Reversing the Panel's finding that Ukraine failed to establish that the conformity assessment procedures provided less favorable treatment to imports from Ukraine compared to suppliers of like products of national origin or originating in any other country – Article 5.1.1 of the TBT Agreement

The Panel had found that Ukraine failed to establish that the conformity assessment procedures for railway equipment in Russia violated Article 5.1.1 by providing less favorable treatment to Ukrainian suppliers as compared to suppliers in Russia or other countries. In none of the 14 instances where Russia had suspended certificates of conformity – on the grounds that inspection control conditions were not satisfied due to certain security concerns – did the Panel find that less favorable treatment was afforded the Ukrainian suppliers. The Ukrainian suppliers were deemed not to be ‘in a comparable situation’ as suppliers from the other countries. Therefore, Russia was not required to afford non-discriminatory access to conformity assessment procedures. Specifically, Russia was found not to act outside its margin of appreciation when deciding to cancel inspection control in Ukraine to safeguard the life or health of Russian officials that would have been sent to Ukraine to carry out inspections.Footnote ¹

However, the Appellate Body reversed the Panel for an error in properly applying Article 5.1.1 to the facts of the case. In determining whether suppliers from Ukraine were in a ‘comparable situation’ as those from other Members, the Appellate Body considered the Panel unduly relied on factors pertaining to Ukraine as a whole and not focusing on the relevant suppliers of railway equipment. Since it is suppliers that are entitled to access to conformity assessment procedures under no less favorable conditions, the relevant analysis is to be focused on the situation of those suppliers, not factors that more generally apply to an entire country. The Panel erred by focusing the analysis on the security situation in Ukraine in general, but failed to ‘assess the evidence on the record with a view to determining how the security situation related to the specific suppliers at issue’.Footnote ² Whereas the Appellate Body reversed the Panel's finding, it could not complete the analysis because of alleged insufficient factual findings on the record regarding how the security situation affected the specific suppliers at issue.Footnote ³

Reversing the Panel's finding that Ukraine failed to establish that certain less trade-restrictive alternatives were reasonably available – Article 5.1.2 of the TBT Agreement

The Panel found that Ukraine had failed to establish, with respect to each of the 14 so-called ‘instructions’ (measures) at issue, that Russia had acted inconsistently with its obligations under Article 5.1.2 of the TBT Agreement. Specifically, as Ukraine had not shown that there were less trade-restrictive alternatives reasonably available to Russia, the decisions to suspend certificates of conformity did not constitute unnecessary obstacles to international trade.Footnote ⁴

However, the Appellate Body also reversed this Panel finding because of an error in allocating the burden of proof for determining whether the Russian conformity assessment procedures created unnecessary obstacles to international trade by being stricter, or were applied more strictly, than necessary to give adequate confidence of conformity. The Appellate Body found that, in order to establish that a conformity assessment procedure is stricter than necessary, the procedure may be compared to possible alternative procedures, which must be reasonably available, less strict or applied less strictly, and must provide an equivalent contribution to giving the importing Member adequate confidence that products conform with the applicable technical regulations or standards. The burden for demonstrating these criteria is on the complainant who must make out a prima facie case. The respondent can rebut this prima facie case by presenting arguments showing that the challenged procedure is not more strict than necessary.Footnote ⁵ Of course, alternative measures are hypothetical in nature, i.e. they do not yet exist, or at least do not exist in the particular form proposed by the complainant. Therefore, as the Appellate Body noted, complainants cannot be expected to provide complete and exhaustive descriptions of the alternative measures they propose.Footnote ⁶

On that basis, the Appellate Body found that the Panel had placed an excessive burden on Ukraine to demonstrate the existence of certain less trade-restrictive alternatives. Specifically, Ukraine had argued that conducting off-site inspections in Ukraine – which was an option explicitly contemplated under Russian law – would be a less trade-restrictive alternative measure. The Panel had rejected this proposed alternative, finding that Ukraine failed to present evidence of compliance with the requirements for conducting such off-site inspections. However, the Appellate Body found that this went beyond what Ukraine was required to show under the TBT Agreement.Footnote ⁷ The Appellate Body found that ‘a complainant under Article 5.1.2 cannot be expected to provide detailed information on how a proposed alternative would be implemented by the respondent in practice’. Rather, once Ukraine had established that the proposed alternative was reasonably available, it was for Russia to present evidence to rebut the contention.Footnote ⁸ Again, having reversed the Panel, the Appellate Body was unable to complete the legal analysis because of insufficient factual findings on the record.Footnote ⁹