For the first time since Ukraine became World Trade Organization (WTO) member, it has requested that the WTO Dispute Settlement Body establish a panel to settle a dispute with Armenia over less favorableconditions for theimport of Ukrainian tobacco and alcohol than those of national origin.
The request was posted on the WTO’s web site.
According to the WTO, Ukraine asks that this request be placed on the agenda of the next meeting of the WTO Dispute Settlement Body that will take place on September 21, 2010.
According to Ukraine, it was impossible to resolve the dispute through consultations.
"In case a country refuses from consultations or does not start them, a WTO member that has placed a request for the consultations has the right, under Article 4.3 of the Understanding on Rules and Procedures Governing the Settlement of Disputes, to immediately request the establishment of a panel to settle a dispute," Andrii Zablotskyi, an associate from the Volkov Koziakov & Partners law firm, told Interfax-Ukraine.
He also said that following examination, the panel issues recommendations to the county which has violated the WTO agreements under which the country should bring its legislation in line with the WTO standards.
On July 20, 2010, Ukraine requested consultations with Armenia regarding Armenia’s measures affecting the importation and internal sale of cigarettes and alcoholic beverages.
Ukraine alleged that Armenia’s law "On Presumptive Tax for Tobacco Products" of March 24, 2000, levies discriminatory internal taxes on imported tobacco products and is therefore in violation of Article III of the GATT 1994 and paragraph 1.2 of Armenia’s Protocol of Accession to the WTO.
Moreover, the law imposes customs duties on such imported tobacco products at a rate of 24%, which is higher than Armenia’s WTO bound rate of 15%.
According to the Ukrainian side, for a small number of products, including cigarettes, Armenia imposes a single, fixed charge (the "presumptive tax") which includes both internal taxes such as VAT and excise tax and the applicable customs duty. Armenia applies this so-called "presumptive tax" at the fixed rates of AMD 6,500 ($17.7) per 1,000 imported cigarettes and AMD 4,750 ($12.9) per 1,000 like domestic cigarettes pursuant to Article 3 of the Tobacco Charges Law. "This presumptive tax on cigarettes at the above fixed rates for imported and domestic cigarettes is in violation of Armenia’s obligations of providing national treatment to imported products and leads to the imposition of customs duties in excess of Armenia’s tariff binding of 15% ad valorem for cigarettes as set forth in Armenia’s Schedule of Concessions," Ukraine claims.
As to imported alcoholic beverages, Ukraine alleges that Armenia’s law "On Excise Tax" of July 7, 2000, applies higher excise taxes on imported alcoholic beverages than on like domestic products.
Ukraine considers that this is also inconsistent with Armenia’s obligations under Article III of the GATT 1994.
