Mutual trade restrictions between the Russian Federation and Ukraine were broadened and extended for 2018

1 January 2018 could have been a turning point in the relationship between the Russian Federation and Ukraine. All mutual restrictions, which had been snowballing between two countries since 2015, were due to expire by 31 December 2017.

Let us recall, that from 1 January 2016 Russia:

  • suspended the Commonwealth of Independent States (CIS) Treaty on the Free Trade Area in respect to Ukraine (the Federal Law of 30 December 2015 No.410-FZ);
  • expanded a food embargo on Ukraine on 12 categories of products including kinds of meat, fish, milk and dairy products, vegetables, fruit, nuts and other food products (the Resolution of the Government of Russia of 13 August 2015 No.842 (including further amendments);
  • introduced a transit ban from Ukraine to Kazakhstan and Kyrgyzstan (effective from 1 July 2016) through the territory of Russia (the Decree of the President of Russia of 1 January 2016 No.1 (including further amendments).

In turn, Ukraine applied the following “retaliatory measures”:

  • suspended from 5 January 2016 the CIS Treaty on the Free Trade Area in respect to Russia by imposing customs duties on products originating from Russia on a most favored nation (MFN) basis (the Resolution of the Cabinet of Ministers of Ukraine (the CMU) No.1146 of 30 December 2015);
  • banned import of certain products originating from Russiafrom 10 January 2016, including some kinds of meat, fish, tea, coffee, confectionary products, chocolate, bakery products, beer and other alcohol products (the Resolution of the CMU No. 1147 of 30 December 2015 (including further amendments);

Initially most of the above restrictions were effective until 31 December 2017, except for suspension of the Treaty on the Free Trade Area by Russia, which does not have an expiration date, meaning that the Treaty can be renewed only upon the decision of the President of Russia.

However, starting from summer 2017, both Russia and Ukraine have not only prolonged mutual restrictions, but also expanded them.

In particular, Russia:

  • expanded the food embargo, additionally banning the import of live pigs, edible offal of cattle and offal of other meat, as well as pork and cattle fat (the Resolution of the Government of Russia of 25 October 2017 No.1292);
  • extended the food embargo until 31 December 2018 (the Decree of the President of Russia of 30 June 2017 No.293);
  • prolonged the transit ban until 30 June 2018 (the Decree of the President of Russia of 30 December 2017 No.643);

In turn, Ukraine:

  • extended until 31 December 2018the application of customs duties on the MFN basis to the products originating from Russia (the Resolution of the CMU of 20 December 2017 No.1019);
  • expanded the list of products banned for import to the territory of Ukraine from Russia, adding such products as ammonium sulfate, polyethylene, mixtures of ammonium nitrate, polyvinyl chloride (this ban will be effective from 1 March 2018), and prolonged the effective ban until 31 December 2018 (the Resolution of the CMU of 20 December 2017 No.1022).

Consequently, the renewal of the active trade between Ukraine and the Russian Federation is not likely to be forthcoming in 2018.

For more information, please contact Anzhela Makhinova.