International trade 2023
Law and Practice
1. Trade Agreements
1.1 World Trade Organization Membership or Plurilateral Agreements
Ukraine joined the WTO on 16 May 2008. It is a party to the Marrakesh Agreement establishing the World Trade Organization (the “WTO Agreement”) and all multilateral agreements included in the annexes thereto, including the Trade Facilitation Agreement. In 2016, Ukraine joined the Government Procurement Agreement, a WTO plurilateral agreement.
Since 2020, Ukraine has been participating in a Multi-Party Interim Appeal Arbitration Arrangement under Article 25 of the DSU (MPIA), a dispute settlement procedure agreed upon by WTO members to secure an appeal mechanism among the parties to this arrangement until the WTO Appellate Body becomes operational.
1.2 Free Trade Agreements
Ukraine is currently a party to 18 free trade agreements (FTAs) covering 47 states, in particular:
- the UK–Ukraine FTA (entered into force on 1 January 2021);
- the Ukraine–Israel FTA (entered into force on 1 January 2021);
- the EU–Ukraine FTA within the framework of the EU–Ukraine Association Agreement (entered into force on 1 September 2017 and has applied provisionally since 1 January 2016);
- the Canada–Ukraine FTA (entered into force on 1 August 2017);
- the Ukraine–Montenegro FTA (entered into force on 1 January 2013);
- the Commonwealth of Independent States (CIS) FTA (entered into force on 20 September 2012), which was concluded by Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Moldova, the Russian Federation, Tajikistan, Ukraine and Uzbekistan; the application of the CIS FTA to trade relations between Ukraine and the Russian Federation has been suspended since 1 January 2016;
- the EFTA–Ukraine FTA (entered into force on 1 June 2012);
- the Ukraine–Macedonia FTA (entered into force on 5 July 2001);
- the Ukraine–Azerbaijan FTA (entered into force on 26 August 1996);
- the Ukraine–Georgia FTA (entered into force on 4 June 1996); and
- the Ukraine–Turkmenistan FTA (entered into force on 4 November 1995).
In the early 1990s, before the CIS FTA, Ukraine had concluded bilateral FTAs with seven CIS member states (Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Moldova, Tajikistan, and Uzbekistan). These FTAs are still in force and should be terminated.
Most of the FTAs to which Ukraine is a party are bilateral agreements, except for the CIS FTA, which is plurilateral. All existing Ukrainian FTAs can be subdivided into two broad categories: “old generation” FTAs and “new generation” FTAs.
“Old generation” FTAs (namely, bilateral FTAs with the CIS member states and with Georgia, Azerbaijan, Turkmenistan and Macedonia) were concluded before Ukraine acceded to the WTO and have the following distinctive features:
- the scope of their coverage is limited to goods only;
- these agreements are primarily focused on trade in goods and the elimination of import duties;
- they are drafted in a very general manner, often lacking sufficient specification for effective implementation;
- the respective agreements lack detailed dispute settlement rules (almost all FTAs stipulate only bilateral consultation mechanisms for addressing all disputes); and
- the agreements provide for full liberalisation in trade in goods. Even though they do not directly stipulate any exceptions from the full liberalisation, in practice, such exceptions have been agreed upon by the parties in separate protocols (usually adopted at the level of governments), which have often been revised or suspended fully or partially. Thus, in practice, because of this non-systematic approach, it is hardly possible to identify the complete list of effective exceptions.
“New generation” FTAs (including the UK–Ukraine FTA, the Ukraine–Israel FTA, the EU–Ukraine FTA, the Canada–Ukraine FTA, the EFTA–Ukraine FTA, the CIS FTA and the Ukraine–Montenegro FTA) have been concluded by Ukraine in the past ten years and were built on the existing framework of WTO commitments and obligations, often going beyond them. The scope of coverage of such agreements is wider and, depending on the agreement, covers areas such as trade in services, intellectual property, investment, government procurement, trade facilitation, e-commerce, competition, movement of capital, labour and dispute settlement mechanisms. Moreover, such agreements contain specific rules and procedures that allow for meaningful operation of the free trade areas (eg, extensive rules of origin, cumulation mechanisms, notification procedures, and detailed dispute settlement mechanisms). “New generation” FTAs also tend to contain detailed schedules of concessions indicating the level of liberalisation to be provided on a code-by-code basis.
1.3 Other Trade Agreements
In 2018, Ukraine joined the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (the “Pan-Euro-Med Convention”), which established common rules of origin among the countries with which the EU had FTAs and customs unions and allowed for the application of diagonal cumulation between the Pan-Euro-Med members.
In addition, Ukraine currently benefits from the Generalised System of Preferences (GSP) schemes of Japan and Canada.
The Japanese GSP Scheme covers 3,715 products (424 agricultural items and 3,291 industrial items). Agricultural items are subject to various tariff reductions, including duty-free treatment. Most industrial products are given duty-free treatment. The current GSP Scheme is effective until 31 March 2031.
Ukraine is also among the beneficiaries of the Canadian GSP Scheme, under which the applicable rates range from duty-free rates to reductions of the general most-favoured nation (MFN) rates. Certain products are excluded from the Scheme, such as chemicals, textiles and apparel. According to the current version of the Canadian Customs Tariff, sections related to the general preferential tariff (applied under the GSP Scheme) are valid until 31 December 2024. GSP preferences are operating in parallel with the Canada–Ukraine FTA that entered into force in 2017.
Ukraine is also listed as a beneficiary under the US GSP Scheme; however, the US GSP Scheme expired on 31 December 2020. Although the US GSP Scheme has not yet been renewed, such renewal is envisaged by both the Senate’s US Innovation and Competition Act and the House’s America COMPETES Act.
