LAW FIRM DIRECTORY

Industry Sectors

SERGEI GRISHKO,
partner at REDCLIFFE PARTNERS Law Firm, attorney

YEVHEN DYADYUK,
senior lawyer at REDCLIFFE PARTNERS Law Firm, attorney, PhD in Law.

Interests game

Any regularities in international trade are nothing more than temporary conventionalities, but trade interests are a constant thing. In the current market situation, the number one challenge for Ukraine is to maintain a reasonable balance between national interests and global trends. Serious businesses should be ready to not only increase spending on maintaining their interests on global markets, but to also actively and consistently protect the domestic Ukrainian market

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The annual reports of the Directorate General for Trade at the WTO, which contain reviews of the latest global trends in the international trade environment show a parallel increase in the influence of two conflicting regimes of world trade policy — liberalization and protectionism. Nor should we ignore the expansion of mutual sanctions, which directly affect international trade.

While previously developed countries practiced protectionism (for example, the European Commission in the last report showed a trend both towards a decrease in adoption of trade protection measures, and to abandonment of previously initiated investigations), today, developing countries also have picked up this trend.

By the way, in the past developed countries introduced safeguard measures against developing countries, and now the escalating war between such countries as the United States and China (the formal reason of the beginning of which, ironically, was anti-dumping investigation of imports of Chinese solar panels to the USA), shows that any regularities in international trade are nothing more than temporary conventionalities, but trade interests are a constant thing.

It makes no sense to deny that Ukraine is also a developing country, and the IMF’s data clearly shows this. Therefore, keeping a reasonable balance between the interests of national manufacturers and global market trends is the number one task for responsible current Ukrainian policy.

Unfortunately, the oversupply of manufacturing capacities in the world, especially in industries that are traditionally export-oriented and important for Ukraine, forces the countries, to which Ukrainian export is directed, to initiate or extend trade safeguard measures using all the tools allowed by the WTO: anti-dumping, anti-subsidy and special investigations and, in some cases, non-tariff measures to restrict free trade (quotas, licensing, imposing duties and technical restrictions). Under such conditions, the state and business, having certain development goals, should not firmly adhere to prearranged actions, as  they need to be more flexible and more manoeuverable, responding promptly to the challenges of global commerce.

 

Time of opportunities

Is Ukraine ready to be at the forefront of the latest changes in international trade, and should they be followed? Are the benefits of active safeguard measures comparable with the spending on their use and the balance of interests of all the parties involved? We will try to find the most significant arguments to justify the proposed answers.

Serious export-oriented businesses which are used to plan their activities for the future should be prepared not only to increase expenditure on upholding their interests in world markets, but to also actively and consistently defend the domestic market of Ukraine, which could become a "driver" of economic growth with a reasonable and adequate state investment policy regarding infrastructure (roads, ports, electric power area and networks).

It should be understood that even the very reasonable threat of initiation/application of trade safeguard measures by business/state can lead to a reduction in trade balance distortions.

Also, due to "tectonic" changes in the priorities of international trade (for example, with the vacation of promising niches), Ukrainian business should be more active in promoting and lobbying its own goods, works and services in third markets, while not forgetting how this or that niche was vacated. For example, Ukrainian tires in the markets of Latin America clearly show that by implementing anti-dumping measures against Chinese tire manufacturers and, accordingly, reducing their share, Ukrainian manufacturers have tried to expand their presence in this promising market, but they did it too quickly and ended up like Chinese manufacturers.

Therefore, in 2019, the importance of involving lawyers practicing in the area of international trade law to implement strategic business plans on maintaining or increasing shares in  foreign and domestic markets will increase, which is likely to lead to an increase in supply of these services from law firms that will not only expand the staff of the lawyers enlisted but, perhaps, they will discover a new area for themselves.

 

Legislative support

Many statements have been made in recent years about the need to amend Ukrainian legislation and reform state institutions responsible for trade protection since more or less significant changes were already made in 2013 (changes in the relevant laws regarding the "single window" in August 2018 did not substantially change the existing concept of trade protection).

To support these aspirations, the Ministry of Economic Development and Trade of Ukraine has, on the basis of international experience and the progressive practice of the WTO, developed appropriate draft bills. These initiatives were actively discussed throughout 2017 by the legal community, but, unfortunately, they have not yet become priority ones for the Ukrainian Parliament.

Despite the request of the business sector for a quick and efficient response to international trade dynamics, little attention is paid to updating the procedure for protecting the interests of domestic manufacturers during the conduct of anti-dumping, special or countervailing investigations into goods of Ukrainian origin by foreign countries or their economic or customs associations.

As practice shows, government institutions are inert in this matter (the absence of the notorious ‘political will’, and, admittedly, the low professionalism of the authorities have an influence), so the main part of efforts aimed at protecting the trade interests of Ukrainian exporters in third markets falls on the shoulders of business and its legal advisors.

Let's hope that in 2019, the reform will affect the area of trade defense and Ukrainian business will, finally, be able to fully take advantage of its results to strengthen its position.

The business sector and law firms will actively monitor global trade defense trends in 2019, trying to apply modern approaches in defending their interests. But the question of how much the law-enforcement practice and state policy of Ukraine will correspond to these approaches remains very much an open one.