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Ukraine tries to facilitate tobacco products import to Armenia with WTO’s assistance

Kyiv. July 26, 2010

Last week Ukraine first exercised its right to request consultations from the World Trade Organization (the WTO) and submitted a request for consultations with Armenia to WTO Dispute Settlement Body. According to Ukraine’s statement published at WTO’s website, Armenia applies so-called "presumptive tax" to Ukrainian tobacco products.
Under the Law of Armenia "On Presumptive Tax for Tobacco Products" of March 24, 2000 the excise rate is 6,500 drams per 1,000 cigarettes for imported products and 4,750 drams  - for domestic products. Thus, the regime for Ukrainian products is less favorable than for like domestic products.
Ukraine states such actions are inconsistent with paragraphs 1, 2 and 4 of Article III of the General Agreement on Tariffs and Trade 1994 (GAAT 1994) envisaging the establishment of national regime of internal taxation and regulation in relation to imported products.
Moreover, under the Law of Armenia "On Excise Duty” of July 7, 2000, Armenia imposes excise tax on alcoholic beverages (Customs commodity codes: 2203, 2204, 2205, 2206, 2207, 2208) in violation of its commitments before the WTO as it protects national producers via discrimination of the products imported from Ukraine.
Earlier similar things with Ukrainian products occurred in the Georgian market. Ukraine saw discrimination in that excise duty on imported tobacco products was one and a half times higher than for domestic cigarettes. The Ministry of Economy of Ukraine conducted nonofficial consultations to protect interests of Ukrainian producers. As
a result, in November 2009 the Georgian Parliament decided to set the unified excise rate.
Similar nonofficial consultations were held with Armenian representatives;
however, this resulted in unsatisfactory outcome for Ukraine. Hence, this apparently became the reason for Ukraine to request for consultations within the WTO.
As Associate of
Volkov Koziakov and Partners Anna Gladshtein explains if Ukraine-Georgia consultations pass properly than mutually agreed solution will be made. Otherwise, if the parties fail to agree within due term set for consultations than Ukraine could call for a Panel to settle the dispute.
Ms. Gladshtein added that under Article 4.3 of the WTO Understanding on Rules and Procedures on Dispute Settlements, Armenia has to respond to the request not later than 10 days from the moment of its receipt, unless otherwise provided, and come into consultations not later than 30 days after the receipt of the request for consultations.
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