In response to the war, some Ukrainian trading partners have granted additional tariff preferences for Ukrainian exports, namely:
- commencing 4 June 2022, for a period of twelve months, the EU has unilaterally suspended import tariffs, entry price system, tariff quotas, anti-dumping and safeguard duties (Regulation (EU) 2022/870 of the European Parliament and of the Council of 30 May 2022 on temporary trade-liberalisation measures supplementing trade concessions applicable to Ukrainian products);
- commencing 9 June 2022, for a period of twelve months, Canada has unilaterally suspended customs duties, anti-dumping, safeguard, and countervailing measures (Customs Notice 22-12: Ukraine Goods Remission Order);
- commencing 8 July 2022, for a period of twelve months, the UK has suspended import tariffs (Agreement No 1 in the form of an exchange of letters between Ukraine and the United Kingdom of Great Britain and Northern Ireland on amendments to the Agreement on Political Co-operation, Free Trade and Strategic Partnership between Ukraine and the United Kingdom of Great Britain and Northern Ireland);
- commencing 4 July 2022, for a period of twelve months, Australia has suspended import tariffs (Australian Customs Notice No 2022/32);
- from 1 June 2022 until 1 June 2023, the US has suspended an additional 25% ad valorem duty applied to steel products (Proclamation: Adjusting Imports of Steel into the United States No 10403).
1.4 Future Trade Agreements
On 3 February 2022, Ukraine signed the FTA with Turkey. Now the ratification of the FTA by both parties is expected.
Ukraine is currently negotiating amendments to the effective FTAs with some trading partners. In particular, Ukraine has agreed with Moldova to replace current rules of origin with those set by the Pan-Euro-Med Convention. Moreover, Ukraine has agreed with Macedonia to replace the current rules of origin with the rules applicable under the Pan-Euro-Med Convention and to set out some additional tariff preferences for Ukraine. Both arrangements are pending ratification. Moreover, the Government of Ukraine has announced that other negotiations are currently being conducted, eg, on the inclusion of trade in services chapter into the FTA with Canada, the FTA with the United Arab Emirates and the Digital Trade Agreement with the UK.
1.5 Key Developments Regarding Trade Agreements
Given the losses caused by the war, Ukraine is trying to reach arrangements (at least temporarily) for the fullest trade liberalisation possible. This is important to ensure the vitality of Ukrainian exports, which are especially crucial for the Ukrainian economy in the current circumstances. Since the Ukrainian market has considerably decreased, exports could be the only viable option for ensuring work for Ukrainian enterprises.
1.6 Pending Changes to Trade Agreements
In June 2022, Ukraine was granted EU candidate status. After fulfilling the required conditions by the end of this year, Ukraine will start negotiations on its membership with the EU. This process will result in considerable amendments to the current legal environment in Ukraine, including in the trade-related field.
2.1 Authorities Governing Customs
The primary legal act regulating customs matters in Ukraine is the Customs Code of Ukraine No 4495-VI dated 13 March 2012.
2.2 Enforcement Agencies Enforcing Customs Regulations
The State Customs Service of Ukraine administers and enforces customs laws and regulations in Ukraine. It is responsible for the following in particular:
- the control and supervision of compliance with the customs laws and regulations within the territory of Ukraine;
- customs clearance;
- the control of goods crossing the border;
- the administration of customs duties and related payments; and
- the administration of customs statistics, etc.
2.3 Legal Instruments
Under Article 29 of the Law “On Foreign Economic Activity” No 959-XII dated 16 April 1991 (the “Foreign Economic Activity Law”), Ukraine may introduce trade restrictions in response to discriminative or unfriendly actions by a state that is not a WTO member (anti-discriminative measures).
Ukrainian legislation does not provide for an exhaustive list of discriminative or unfriendly actions that may lead to the imposition of anti-discriminative measures. The Foreign Economic Activity Law states only that actions limiting legal rights and interests and deteriorating the position of Ukrainian entities engaged in foreign economic activities compared to foreign entities are considered discriminative.
Anti-discriminative measures are imposed by the Interdepartmental Commission on International Trade (the “Commission”) following an investigation conducted by the Ministry of Economy of Ukraine (the “Ministry”). The Commission is responsible for the key decisions during proceedings, while the Ministry is responsible for procedural issues. The procedure governing the anti-discriminative investigation is established by the Resolution of the Cabinet of Ministers of Ukraine No 2120 dated 22 November 1999.
An anti-discriminative investigation is initiated following the submission of an application by an entity engaged in foreign economic activities or an executive agency. Within 60 days of receiving the application, the Ministry must conduct an anti-discriminative investigation to determine the existence of discriminative or unfriendly actions that are causing injury or a threat thereof to the state and/or Ukrainian entities engaged in foreign economic activities.
Based on the results of an anti-discriminative investigation, the Ministry drafts a report with the relevant recommendations and submits it to the Commission on the decision to be adopted.
According to Article 29 of the Foreign Economic Activity Law, anti-discriminative measures can be introduced in the following forms:
- full or partial bans on trade;
- termination of trade preferences;
- licensing of foreign economic operations;
- safeguard duties; and
- other measures envisaged by domestic legislation and international treaties.
Ukraine has recently applied several anti-discriminative measures against Belarus.
See 5. Anti-dumping and Countervailing (AD/CVD) for the discussion related to safeguard measures.
2.4 Key Developments in Customs Measures
On 31 August 2022, Ukraine adopted the Law of Ukraine “On Joining the Convention on the Common Transit Procedure”, allowing the movement of goods between 35 countries: EU member states, European Free Trade Association (EFTA) countries, Turkey, Northern Macedonia and Serbia. The said Convention has entered into force for Ukraine since 1 October 2022.
As a result of the war, Ukraine has adopted many different regulations, including in the field of customs. For instance, from April until the end of June 2022, Ukraine suspended the application of import tariffs for nearly all products, except for ethyl alcohol and other alcoholic distillate, alcoholic beverages, beer (except kvass “live fermentation”), tobacco, tobacco products, industrial tobacco substitutes and liquids used in electronic cigarettes. The said elimination of duties has not applied to goods originating in or imported from a country recognised as the occupying power and/or the aggressor state in respect of Ukraine. However, since 1 July 2022, all import duties have been returned, except for products imported for humanitarian purposes.
