International Trade News. May-June 2016
THE GOVERNMENT HAS APPROVED THE REGULATION ON PROTECTION OF UKRAINE'S RIGHTS AND INTERESTS IN TRADE AND ECONOMIC FIELD WITHIN THE FRAMEWORK OF THE WORLD TRADE ORGANIZATION
On 1 June 2016 the Cabinet of Ministers of Ukraine, approved the “Regulation of Protection of Ukraine's Rights and Interests in Trade and Economic Field within the Framework of the World Trade Organization” (the “Regulation”)|1| by the Decree No. 346. The Regulation defines, inter alia, the rules and procedures on protection of the rights and interests of Ukrainian companies in the framework of the World Trade Organization (the “WTO”) dispute settlement system throughout all stages starting from consultations to implementation of the recommendations or rulings of the WTO dispute settlement body (the “WTO DSB”).
The Regulation expressly provides for the right of Ukrainian interested bodies and organizations (including the public authorities, the enterprises, institutions and organizations irrespectively of their form of ownership, as well as the representatives thereof) to apply to the Ministry of Economic Development and Trade of Ukraine (the “Ministry”) if another WTO Member State violates the WTO covered agreements In this case the affected body/organization may submit to the Ministry the respective statement outlining the circumstances of identified trade restrictions.
If the Ministry considers that there is a violation of the WTO covered agreements, it takes the decision to establish the interdepartmental working group, in which representatives of affected Ukrainian companies may participate, and which shall directly manage initiation and maintenance of a dispute.
Moreover, the state bodies and foreign diplomatic missions of Ukraine shall monitor the trade barriers applied by the WTO members with respect to Ukraine. Having the relevant violations been detected, the Ministry shall be notified within five business days in order to subsequently initiate the relevant procedures and address the violations|2|.
Just to remind: in the 20 years since the WTO was established, more than 500 disputes have been brought to the WTO. Moreover, according to the statistics, the average dispute covers 162 claims challenging 22 restrictive measures. At the moment, 102 of 162 WTO Members (63 per cent have participated in the WTO dispute settlement system. A large number of disputes resolved under the auspices the WTO as well as the active position of the states are caused by significant business interest behind each WTO dispute. Therefore, the Regulation is of great practical importance for the business, since it not only eliminates the obstacles to the protection of interests of domestic producers from trade barriers by virtue of the WTO mechanisms, but also regulates the mechanism of interaction between the state authorities and business. Moreover, it provides for the confidentiality warranties as to sensitive information, provided for by business in terms of such procedures.
ON 18 MAY THE OFFICIAL PROCEDURE OF ACCESSION OF UKRAINE TO THE WORLD TRADE ORGANIZATION AGREEMENT ON GOVERNMENT PROCUREMENT WAS COMPLETED
On 18 May 2016, the official procedure of accession of Ukraine to the WTO Agreement on Government Procurement (the “GPA”) was completed. From that date, Ukrainian companies are entitled to participate in government procurement of 45 Member States of the GPA, which, in particular, include: the EU member states, Japan, the USA, Korea, Taiwan, Singapore, Hong Kong and Canada. Thus, the Ukrainian companies gain access to the WTO government procurement market, the total volume of which is estimated at USD 1.7 billion annually, which in more than 30 times exceeds the volume of Ukrainian export in 2014.
The GPA is founded and functions on the basis of the key WTO principle – non-discrimination and equal access to markets. Thus, the foreigners will be granted full access to Ukrainian state tenders, as well as the Ukrainians – to foreign state tenders.
As from the beginning of 2016, the Ministry has been conducting active explanatory work with business representatives regarding the possibilities available within the framework of the GPA. Furthermore, as from January, the Ministry has launched the pioneering project supporting Ukrainian companies, which are planning to participate in a foreign tender for the first time|3|.
UKRAINE URGES THE MEMBER STATES OF THE EURASIAN ECONOMIC UNION TO STOP SYSTEMATIC VIOLATIONS OF THE WTO RULES IN TERMS OF ANTI-DUMPING INVESTIGATIONS
From 25 to 28 April 2016, the meetings of the WTO Committees on trade measures were held at the WTO Secretariat, where the Ukrainian delegation paid particular attention to the meeting of the WTO Committee on anti-dumping practices. Ukraine took advantage of the opportunity to raise a number of important matters regarding the conduct of anti-dumping investigations by the Eurasian Economic Union (the “EAEU”), the four members whereof are the WTO Members, namely Armenia, Kazakhstan, Kyrgyzstan and Russian Federation.
