. /.   WORLD TRADE  
ORGANIZATION  WT/DS411/1 
G/L/925 22 July 2010 
 
 
(10-3960) 
 Original:   English 
  
 
ARMENIA – MEASURES AFFECTING THE IMPORTATION AND  
INTERNAL SALE OF CIGARETTES AND ALCOHOLIC BEVERAGES 
 
Request for Consultations by Ukraine
 
 
 
 The following communication, dated 20 July 2010, from the delegati on of Ukraine to the 
delegation of Armenia and to the Chairman of the Dispute Settlement Body, is circulated in 
accordance with Article 4.4 of the DSU.  
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  My authorities have instructed me to request consultations with the Government of Armenia 
pursuant to Article 4 of the Understanding on Ru les and Procedures Governing the Settlement of 
Disputes and Article XXII:1 of the General Ag reement on Tariffs and Trade 1994 (GATT 1994) on 
the following matters: 
 1. Armenia applies so-called "presumptive tax" at the fixed rates of AMD 6,500 per 1,000 
imported cigarettes and AMD 4,750 per 1,000 like do mestic cigarettes (HS 2402 20) pursuant to its 
Law "On Presumptive Tax for Tobacco Products" of 24 March 2000 (the Law). It appears to impose a 
lower rate on domestic products than on directly  competitive or substitutable products imported from 
Ukraine, so as to afford protection to the dom estic production and accord these products treatment 
less favorable than that accorded to  like products of national origin. 
2. Ukraine considers that the presumptive tax subjects products imported from Ukraine to 
internal taxes in excess of those a pplied to like Armenian products in  violation of Article III:1&2, and 
Article III:4 first sentence of the GATT 1994.  
3. The Law also appears to be inconsistent with  Armenia's obligations under the provisions of 
paragraph 1.2 of the Protocol on the Accession of the Republic of Armenia to the WTO (WT/L/506, 17 December 2002) insofar as it incorporates by refere nce the commitments set out in paragraph 72 of 
the Report of the Working Party on the Accession of the Republic of Armenia to the World Trade 
Organization (WT/ACC/ARM/23, 26 November 2002), which provides as follows: 
"[From the date of accession, Armenia would apply its domestic taxes, including 
value-added and excise taxes, in a non-discr iminatory manner consis tent with Articles 
I and III of the GATT 1994…. The Working Part y took note of these commitments.]"   
4. In addition, although Armenia bound its tariff for cigarettes (HS 2402 20) at 15 per cent, 
pursuant to the Law Armenia appears to collect cu stoms duties on imported cigarettes of up to 24 per 
cent, which is in excess of those set forth and provid ed for in the Schedule reproduced in the Annex to 
the Protocol on the Accession of the Republic of  Armenia to the WTO (circulated in document 
WT/ACC/ARM/23/Add.1), in violation of Article II:1( a&b, first sentence) of the General Agreement 
on Tariffs and Trade (1994).   WT/DS411/1 
G/L/925 Page 2 
 
 
  5. The Law therefore also would appear to violate paragraph 53 of the Report of the Working 
Party on the Accession of the Republic of Armenia to the World Trade Organization, which records 
the following commitment: 
"The representative of Armenia stated that the rates of customs duty would not be 
applied in excess of the levels bound in Armenia's WTO Schedule of Concessions on 
Goods, which is annexed to the Protocol of  Accession of Armenia.  In addition, upon 
request, Armenia would consult with WTO Me mbers to address any concerns related 
to the application of specific duties to imports where Armenia had adopted bound ad 
valorem  tariff rates.  The Working Part y took note of this commitment." 
6. Besides, pursuant to its Law "On Excise Tax" of 7 July 2000 Armenia applies excise tax on 
imported alcoholic beverages (HS 2203, 2204, 2205, 2206, 2207, and 2208) at rates, which are 
substantially higher than those applied on like domestic  products. It appears to impose a lower rate on 
domestic products than on directly competitive or substitutable products imported from Ukraine, so as 
to afford protection to the domestic production an d accord these products treatment less favorable 
than that accorded to like products of national origin. 
7. Ukraine considers that the excise tax subjects products imported from Ukraine to internal 
taxes in excess of those applied to like Armenian pr oducts in violation of Article III:1&2, and Article 
III:4 first sentence of the GATT 1994.  
8. Therefore, the Law "On Excise Tax" would app ear to violate paragraphs 72 and 70 of the 
Report of the Working Party on the Accession of the Republic of Armenia to the World Trade 
Organization. The latter paragraph records the following commitment:  
"In response, the representative of Armenia st ated that legislation had been enacted 
by Armenia's Parliament in Law No. HO-415-N on 21 October 2002 and would be 
implemented before the date of accession to equalise the level of excise duties applied to all distilled beverages, vodka, cognac, li quor, etc. (HS 2208) and to equalise the 
level of excise duties applied to champagne, sparkling wines, wines, etc. (HS 2204).  
The Working Party took no te of these commitments." 
9. The Government of Ukraine has attempted to resolve this matter through bilateral contacts at 
senior levels of the Government of Armenia, to no avail. 
10. In view of the foregoing, we respectfully request  that Armenia bring the relevant measure into 
conformity with WTO rules with immediate effect by applying VAT and excise taxes on imported 
and domestic tobacco products a nd alcoholic beverages in a non-discriminatory manner, and by 
limiting customs duties to the ad valorem  equivalent of no more than 15 per cent, i.e. its bound rate.  
11. With a view to reaching a mutually satisfactor y solution to this matter, we propose that 
consultations be held in Geneva as soon as possible on a date to be agreed between our Missions.  
 Ukraine reserves its right to raise further fact ual claims and legal matte rs during the course of 
consultations.  
  We look forward to receiving your reply to the present request and to fixing a mutually 
convenient date for consultations. 
 
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