Moreover, at the beginning of the war, Ukraine simplified many non-tariff requirements, eg, in part of tariff barriers, sanitary and phytosanitary measures. However, starting from the beginning of September 2022, Ukraine has returned certain non-tariff requirements. Therefore, it is crucial to constantly monitor relevant amendments.
2.5 Pending Changes to Customs Measures
Taking into account that in June 2022 Ukraine was granted EU candidate status, the completion of the harmonisation of Ukrainian customs regulation with the EU legislation, primarily the EU Customs Code, will be the key development in the customs field.
3.1 Sanctions Regime
Sanctions are applied in Ukraine based on the Law “On Sanctions” No 1644-VII dated 14 August 2014 (the “Sanctions Law”).
According to the Sanctions Law, sanctions can be imposed on the following matters:
- actions of a foreign country, a legal entity, an individual or other actors that:
- create a real or potential threat to the national interests, security, sovereignty and territorial integrity of Ukraine;
- contribute to terrorist activity and/or violate the rights and freedoms of Ukrainian individuals and citizens or the interests of society and the state;
- lead to the occupation of Ukrainian territory, the expropriation or restriction of property rights, damage to property, or the obstruction of sustainable economic development or the full exercise by citizens of Ukraine of their rights and freedoms; or
- execute any such actions in relation to any other country, its legal entities or citizens;
- resolutions of the UN General Assembly and Security Council;
- resolutions and regulations of the EU Council; and
- violations of the UN Universal Declaration of Human Rights 1948 and the UN Charter.
The list of sanctions that can be imposed under the Sanctions Law includes:
- asset freezing;
- confiscation of assets into the property of the state;
- limitation of trading operations;
- restrictions and full or partial termination of recourse transit, flights and transportation through the territory of Ukraine;
- bans on the export of capital from the territory of Ukraine;
- suspension of economic and financial transactions;
- annulment or suspension of permits and licences to carry out particular economic activities;
- prohibition on technology and IP rights transfers;
- prohibition against participating in privatisation and rent of state property;
- prohibition against participating in public procurement;
- full or partial prohibition against concluding agreements in respect of securities belonging to persons subject to sanctions;
- prohibition against increasing the size of the authorised capital of legal entities;
- introduction of additional measures in the field of ecological, sanitary, phytosanitary and veterinary control;
- termination of trade agreements, joint projects and industrial programmes;
- refusal to grant or terminate visas;
- termination of international treaties; and
- other trade-restrictive measures.
As a result of the war, in addition to sanctions, Ukraine has introduced many other restrictions applicable to Russia and Belarus. For instance, the Law of Ukraine “On Major Principles of Confiscation in Ukraine of Objects of Property Rights of the Russian Federation and its Residents” No 2116-IX dated 3 March 2022 enables confiscation of property belonging to the Russian Federation and its residents in favour of the Ukrainian state. One more example is the Law of Ukraine “On amending the Law of Ukraine ‘On Medicines’ regarding limiting the circulation of medicines whose production is located on the territory of the Russian Federation or the Republic of Belarus” of 22 May 2022 No 2271-IX. Law No 2271-IX permits refusal of the registration of medicines or termination of the issued registration certificates of medicines if any stage of production of such medicines is performed on territory within the Russian Federation or Belarus.
3.2 Legal or Administrative Authorities Imposing Sanctions
As the primary legal act governing sanctions in Ukraine, the Sanctions Law sets out the general conditions under which sanctions may be imposed and the types of sanctions, designates the persons against whom sanctions may be imposed, and so on.
Decisions to introduce, abolish and/or amend sanctions are enacted by decrees of the President of Ukraine.
3.3 Government Agencies Enforcing the Sanctions Regime
The National Security and Defence Council of Ukraine (NSDCU) is responsible for administering and enforcing sanctions in Ukraine.
The initiative to impose sanctions under the Sanctions Law can be taken by the Parliament of Ukraine, the President of Ukraine, the Government of Ukraine, the National Bank of Ukraine, and the Security Service of Ukraine. Notably, to ensure the sanctions’ efficiency in the course of the war, the Interdepartmental working group for the performance of state sanction policy has been created by the Resolution of the Cabinet of Ministers of Ukraine No 967 of 30 August 2022. The major role of the working group is to monitor the efficiency of the sanctions applied and suggest sanctions to be applied. Based on these proposals, the NSDCU adopts decisions to introduce, abolish and/or amend sanctions; these decisions are enacted by decrees of the President of Ukraine.
3.4 Persons Subject to Sanctions Laws and Regulations
The Sanctions Law distinguishes between Personal Sanctions and Sectoral Sanctions. Personal Sanctions may be introduced, inter alia, against a foreign country, foreign citizens, foreign legal entities and entities engaged in terrorist activities. Sectoral Sanctions may be imposed on an unlimited number of persons who conduct certain types of activities. No Sectoral Sanctions have yet been introduced in Ukraine.
3.5 List of Sanctioned Persons
From October 2021, the information on sanctions imposed in Ukraine is consolidated in the “List of Individuals and Legal Entities to whom Sanctions (Restrictive Measures) are Applied”, which is available at sanctions-t.rnbo.gov.ua. The NSDCU administers this database based on the decrees of the President of Ukraine.
In response to the full-scale Russian invasion of the territory of Ukraine, a new database of sanctions has been introduced – sanctions.nazk.gov.ua. This database is a unified resource, providing information on (i) the natural persons and legal persons upon whom sanctions have already been imposed by either the EU, the United Kingdom, the United States, Canada, Switzerland, Australia, Japan, New Zealand or Ukraine; and (ii) the natural persons and legal persons upon whom sanctions have not yet been imposed, but there are strong grounds for applying such sanctions. This database is a joint project of the National Agency on Corruption Prevention and the Ministry of Foreign Affairs of Ukraine. It is worth emphasising that there are currently (December 2022) many guidelines posted on the aforementioned website, explaining which individuals and legal entities the sanctions shall apply to.