Ukraine drew the attention of the WTO Member States to systematic violation by the EAEU of the WTO rules in terms of anti-dumping investigations, leading to the imposition of legally and economically unjustified restrictions on the access to markets of five countries (including Belarus) for Ukrainian goods. In particular, the Ukrainian delegation reported that the anti-dumping investigations concerning the import in the EAEU customs territory of bars, ferrosilicon manganese and steel tubes originating in Ukraine were conducted in violation of the WTO Agreement on Implementation of Article VI of the GATT, and the GATT itself. In terms of the meeting the representatives of the EAEU Member States provided no explanations regarding matters raised by Ukraine, and informed that written responses would be submitted at the nearest time.
Moreover, in terms of the meeting Ukraine appealed to Pakistan regarding the anti-dumping investigation concerning cold rolled stock, originating, in particular, in Ukraine, emphasizing unlawfulness of Pakistan’s provisional anti-dumping measures. Furthermore, in terms of the work of the WTO Committee on safeguard measures, the Ukraine’s delegation addressed to the Republic of India a series of questions concerning the conduct of the safeguard investigations and their non-compliance with the focal provisions of the WTO agreements, requesting India to cancel the restrictions imposed and forgo the application of safeguard measures based not on facts, but on calculation of forecasted indicators|4|.
REGIONAL TRADE LIBERALIZATION
UKRAINE IS READY TO SIGN THE FREE TRADE AGREEMENT WITH TURKEY
It has been known that on 9 March 2016 the President of Turkey Recep Tayyip Erdogan and the President of Ukraine Petro Poroshenko agreed to sign the free trade agreement till the end of 2016.
Turkey is the third largest economic partner of Ukraine in terms of goods turnover volume. Moreover, for Ukraine Turkey ranks on second place in terms of export volume, and for Turkey Ukraine ranks on twelfth place in terms of import volume. Along with that, the annual positive balance for the last five years constitutes approximately USD 2 billion. Ukraine’s principal exported goods are steel, foodstuffs, chemical products, wood-processing products. Turkey exports into Ukraine foodstuffs, consumer industry products, chemical products|5|.
Furthermore, Ukraine intensifies its cooperation with Turkey in the field of technical regulation of standardization, metrology, conformity assessment and consumer protection. The Deputy Minister of Economic Development and Trade of Ukraine Maxim Nefyodov already signed the programme of implementation of the respective Memorandum as concluded between the Cabinet of Ministers of Ukraine and the Government of the Turkish Republic (the “Implementation programme”).
The Implementation programme is designed for 2016-2018 and is aimed at further development of cooperation with Turkey in the field of technical regulation, in particular – establishment of cooperation between specialized organizations in the sphere of metrology and its expansion in terms of participation in international and European standardizing organizations. Moreover, the Implementation programme provides for prospects of conducting joint workshops concerning the implementation of European technical legislation, and conformity assessment procedures. This is particularly important in terms of current negotiating process between Ukraine and the EU as to the conclusion of the Agreement on Conformity Assessment and Acceptance of Industrial Products|6|.
UKRAINE IS PREPARING FOR A NEW ROUND OF NEGOTIATIONS WITH ISRAEL CONCERNING THE FREE TRADE AGREEMENT
According to the Deputy Minister of Economic Development and Trade of Ukraine – the Trade Representative of Ukraine Nataliya Mykolska, Ukraine’s priorities include the free trade agreements with Canada, Turkey and Israel. That is why the negotiations on free trade area with Serbia have been suspended|7|. Currently, Ukraine is preparing for a new round of negotiations with Israel concerning the free trade agreement. Particular attention is given to the prospects of supplies of Ukrainian beef to Israel|8|. It should be noted that Israel ranks on the fifteenth place from among the countries, with which Ukraine has the largest goods turnover|9|.
UKRAINE HAS CONDUCTED THE BILATERAL CONSULTATIONS WITH MOLDOVA CONCENRNG THE INTRODUCTION OF QUOTAS AND IMPORT DUTIES ON CERTAIN TYPES OF UKRAINIAN GOODS
The Ukrainian delegation took part in the bilateral consultations at the expert level in connection with the withdrawal by the Republic of Moldova of certain types of Ukrainian goods from the free trade mode in terms of the CIS Free Trade Area Agreement, as well as introduction of quotas and import duties. The consultations were held in accordance with the agreements reached in the course of the telephone conversation between the First Deputy Prime Minister – Minister of Economic Development and Trade of Ukraine Stepan Kubiv, and the Vice Prime Minister – Minister of Economy of Moldova Octavian Kalmyk|10|.
