STATEMENT by ECUADOR AT THE MEETING OF THE

SAFEGUARD COMMITTEE HELD ON 26 APRIL 2021

The following intervention, made by the delegation of Ecuador at the meeting held on 26 April 2021 and the relevant agenda item is "3.21. Ukraine ‑ fresh cut roses", is being circulated at this delegation's request.

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Mr Chairman, it grieves me deeply to bring this matter to discussion, we should have done so in the light of the circumstances in which we find ourselves.

These circumstances are, Mr Chairman, that last Thursday (April 22) we were notified of a decision of the Ukrainian investigating authority, which had been adopted almost a week before (April 16).

This unfortunate decision was to adopt a safeguard for three years to roses, blatantly contravening the obligations derived from the Multilateral Trading System.

The decision of the Ukrainian Government entails numerous errors of form and substance.

Regarding the fulfilment of the procedural aspects, I would like to highlight:

·        The transparency problems in the handling of this process, in which the interested parties were only notified two weeks after the beginning of the investigation, granting unfeasible deadlines to respond, contrary to the provisions of Art. 12 of the Agreement on Safeguards.

·        The lack of transparency that results in a flagrant violation of due process since most of the information was declared confidential without the corresponding justification, even less so, the presentation of the non‑confidential summary as required by Art. 3.2 of the Agreement.

·        The absence of non‑confidential summaries‑which grants the parties a minimal understanding of the concerned variables‑removes all possibility for those affected to exercise their right to defense. This is because the evidence on the basis of which the decision was made has not been delivered and the information in almost all cases is not available, making it impossible to analyze, contrast and respond to it.

More problematic are, Mr Chairman, the errors in the substantive aspects set by the Agreement:

·        The accommodative way in which deadlines are chosen, modified, and ultimately interpreted, to demonstrate what Ukraine decided from the beginning that the investigation would reflect, giving little regard for what the numbers actually say and without considering the defense arguments made by Ecuador and the other parties interested in the investigation.

·        The state of disinformation to which the interested parties have been subjected regarding the procedural deadlines and steps.

·        It is worrying how the Investigating Authority initiated an investigation with the period 2016‑2019 without having the basic information of the domestic industry that only presented information until 2018; and even more worrying, the change from the investigation period from 2017 to June 2020 without timely informing the interested parties, thus preventing access to information related to the "new period".

·        The Investigating Authority has not adjusted the baseline information submitted by the domestic industry until 2018. And if it has done it so, it has not reported it and has not allowed access to this information.

Additionally, and not by any means agreeing with the decision taken by the Government of Ukraine, the measure does not comply with the obligation of progressive liberalization at regular intervals, since it starts with 56% in the first year, 11 percentage points are reduced in the first year and 9% the second, leaving a third instalment of almost 36% that is not reduced until the last day of the programmed safeguard, violating the legal obligation to progressively liberalize the measure at regular intervals during the period of its application. This calculation clearly violates Art. 7.4 of the Agreement.

There is no explanation regarding the way in which, in accordance with the principle of proportionality established in Art. 5.1 of the Agreement, the 56% tariff has been set. Ukraine does not consider that a duty should be applied "only to the extent necessary to facilitate adjustment". Nor is it explained how this high tariff is "necessary to prevent or remedy serious injury"

This explanation could come from the comparison between the price of the imported good and the local good. We wouldn't know Mr Chairman; it is an impossible task considering the supposed confidentiality of the data argued by Ukraine. In addition to the above, there is no adjustment plan submitted by the domestic industry, a fundamental requirement for the adoption of a safeguard measure.

The analysis carried in accordance with the obligation set in Article XIX of the GATT 1994, regarding the unforeseen evolution of circumstances, does not conform to the standards established in the Agreement or in the WTO jurisprudence. It cannot be argued that the establishment of a phytosanitary measure, which is no longer in force, or that a country has better conditions for the production of roses, is considered as an "unforeseen development".

There is no analysis of the causal link between imports and injury. Ukraine declares the existence of this substantial element contained in Art. 4.2 b) instead of demonstrating it. Furthermore, the increase in absolute terms required by Art. 8.3 of the Agreement does not exist, since the volume of flower imports from Ecuador falls 8% in 2020.

As soon as Ukraine honors us with the notification provided for in paragraph c) of Article 12, the Secretariat will be able to verify that there is no demonstration of the existence of serious injury and the causal link required by Art. 12.2 of the Agreement.

Mr President, I lament the need to present these data to the Committee, but we consider that a review of the procedure that led to the decision taken by the Government of Ukraine is unavoidable. The safeguards system cannot be abused by Members, even by the Member that makes the most use of them throughout the WTO, considering the size of its market; around twenty procedures to date.

The investigating authority is a depository of obligations on two levels. On the first level, to respect the obligations enshrined in international agreements, and on the second level, the obligation to conduct the investigations requested by the domestic industry that demand commercial relief. Both levels must be adequately balanced and one cannot be addressed to the detriment of the other.

Finally, Mr Chairman, Ecuador awaits with interest the responses that Ukraine shall present to this Committee to the questions formulated at the October 2020 meeting regarding the investigation of fresh cut Roses. This information will already put into context the violations to due process and to the Agreement on Safeguards.

That is why, Mr President, in accordance with Article 13.1 (b) of the aforementioned Agreement, Ecuador requests the Committee to verify whether the procedural requirements have been met in relation to the safeguard measure adopted by Ukraine, and to communicate its findings to the Council for Trade in Goods.

Ecuador will be attentive to the communication made by the Committee.

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