3.6 Sanctions against Countries/Regions
Ukraine does not maintain any comprehensive country-based or region-based sanctions. It has introduced personal sanctions against many persons and entities related to the Russian Federation (residing/registered in various countries) but not against the country as such. In addition, certain comprehensive trade-restrictive measures have been imposed against products originating in the Russian Federation (see 3.7 Other Types of Sanctions).
3.7 Other Types of Sanctions
In addition to sanctions imposed under the Sanctions Law, trade restrictions may be introduced based on Article 29 of the Foreign Economic Activity Law. In particular, in response to discriminative or unfriendly actions by a state recognised by the Parliament of Ukraine as an aggressor and/or an occupier, the government of Ukraine is entitled to impose trade restrictions (retaliatory measures) against such state.
The respective restrictions can be introduced in the following forms:
- full or partial bans on trade;
- termination of trade preferences;
- licensing of foreign economic operations;
- safeguard duties; and
- other measures envisaged by domestic legislation and international treaties.
Since 2016, and based on Article 29 of the Foreign Economic Activity Law, the Cabinet of Ministers of Ukraine (CMU) has been introducing the following trade restrictions against the Russian Federation.
- The introduction of customs duties on all goods originating from the Russian Federation at the MFN rates envisaged by the Customs Tariff of Ukraine. Russia imposed the same restriction against goods originating in Ukraine. Thus, since 1 January 2016, the CIS FTA does not apply to trade relations between both countries, and the respective goods are not covered by a duty-free regime. The measure introduced by Ukraine is in force until 1 January 2023 and is likely to be extended for the next year (CMU Resolution “On Tariff Rates for Goods Originating from the Russian Federation” No 1146, dated 30 December 2015).
- The imposition of a ban on imports of certain goods originating from Russia. In particular, Ukraine has prohibited the import of certain agricultural and industrial products, alcoholic beverages, tobacco products, medicines, fertilisers, etc. The measure is applicable until 1 January 2023 and is likely to be extended for the next year (CMU Resolution “On the Ban on Import of Goods Originating from the Russian Federation into the Customs Territory of Ukraine” No 1147, dated 30 December 2015).
- The imposition of safeguard duties on imports into Ukraine of diesel fuel, liquefied gas, petroleum and coal originating in Russia. The measure is applicable until 31 December 2022 and is likely to be extended for the next year (CMU Resolution “On Application of Safeguard Duties to Imports of Certain Products with Origin in Russian Federation that are Imported into the Territory of Ukraine” No 719, dated 17 August 2020).
Since the commencement of the war, Ukraine has applied many different trade-related restrictions, namely:
- prohibition of imports of all products from the territory of the Russian Federation (CMU Resolution “On Application of Ban on Import of Goods from the Russian Federation” No 426, dated 9 April 2022);
- prohibition of export of all products from Ukraine to the Russian Federation (CMU Resolution “On Prohibition of Export of the Products from Ukraine onto the Customs Territory of the Russian Federation” No 1076, dated 27 September 2022);
- confiscation of property belonging to the Russian Federation (the Law of Ukraine “On Major Principles of Confiscation in Ukraine of Objects of Property Rights of the Russian Federation and its Residents” No 2116-IX dated 3 March 2022); and
- refusal to issue registration certificates or termination of the registration certificates of medicines if any stage of production of such medicines is performed on the territory of the Russian Federation and Belarus (the Law of Ukraine “On amending the Law of Ukraine ‘On Medicines’ regarding limiting the circulation of medicines whose production is located on the territory of the Russian Federation or the Republic of Belarus”), etc.
3.8 Secondary Sanctions
Ukraine does not impose secondary sanctions.
3.9 Penalties for Violations
Ukrainian laws and regulations do not provide for penalties for violating the Ukrainian Sanctions Law. At the same time, compliance with sanctions is strictly monitored by the state authorities and other agencies (including the Security Service of Ukraine, the State Customs Service of Ukraine, the National Bank of Ukraine, notaries and the state registrar).
In this regard, first, it is hardly possible to avoid compliance with the sanction regime within the jurisdiction of Ukraine. Second, in the case of any co-operation with sanctioned persons (eg, entering into business operations), the sanctions will most probably be applied against such co-operating persons.
3.10 Sanctions Licences
Sanctions licences are not available in Ukraine.
Although there are no specific legal acts regulating compliance standards with the Sanctions Law, compliance with sanctions is strictly monitored by the state authorities (including the Security Service of Ukraine and the State Customs Service of Ukraine).
3.12 Sanction Reporting Requirements
In the course of enforcement of the Sanctions Law, Ukrainian banks are requested, inter alia, to submit the following information to the National Bank of Ukraine:
- on balances of bank accounts of sanctioned persons (legal entities and private individuals);
- on attempts to conduct financial transactions by sanctioned persons or their representatives; and
- on attempts to conduct financial transactions for the benefit of sanctioned persons, etc (Resolution of the National Bank of Ukraine No 654, dated 1 October 2015).
3.13 Adherence to Third-Country Sanctions
Ukrainian law does not prohibit adherence to other jurisdictions’ sanctions. Moreover, Ukraine is currently taking steps to synchronise its sanctions with similar measures applied by the EU, the United Kingdom, the United States, Canada, Switzerland, Australia, Japan, and New Zealand. For these purposes, Ukraine has created a special site: sanctions.nazk.gov.ua.
3.14 Key Developments regarding Sanctions
The current sanctions regime was introduced in Ukraine in 2014 to respond to the annexation of Crimea and armed aggression in the Eastern part of Ukraine. Thus, during the first several years of the current sanction regime, sanctions were introduced in Ukraine mostly against Russian individuals or persons related to the events in Crimea and the Eastern part of Ukraine.
