 June 2022. Moreover, on 13 May 2022, Canada terminated anti-dumping duties applied to imports into Canada of flat hot-rolled carbon and alloy steel sheets and strips with origin in Ukraine. The said measures had been applied since 2001 at the rate of 77%[15].

The UK suspended the application of safeguard measures on steel originating from Ukraine have been in place for two years starting from 1 July 2022. Moreover, on 31 August 2022, the anti-dumping duties on Ukrainian hot-rolled flat and coil products were suspended. The suspension was renewed on 30 May 2023, and on 29 August 2023, anti-dumping duties in place on Ukrainian products were fully revoked.[16]

The USA has exempted Ukrainian imports from an additional 25% ad valorem duty for one year by the Proclamation: Adjusting Imports of Steel Into the United States (Ukraine) from 1 June 2022 until, initially, for one year since 1 June 2022 with further extension for one more year. Moreover, in November 2023, the US Department of Commerce (DOC) recognised the unique challenges facing exporting from Ukraine while Russia’s invasion continues. It granted a 0% (no-dumping) rate (instead of 19.03% applied following the results of the initial anti-dumping investigation) for the Ukrainian producer of PC Strands. This case is unique for Ukraine because this is the first case in history when a review/investigation is terminated with a 0% dumping margin rate.

The successful cases noted above demonstrate that Ukrainian producers should consider the possibility of reviewing all anti-dumping measures applied against Ukrainian products on export markets. As of today, a total of 28 different anti-dumping duties have been applied by various exporting countries against Ukrainian products.

[1] https://ukurier.gov.ua/uk/news/povidomlennya-pro-porushennya-ta-provedennya-25-02/

[2] https://ukurier.gov.ua/uk/articles/povidomlennya-pro-zastosuvannya-poperednih-a051122/

[3] https://ukurier.gov.ua/uk/news/povidomlennya-pro-zastosuvannya-ostatochnih-antide/

[4] https://ukurier.gov.ua/uk/news/povidomlennya-pro-zastosuvannya-ostatoch_02-08-23/

[5] https://ukurier.gov.ua/uk/news/povidomlennya-pro-zastosuvannya-osta_02_08_23/

[6] https://ukurier.gov.ua/uk/news/povidomlennya-pro-zastosuvannya-ostat_02-08-23/

[7] https://ukurier.gov.ua/uk/news/povidomlennya-pro-zminu-antidempingovih-z02-08-23/

[8] https://ukurier.gov.ua/uk/articles/povidomlennya-pro-pripinennya-specialnogo-03-09-22/

[9] https://ukurier.gov.ua/uk/articles/povidomlennya-pro-pripinennya-specialnogo-03-09/

[10] https://ukurier.gov.ua/uk/articles/povidomlennya-pro-pripinennya-specialnogo-rozslidu/

[11] https://ukurier.gov.ua/uk/articles/povidomlennya-pro-pripinennya-specialnogo-05-11-22/

[12] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:JOC_2022_384_R_0003&from=EN

[13] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R0365&from=EN

[14] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R0365&from=EN

[15] Tribunal Continues Order, With Amendment—Flat Hot-rolled Carbon and Alloy Steel Sheet and Strip from Brazil, China, Ukraine and India

[16] https://www.gov.uk/government/publications/trade-remedies-notices-anti-dumping-duty-on-hot-rolled-iron-and-steel-products-from-brazil-iran-russia-and-ukraine/trade-remedies-notice-202316-anti-dumping-duty-on-certain-hot-rolled-flat-products-of-iron-non-alloy-or-other-alloy-steel-originating-in-brazil-ir#expiry-of-anti-dumping-duty