It should be noted that the Decree of the Government of Moldova dated 6 May 2016 No. 576 “On Introduction of Trade Measures on Protection of the Domestic Market” (the “Decree”), imposing tariff quotas on certain categories of goods originating in Ukraine entered into force on 13 May 2016.
TRADE DEFENCE MEASURES
THE RUSSIAN FEDERATION EXTENDS THE FOOD EMBARGO
The President of the Russian Federation (the "RF") Volodymyr Putin signed a decree on the extension of the food embargo until 31 December 2017.
Just to remind: on 1 January 2016 the RF introduced the duties on the goods originating in Ukraine within the most favoured nation regime instead of the preferential regime, which was in force until 31 December 2015. The standard customs duties provided in accordance with the EEU Unified Customs Tariff are applied to all groups of Ukrainian goods instead of zero rates that had been applied before. In addition, the RF introduced a ban (embargo) on Ukrainian imports into the territory of the RF in respect of certain agricultural products, raw materials and food. The prohibited products include such categories as meat, poultry, fish, milk, vegetables, fruits and nuts|11|.
In response to the Russian ban, Ukraine introduced embargo on certain goods from the RF, effective from 10 January to 5 August 2016. The embargo was introduced with respect to the following products: meat, fish, some dairy products, processed cheese, coffee, tea, food mixes, confectionery and bakery products, baby food, pasta products, sauces; flavorings and spices, beer, alcohol, vodka, dog food, cigarettes with filter|12|.
UKRAINE INITIATED THE ANTI-DUMPING INVESTIGATION AGAINST IMPORT INTO UKRAINE OF SOME KINDS OF CHOCOLATE AND OTHER PROCESSED FOOD PRODUCTS CONTAINING COCOA FROM THE RUSSIAN FEDERATION
According to the Decision of the Interdepartmental Commission on International Trade "On Initiation and Conduct of the Anti-Dumping Investigation Against Import into Ukraine of Certain Kinds of Chocolate and Other Processed Food Products Containing Cocoa from the Russian Federation" No. АД-357/2016/4411-05 dated 26 May 2016, Ukraine initiated the anti-dumping investigation against import of the goods with the following description: chocolate and other processed foods products containing cocoa classified under the codes 1806 31 00 00, 1806 90 11 00, 1806 90 19 00 і 1806 90 50 00in accordance with the Ukrainian Commodity Classification for Foreign Economic Activity (the “UCCFEA”). The country of origin of the goods is the Russian Federation.|13|
The investigation was initiated at the request of the association "Ukrkondprom", acting on behalf of the confectionary corporation Roshen, the PJSC "Kharkiv Biscuit Factory", the PJSC "Confectionary Factory "Kharkivyanka"|14| and the PJSC "Poltavakondyter"|15|.
UKRAINE EXTENDED THE ANTI-DUMPING INVESTIGATION AFAINST IMPORTS IN UKRAINE OF CERTAIN NITROGEN FERTILISERS ORGINIATING FROM THE RUSSIAN FEDERATION
By Decision No. АД – 358/2016/4411-05 dated 09 June 2016, the Interdepartmental Commission on International Trade extended the term of the anti-dumping investigation against import into Ukraine of certain nitrogen fertilizers originating from the Russian Federation, initiated in accordance with the Decision of the Interdepartmental Commission on International Trade "On Initiation and Conduct of the Anti-Dumping Investigation Against Import into Ukraine of Certain Nitrogen Fertilizers Originating from the Russian Federation" No. AD-331/2015/4442-06 dated 23 June for 15 months|16|.
Just to remind: According to the Decision of the Interdepartmental Commission on International Trade "On Initiation and Conduct of the Anti-Dumping Investigation Against Import into Ukraine of Certain Nitrogen Fertilizers Originating from the Russian Federation" No. AD-331/2015/4442-06 dated 23 June 2015, Ukraine initiated the anti-dumping investigation against import of urea and ammonium nitrate in hydrous and ammonia solutions, classified under codes 310210 and 3102800000 in accordance with the UCCFEA. The country of origin is the Russian Federation.
UKRAINE APPLIED DEFINITIVE ANTI-DUMPING MEASURES AGAINST IMPORT OF SODIUM HYDRATE FROM THE RUSSIAN FEDERATION INTO UKRAINE
By Decision "On Application of the Definitive Anti-Dumping Measures against Import of Sodium Hydrate from the Russian Federation into Ukraine" No. АД – 355/2016/4411-05 dated 28 April 2016, the Interdepartmental Commission on International Trade applied the definitive anti-dumping measures against import of sodium hydrate into Ukraine, which have the following description: Sodium Hydroxide (Sodium Hydrate) in hydrous solutions (hydrous tin of sodium hydrate), received through the diaphragm method with the mass part of the chloride (chloride) natrium not less than 2.0%, originating from the Russian Federation classified the code 2815 12 00 10 in accordance with the UCCFEA|17|.