Since 2015, and until 24 February 2022, Ukraine has applied sanctions more actively than before. Particularly, sanctioned persons (legal entities and private individuals) were not only from the Russian Federation (as it was before) but also from Ukraine and many foreign countries (the British Virgin Islands, Estonia, Georgia, the UK, Cyprus, Finland, France, Hungary, Hong Kong, the Kyrgyz Republic, Lithuania, Luxembourg, Moldova, the Netherlands, Panama, Poland, Portugal, Russia, Singapore, Syria, Switzerland, the UAE and the USA). Several years ago, new sanctions were introduced two or three times per year. In contrast, about 20 decisions with sanction lists were enacted in 2021. Different enforcement authorities have started applying sanctions in practice more efficiently and more actively: eg, customs authorities refuse customs clearance declared by persons subject to sanctions, and notaries refuse to notarise translations involving persons covered by sanctions.
Since the beginning of the war, Ukraine has considerably revised its sanction policy. The sanctions have been defined by the President of Ukraine as one of the most important vectors of Ukraine’s external policy during the Russian aggression.
First of all, Ukraine has revised its sanction legislation to make it as practically efficient as possible.
Different Ukrainian authorities have started to apply sanctions more actively and efficiently. In particular, at the beginning of October 2022, Ukraine applied sanctions to about 3,800 persons and legal entities.
To apply sanctions more efficiently, Ukraine has even created a special Interdepartmental working group for the performance of the state sanction policy. This working group has already elaborated the concept of the state sanction policy soon to be approved by the NSDCU.
Moreover, a special site has been created –sanctions.nazk.gov.ua – to compile information on all sanctions applied in Ukraine and around the world, as well as on individuals and legal entities that could be subject to sanctions.
Another important trend is the application of such type of sanctions as confiscation of the property belonging to the Russian Federation, the residents of the Russian Federation and to the individuals and legal entities subject to sanctions. At the beginning of October 2022, Ukraine announced that about 900 different objects would be confiscated shortly.
3.15 Pending Changes to Sanction Regulations
Ukraine will apply more and more sanctions as well as other restrictions against individuals and legal entities somehow related to Russia and Belarus, and against individuals and legal entities facilitating the war, including those who have been directly financing the war to those who have been justifying the war. Moreover, more property of such individuals/legal entities will be confiscated in favour of Ukraine to further compensate for the damage caused by the war and to rebuild Ukraine.
4.1 Export Controls
Ukraine is a member of the following international export control regimes:
- the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies;
- the Missile Technology Control Regime;
- the Treaty on the Non-Proliferation of Nuclear Weapons; and
- the Australia Group.
To protect national security interests and ensure compliance with its international obligations, Ukraine maintains state control over international transfers of military and dual-use goods.
4.2 Administrative Authorities for Export Controls
The Law of Ukraine “On State Control over International Transfers of Military and Dual-Use Goods” No 549, dated 20 February 2003 (the “State Export Control Law”) is the primary legal act governing export control in Ukraine.
4.3 Government Agencies Enforcing Export Controls
The State Export Control Service is the authority responsible for state export control of military and dual-use goods.
4.4 Persons Subject to Export Controls
Persons exporting or importing products for military purposes and dual-use goods are subject to export controls.
4.5 Restricted Persons
Ukraine does not maintain a list of restricted persons.
4.6 Sensitive Exports
Ukrainian export controls regulate:
- military goods – the list of military goods is annexed to the Procedure for Exercising State Control over International Transfers of Military Goods, approved by CMU Resolution No 1807, dated 20 November 2003; and
- dual-use goods – the list of dual-use goods is annexed to the Procedure of State Control over International Transfers of Dual-Use Goods, approved by CMU Resolution No 86, dated 28 January 2004.
The above lists are compiled by the State Export Control Service and adopted by the government of Ukraine.
4.7 Other Export Controls
Depending on the nature of transactions and types of goods exported, special export procedures may apply, such as issuing export permits and conducting state inspections. Apart from military and dual-use goods, the respective export control procedures apply to goods of cultural value, drugs, psychotropic substances and their precursors etc.
In addition, the Law “On Currency and Operations Connected with Currency”, dated 21 June 2018, regulates foreign currency payments involving Ukrainian companies.
Depending on the nature of the violation, type of exported product, intention of the infringer and other factors, a violation of the export control regulations may lead to criminal, administrative and civil liability, including the imposition of fines and revocation/suspension of a permit for international transfers of military and dual-use goods, etc.
For example, the international transfer of goods without a permit from the State Export Control Service amounts to 150% of the value of the transaction (Article 25(1) of the State Export Control Law). Smuggling – that is, the movement of certain goods across the customs border of Ukraine, bypassing customs control (including explosive substances, weapons and ammunition) – is punishable by imprisonment for a term of three to seven years. The same actions committed by a group of persons with prior collusion, by a person previously convicted of this criminal offence, or by a public officer are punishable by imprisonment for a term of 5–12 years and by confiscation of the goods (Article 201 of the Criminal Code).
4.9 Export Licences
A permit from the State Export Control Service is required for international transfers of military and dual-use goods, including import and export. For this purpose, an entity transferring military and dual-use goods must be registered at the State Export Control Service. In addition, an entity transferring military goods or goods containing a state secret must obtain such authorisation from Ukraine’s government.
According to the State Export Control Law, based on the recommendations of the State Export Control Service, entities involved in international transfers of goods should establish a system of internal export control. The respective system of internal export control is mandatory for entities transferring military goods or goods containing a state secret. The State Export Control Service assesses the systems of internal export control established by the respective entities, based on which an assessment certificate is issued.
4.11 Export Reporting Requirements
Entities providing international transfers of military and dual-use goods and end-users of such products in Ukraine have strict reporting obligations before the State Export Control Service.
