Ukraine takes Russia to WTO for obstructing freight transit

September 15, 2016 3:18 AM EDT

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By Tom Miles

GENEVA (Reuters) - Ukraine has filed a complaint at the World Trade Organization to challenge Russia over restrictions on freight transit, the WTO said in a statement on Thursday.

Ukraine says Russia has broken WTO rules by singling out Ukraine with trade-restrictive measures, such as requiring Ukrainian trucks to use identification seals and to move in convoy, and by putting restrictions on Ukrainian drivers entering Russia from Belarus.

“We believe that the transit restrictions imposed by the Russian Federation are not justified and do not comply with WTO terms,” Ukraine's first deputy prime minister Stepan Kubiv said in a statement.

"This is a yet another step taken to defend Ukraine’s rights within the WTO against opaque and discriminatory restrictions by the Russian Federation, particularly with regard to unjustified restrictions of imports of Ukrainian goods, including railway equipment, to the Russian Federation," the statement said.

In its complaint, seen by Reuters on Thursday, Ukraine said its trade to countries in Central and Eastern Asia and the Caucasus region had fallen by 35.1 percent in the first half of 2016 compared to the same months of 2015.

By the end of this year Ukraine will have lost about $400 million worth of exports to Kazakhstan and Kyrgyzstan, a 0.3 percent hit to Ukraine's economy, the statement said.

A decree from Russian President Vladimir Putin suspended a free trade deal with Ukraine on January 1, 2016, banning road and rail transport from Ukraine through Russia to Kazakhstan unless the route also goes through Belarus, the complaint said.

Adding an extra country and a border crossing into the trip adds time and cost to trade, it said.

The decree was valid until July 1, but Putin renewed it until the end of 2017, adding Kyrgyzstan as a destination along with Kazakhstan, and banning any goods embargoed by Russia or subject to a tariff in the Eurasian Economic Union, a customs zone led by Russia.

Russia also requires trucks to go in caravan from Ukrainian territory and to be accompanied by Russian official vehicles all the way through Russian territory, the complaint said. There are two caravans a week and trucks have to pay to be included.

"The new measures... effectively ban the transit of the majority of goods from the territory of Ukraine," it said.

Russia has 60 days to settle the complaint. After that, Ukraine could ask the WTO to adjudicate.

(Additional reporting by Alexei Kalmykov; Editing by Ralph Boulton)

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