The definitive anti-dumping measures were applied in the form of the definitive anti-dumping duty in the amount of 26% for the period of five years.
Just to remind: On 3 November 2014, the Interdepartmental Commission on International Trade adopted the decision No. АД-324/2014/4421-06 “On Initiation and Conduct of the Antidumping Investigation against Import into Ukraine of Sodium Hydrate Originating from the Russian Federation” which entered into force on 7 November 2014. The investigation was initiated at the request of the PJSC “Dniproazot”.
EURASIAN ECONOMIC COMMISSION EXTENDED THE ANTI-DUMPING MEASURES AGAINST CERTAIN TYPES OF STEEL PIPES ORIGINATING FROM UKRAINE
According to the Notification of the Department for Internal Market Defense of the Eurasian Economic Commission "On Completion of the Sunset Review of Anti-Dumping Measures Against Certain Types of Steel Pipes Originating from Ukraine" dated 2 June 2016, the sunset review of anti-dumping measures against import of casing pipes, tubing pipes as well as oil line pipes, gas line pipes and hot-deformed conventional pipes with diameter up to 820 mm classified under the codes 7304, 7305 and 7306 according to the Foreign Economic Activity Commodity Nomenclature of the EAEU was completed. The sunset review was initiated following the expiry of the previous anti-dumping measures. As the result of the sunset review, the anti-dumping measures were extended until 1 June 2021|18|.
Just to remind: According to the Decision of the Commission of Customs Union "On Measures for Protection of the Economic Interests of Producers of Certain Types of Steel Pipes in the Customs Union" No. 702 dated 22 June 2011, the previous anti-dumping measures were imposed until 18 November 2015 inclusive at the following rates:
- casing pipes – 18.9 per cent;
- tubing pipes – 19.9 per cent;
- oil line pipes, gas line pipes and hot – deformed conventional pipes with a diameter up to 820 mm – from 19.4 per cent to 37.8 per cent.
ANTI-DUMPING DUTY IMPOSED ON FERROSILICON MARGANESE FROM UKRAINE
Pursuant to the Notification of theDepartment for Internal Market Defense of the Eurasian Economic Commission "On Completion of the Anti-Dumping Investigation on the Ferrosilicon Manganese Originating from Ukraine", the Council of the Eurasian Economic Commission decided on 2 June 2016 to apply anti-dumping duty for the period of five years to ferrosilicon manganese originating from Ukraine and imported into the customs territory of the EEU in the amount of 26,35 per centfrom the customs value of the goods|19|.
DEFINITIVE DECISION ADOPTED UPON THE RESULTS OF THE COMPENSATORY INVESTIGATION ON FERROSILICON MANGANESE FROM UKRAINE
In accordance with the Conclusion of the Department for Internal Market Defense of the Eurasian Economic Commission, published on 24 June 2016, there are no grounds for the application of the compensatory measures to ferrosilicon manganese originating from Ukraine|20|.
Just to remind: The compensatory investigation was initiated on 26 December 2014 upon the request of the OJSC "Chelyabinskyy electrometallurgical plant".
THE GOVERNMENT HAS MADE REAL STEPS THAT WILL SECURE THE PRICE REDUCTION AND INCREASE THE QUALITY OF THE PHARMACEUTICALS
On 31 May 2016 the Law of Ukraine "On Amendments to Article 9 of the Law of Ukraine "On Pharmaceuticals" (the "Law") was adopted, which came into force on 19 June 2016|21|.
The law provides for:
- shortening of the decision-making process for registration of a pharmaceutical by the Ministry of Health of Ukraine to ten working days ("Ministry");
- definition that the state registration of a pharmaceutical containing an active substance not listed in the State Register of Pharmaceuticals of Ukraine, which is registered by the competent authority of the United States, Switzerland, Australia, Canada or the EU member and included in the guidelines for the treatment or rules of these countries shall be conducted under the simplified procedure (shortened list of documents as well as limited examination period – up to twenty days; the decision-making process by the Ministry shall take up to seven days|22|.