Such obligations include reporting on the end-use of military and dual-use goods subject to international transfers. Such reporting must be supported by documentary evidence confirming the end-use of the respective goods. The State Export Control Service is entitled to conduct inspections to ensure that the end-use of the respective products complies with the declared purposes.
4.12 Key Developments Regarding Exports
In 2022, as a response to the full-scale invasion by the Russian Federation, the Cabinet of Ministers of Ukraine was authorised to establish a list of goods, the international transfers of which are not covered by the State Export Control Law during the period of martial law on the territory of Ukraine.
In 2021, the Ministry commenced public consultations regarding the amendments to the State Export Control Law. The respective draft law has been elaborated on by the State Export Control Service to, inter alia:
- approximate the national export control regulation to the EU standards;
- shorten the timeframes of export control procedures and optimise the provision of administrative services in this field;
- mark the limit between the export control procedures over international transfers of military and dual-use goods; and
- establish clear criteria for adding items to the lists of goods subject to export control.
4.13 Pending Changes to Export Regulations
It is expected that the export control regulation in Ukraine may be amended based on the draft law elaborated on by the State Export Control Service (see 4.12 Key Developments Regarding Exports).
5. Anti-dumping and Countervailing (AD/CVD)
5.1 Authorities Governing AD/CVD
In addition to the relevant WTO agreements, trade defence remedies are regulated in Ukraine by the following laws:
- the Law “On Protection of National Producers from Dumped Imports” No 330-XIV, dated 22 December 1998 (the “Anti-Dumping Law”);
- the Law “On Protection of National Producers from Subsidised Imports” No 331-XIV, dated 22 December 1998 (the “Anti-Subsidy Law”); and
- the Law “On the Application of Special (Safeguard) Measures against Imports to Ukraine” No 332-XIV, dated 22 December 1998 (the “Safeguard Law”).
The Intergovernmental Commission on International Trade (the “Commission”) is responsible for the adoption of key decisions during AD/CVD and safeguard investigations, including on:
- initiation of investigation and/or review;
- application of AD/CVD duties and safeguards; and
- termination of investigation/review without measures.
The Ministry of Economy of Ukraine is responsible for all the procedural aspects of an investigation/review, namely:
- collecting all necessary information and supporting documents by sending different requests, questionnaires, etc;
- holding hearings and consultations; and
- drafting a report following the results of an investigation/review, with recommendations to the Commission on the application of certain measures or termination of the investigation/review without measures, etc.
5.2 Government Agencies Enforcing AD/CVD Measures
The application of AD/CVD and safeguards is administered by the Ukrainian customs authorities.
5.3 Petitioning for a Review
Depending on the type of investigation/review, the following companies are entitled to initiate a review.
- A basic investigation could be initiated upon a request of the domestic industry or by the relevant executive agency.
- An expiry review – Ukrainian law is silent as to the persons entitled to submit a petition for such review. However, taking into account the grounds for extension of duties (ie, (i) there is a necessity to continue the application of safeguard measures to prevent injury or to eliminate injury and (ii) there is evidence that domestic industry is in the process of adaptation to the new competition conditions), in practice such reviews are initiated by domestic industries only.
- A review to speed up liberalisation – a request for such review could be submitted by the State Customs Service of Ukraine or by the relevant executive agency.
- A reconsideration of the decision on the application of measures by the Commission within a 30-day period after adoption thereof – a request for such review could be submitted by the State Customs Service of Ukraine, domestic industry, or the relevant executive agency.
- A basic investigation could be initiated upon the request of the domestic industry.
- A sunset review – a request for such review could be submitted by the domestic industry or by the relevant executive agency.
- An interim review – a request for such review could be submitted by the domestic industry, exporter or importer, or by the relevant executive agency.
- A newcomer review – considering that such review is initiated to determine individual dumping margin rates for foreign producers/exporters that have not exported their products to Ukraine during the investigation period, a request for review initiation shall be submitted by this foreign producer/exporter.
- An accelerated review could be initiated by an exporter that has exported its products to Ukraine during an investigation period but has not been recognised as an interested party based on reasons other than non-cooperation with the Ministry.
5.4 Ad Hoc and Regular Reviews
Ukrainian law does not stipulate reviews on a regular basis. The relevant companies can petition to initiate a review on an ad hoc basis upon the occurrence of the relevant grounds.
5.5 Non-domestic Company Participation
Ukrainian law defines a list of interested parties that may participate in the investigation/review widely, namely:
- a foreign producer, exporter or importer or their association;
- the competent authorities of the exporting country;
- a national producer or wholesaler in Ukraine or its association;
- a trade union of employees of the domestic producers or the wholesaler; and
- executive agencies in Ukraine.
Any person that has the relevant status – domestic or non-domestic – could be treated as an interested party of the investigation and could participate therein.
5.6 Investigation and Imposition of Duties and Safeguards
In Ukraine, AD/CVD and safeguard investigations have the following stages.
- Upon receipt of a petition for investigation initiation, the Ministry shall start an AD/CVD/safeguard procedure to verify whether the petition contains sufficient grounds to initiate an investigation. Following the results of the petition consideration, the Ministry prepares a detailed report with a recommendation as to whether to initiate an investigation and provides such report to the Commission for the adoption of the relevant decision. The investigation shall be considered as officially initiated only after the publication of a notice on the adopted decision in the governmental newspaper Uryadovyy Kuryer. Ukrainian law states that all such procedures usually take 30 days. Still, in practice, the relevant terms could be longer, especially during the war.
- Registration of interested parties of an investigation – the relevant timelines are not set out by law, but usually a 30-day period is applied, starting from the publication date of a notice on investigation initiation.
- Submission of commentaries against an application on investigation initiation – the relevant timelines are not set out by law. In practice, a 45–60-day period is usually applied, starting from the publication date of a notice on investigation initiation.
- Submission of answers to the questionnaire – in practice, questionnaires are sent to all interested parties 2–4 months after investigation initiation. Under the law, interested parties are initially granted 37 calendar days to answer the questionnaire. If needed, and upon justified grounds, the interested parties are allowed to request an extension. Usually, the Ministry grants 14 days’ extension.
- On-the-spot verification – Ukrainian law is silent on the relevant timelines. Usually, such verifications are conducted within 1–2 months after the questionnaire submission. Due to COVID-19, on-the-spot verifications have not been conducted since March 2020.
- Hearings are usually held at the final stage of an investigation, approximately 2–3 months before an investigation termination. In Ukraine, the interested parties shall submit a position paper before hearings. After hearings (usually within 5–10 days), the interested parties shall submit their post-hearing submission. If not, the position will be disregarded.
- Preliminary determination shall be prepared by the Ministry following a review of all the relevant documents and evidence and shall be sent to all interested parties for review and commentaries. Usually, the determination is disclosed one month before the termination of an investigation and up to ten days are granted to interested parties for drafting commentaries.
- Final determination and adoption of a decision following the results of an investigation – upon the receipt of commentaries on the preliminary determination from the interested parties, the Ministry shall finalise its determination and send it to the Commission for the adoption of the relevant decision.
- A notice on the adopted decision shall be published in Uryadovyy Kuryer, and the applied measures shall enter into force within the period set out in the relevant notice – usually 30–60 days after publication.
5.7 Publishing Reports
Ukrainian law does not oblige the Ministry to publish its reports. In AD/CVD cases, the Ministry sends reports to all interested parties of an investigation and must consider their commentaries while finalising the reports. In safeguard cases, there is no well-established practice of the Ministry. In some cases, the Ministry sends the report to interested parties; in others, it does not. In any case, a brief overview of the key findings made during a safeguard investigation is published in notices on the investigation termination in Uryadovyy Kuryer.
5.8 Jurisdictions with No Imposition of Duties and Safeguards
The relevant Ukrainian laws set out the following general rules for the non-imposition of AD/CVD duties and safeguards as in the WTO.
The AD investigation shall not be initiated in respect of countries with negligible import volumes: ie, if the volume of dumped imports from a particular country is found to account for less than 3% of imports of the like product unless countries that individually account for less than 3% collectively account for more than 7% of imports of the like product.
Safeguards shall not apply to imports from developing countries that are WTO members if the volume of imports from this particular country is found to account for less than 3% of total imports unless the total share of all developing countries that are WTO members collectively accounts for more than 9% of total imports.
CVD investigations shall not be initiated if subsidised imports of the WTO member constitute less than 1% of the consumption volumes in Ukraine and the total imports of all WTO members collectively constitute less than 3% of the consumption volumes in Ukraine. CVD duties shall not apply to the developing country that is a WTO member if the import volumes of such country constitute less than 4% of the total imports of the like products from this country. However, CVD duties shall apply if the import volumes of the said developing countries exceed 9% of the total imports of the like products.
Additional exceptions are set out by the bilateral free trade agreements of Ukraine. Particularly, the CIS FTA sets out that the parties agreed to exclude other parties from the application of safeguards if the importation of the product concerned from such parties does not cause injury to the domestic industry; that is, if the following conditions are simultaneously met:
- the other party to the FTA is not among the top five exporters of the product concerned to the country imposing the measures for the past three years;
- for the past three years, the volumes of imports from the other party decreased or increased by lower volumes (in absolute and comparative figures) than from other states; and
- the level of prices for imported products from the other party is equal to or higher than the level of prices of the domestic producer of like or directly competitive products.
The EFTA–Ukraine FTA excludes the application of anti-dumping duties between the parties during the first five years of the agreement implementation (ie, starting from 20 September 2012). Thereafter, the parties could reconsider the above provision that has not been made yet. Moreover, the parties shall not apply safeguards to each other if imports of the relevant party do not cause serious injury. At the same time, the agreement is silent on the applicable criteria.
The Israel–Ukraine FTA excludes the application of safeguards between the parties if imports from the relevant party do not cause serious injury: ie, if the growth rate of imports of the relevant party is considerably lower than the growth rate of total imports from all sources.
5.9 Frequency of Reviews
As for interim, newcomer and accelerated reviews of AD/CVD duties, they shall be conducted only in situations when all relevant circumstances occur and upon a request of the entitled person. In the case of sunset reviews of AD/CVD duties, they shall be conducted every five years, if requested by the domestic industry or by the relevant executive agencies. If not, after a five-year period, the duties will terminate automatically.
As for a review of safeguards to speed up liberalisation, again, it could be initiated at any time when the State Customs Service of Ukraine or the relevant executive agency has justified grounds to initiate a review. An expiry review of safeguards could be initiated by the end of the initial period of application thereof. The relevant law directly sets out that the safeguards shall initially apply for a maximum of four years with a possible further extension. However, in any case, safeguards shall not apply for more than eight years.
5.10 Review Process
Notably, newcomer and accelerated reviews of AD/CVD duties and reviews of safeguards to speed up liberalisation have not been conducted in Ukraine yet. Therefore, it is hardly possible to predict the process of such reviews.
As for sunset and interim reviews of AD/CVD, in practice, the same procedure is applied as set out in 5.6 Investigation and Imposition of Duties and Safeguards. The only difference is the applicable terms – basic investigations could be conducted within 12–18 months, while reviews could take a maximum of 12 months.
Ukrainian law does not precisely define how an expiry review of safeguards shall be performed. In practice, the Ministry tries to follow the same procedure as described in 5.6 Investigation and Imposition of Duties and Safeguards, but such procedure is usually held within a very limited period.
5.11 Appeal Process
AD/CVD duties and safeguards could be appealed before Ukrainian courts. Notably, the relevant request to challenge the duties shall be submitted within one month after the adoption of the relevant decision by the Commission.