COMMENCEMENT OF THE FORMATION OF THE TERRITORIAL BODIES OF THE STATE SERVICE OF UKRAINE ON PHARMASEUTICALS AND DRUG CONTROL
The Regulation of the Cabinet of Ministers of Ukraine"On Establishment of Territorial Bodies of the State Service of Ukraine on Pharmaceuticals and Drug Control" No. 355 dated 1 June 2016 (the "Resolution")|23| provides for the formation of the territorial bodies of the State Service of Ukraine on Pharmaceuticals and Drug Control (the “State Service”). The Resolution also approves the list of the territorial bodies that will be created in the course of this reorganization.
These bodies shall be the successors of the territorial bodies of the State Service, which will be terminated, and, at the same time, will continue to perform their duties until the transfer of such duties to the territorial bodies of the State Service of Ukraine on Pharmaceuticals and Drug Control. In the meantime, the territorial bodies in the city of Sevastopol, Kherson region and the Autonomous Republic of Crimea will be reorganized into one territorial body of the State Service of Ukraine on Pharmaceuticals and Drug Control in the Kherson region. In addition, the Resolution provides for the elimination of interregional territorial bodies of the State Service of Ukraine on Pharmaceuticals and Drug Control as structural units thereof, including: interregional division of the Autonomous Republic of Crimea as well as Vinnytsia and Dnipropetrovsk interregional divisions|24|.
APPROVAL OF THE NOMENCLATURE OF THE IMMUNOLOGICAL PRODUCTS TO BE PROCURED IN 2016
In accordance with the Order of the Ministry of Health of Ukraine "On Approval of the Nomenclature of Pharmaceuticals to Be Procured for Public Funds with the Aim of the Implementation of the National Target Programs and Comprehensive Measures of the Systematic Nature in 2016" No. 504 dated 2 June 2016 (the "Order")|25|, the Ministry of Health of Ukraine has approved the nomenclature of the pharmaceuticals within the group of the “Centralized purchase of the immunological products", which contains 13 items of products, including vaccines for treatment of rabies; polio; tuberculosis; whooping cough, diphtheria and tetanus; Hepatitis B in case of the children etc.
In 2015 these vaccines were purchased by the UN Children's Fund (the “UNICEF"), with which the Ministry of Health of Ukraine signed the Memorandum on the Procurement Services dated 12 October 2015. On 14 April 2016 the first batch of vaccines and antiretroviral products was received in Ukraine|26| with the remaining part of the products being scheduled for supply by the end of November 2016|27|.
AGRICULTURE, FOOD INDUSTRY
GOVERNMENT HAS DEVELOPED THE CONCEPT OF THE NUT INDUSTRY DEVELOPMENT
The Ministry of Agrarian Policy and Food of Ukraine jointly with the Ukrainian Nut Association developed the concept of nut industry development in Ukraine. According to the document, in 2025 Ukraine plans to increase the area of industrial nut orchards to 25 thousand hectares and to plant shelterbelts of the nut plants on the total area of 10 thousand hectares. It is also noted that the special fund of the industry to be formed by means of 2 per cent levy of the value of the nuts exports, derived products and the wood may be an important source of investment|28|.
FIFTEEN REGIONAL CENTERS ON BUSINESS SUPPORT WILL BE ESTABLISHED IN UKRAINE
In terms of presentation of the EU programme ”EU4BUSINESS” between the EU and the European Bank for Reconstruction and Development (the “EBRD”) the Agreement on Establishment of 15 Centers on Support to the Small and Medium Business in the Regions of Ukraine was signed. The first business support centers are already operating in Lviv and Kyiv. Similar centers will be soon established in Odessa, Ivano-Frankivsk, Rivne, Khmelnytskyy, Vinnytsia, Chernihiv, Mykolayiv, Kirovohrad, Poltava, Dnipro, Kramatorsk and Zaporizhzhia.
The centers will be established on the basis of civil and business associations already operating in the regions, which will by selected by the EBRD experts in the course of an open and transparent tender|29|.
THE MINISTRY OF ECONOMIC DECELOPMENT AND TRADE OF UKRAINE HAS IMPLEMENTED THE INTERNATIONAL QUALITY STANDARDS IN THE SPHERE OF TOURISM
During the joint meeting of the Ministry with the heads of the technical standardization committees as well as the SE "UkrNDNC" an agreement was reached on the implementation into the national standardization plan of the list of basic international standards in the field of tourism. The Ukrainian standards will be implemented by adapting the ISO standards to the national legislation|30|.
The approved standards establish the requirements to the tourist information offices, operation of the tourist services in the environmentally protected areas, management of adventure tourism and ecotourism, as well as professional training and qualification programs for guides|31|.