5.12 Key Developments Regarding AD/CVD Measures
After the commencement of the war, the Ministry suspended all investigations from 28 February 2022 approximately until July 2022. The said suspension resulted in considerable delays in all investigations, reviews and/or the procedures for reviewing new applications. For instance, an anti-dumping investigation related to imports into Ukraine of galvanised steel with origin in China was initiated on 19 December 2020. As of 8 November 2022, it was not terminated – even preliminary disclosure of findings and individual dumping margin calculations were not done. It is worth emphasising that, notwithstanding such considerable delays, there have not been Commission’s decisions to extend basic terms of investigations/reviews as happened before. Therefore, it is unclear what procedural steps are performed by the Ministry in different proceedings.
On 17 and 31 August and 2 November 2022, the Commission conducted its first meetings since the commencement of the war. At the meetings, the Commission, among other procedural decisions, terminated four safeguard investigations (against imports of cheese, three-cone chips, PVC-profile and sodium hypochlorite) without the application of measures. The said decisions have been justified by national interests. Unfortunately, the Commission has not explained what is understood by “national interests”. However, most probably, this means a considerable change in circumstances (eg, some producers, unfortunately, have been destroyed or have lost access to raw materials and, thus, cannot produce the products in question; imports have considerably decreased). Moreover, taking into account the extraordinary nature of safeguard measures, application thereof with such considerable delay will violate Ukraine’s WTO obligations. In particular, for safeguard investigations that were pending when the war started, the investigation periods ended on 31 December 2020 or 30 June 2021. At the same time, as a result of suspension of the proceedings, the measures could be implemented only in December 2022. This means that 18 or 24 months passed between the investigation period and the actual implementation of measures, which is a direct violation of the WTO rules.
5.13 Pending Changes to AD/CVD Measures
At several meetings with different Ukrainian business associations, the Ministry’s representatives have confirmed that all imports considerably decreased because of the war. Therefore, in the near future it will barely be possible to initiate safeguard investigations in Ukraine. As for anti-dumping cases, the Ministry is ready to consider them. However, between 24 February and 8 November 2022, the Commission did not initiate any investigations.
On 2 November 2022, the Commission suspended safeguard measures applied to imports of PVC-suspension for the period of martial law. This decision was substantiated by the fact that the domestic producer has not worked because of the war. Most probably, the Commission and Ministry will shortly consider suspension of certain effective anti-dumping or safeguard measures because some Ukrainian producers, unfortunately, have been destroyed or, due to different reasons, cannot produce products subject to anti-dumping or safeguard measures.
6. Investment Security
6.1 Investment Security Mechanisms
At the moment, Ukraine has no foreign investment security/screening mechanisms. Please see 6.8 Key Developments Regarding Investment Security with respect to the recent government initiative to launch the respective procedure in Ukraine.
6.2 Agencies Enforcing Investment Security Measures
Please see 6.1 Investment Security Mechanisms.
6.3 Transactions Subject to Investment Security Measures
Please see 6.1 Investment Security Mechanisms.
6.4 Mandated Filings/Notifications
Please see 6.1 Investment Security Mechanisms.
Please see 6.1 Investment Security Mechanisms.
6.6 Penalties and Consequences
Please see 6.1 Investment Security Mechanisms.
Please see 6.1 Investment Security Mechanisms.
6.8 Key Developments Regarding Investment Security
To establish a foreign investment screening mechanism, in February 2021, the government of Ukraine submitted to the Parliament Draft Law No 5011 “On Foreign Investments in Entities that are Strategically Important for the National Security of Ukraine” (the “Draft Law”). However, in September 2021, the Draft Law was withdrawn from the Parliament’s consideration.
In a nutshell, the Draft Law defined a list of sectors that are strategically important for Ukraine’s national security (the “Strategic Sectors”). This list includes:
- the production and sale of weapons and military equipment;
- telecommunication services;
- aviation and space exploration;
- nuclear energy;
- radioactive waste; and
- the extraction of mineral resources.
The screening mechanism is triggered in the case of making foreign investments into an entity operating in one of the Strategic Sectors during the last three years (the “Strategic Entity”). The definition of foreign investments covers acquiring shares of the Strategic Entity or acquisition of its assets, management functions, and rights to appoint executive bodies in the Strategic Entity.
According to the Draft Law, the screening procedure is provided in two stages. The first stage, conducted by the Ministry, involves the review of a request for investment approval (to be submitted by an investor to the Ministry along with the supporting documents). Following this stage, the Ministry decides whether the foreign investment impact assessment is required and, if yes, passes the respective documents to the Interdepartmental Commission for the Foreign Investments Impact Assessment, a new body to be established by the Ukrainian government for the purposes of this procedure. The second stage involves the impact assessment of the foreign investments on the national security of Ukraine that is provided by the Commission based on the criteria to be defined by the government. Based on this procedure, the Commission takes a decision regarding the foreign investment’s approval. The decision is of a mandatory nature and can be challenged before the court.
6.9 Pending Changes to Investment Security Measures
Taking into account that the Draft Law analysed in 6.8 Key Developments Regarding Investment Security has been withdrawn from the Parliament’s consideration, it is expected that this issue will be further elaborated on by the Ukrainian government.
7. Other Measures Affecting Production and Trade
7.1 Subsidy and Incentive Programmes for Domestic Production
While most of the governmental programmes/incentives supporting domestic industries are consistent with the WTO obligations of Ukraine, some of them have been questioned by Ukraine’s trading partners and warrant specific mention, particularly the following.
- Until 15 September 2026, Ukraine has increased export duty on ferrous metals scrap to EUR58 per tonne. According to Ukraine’s obligations upon its accession to the WTO, the level of this export duty on ferrous metal scrap cannot exceed EUR10 per tonne. There are initiatives to ban the export of ferrous metals scrap from Ukraine to support the domestic metallurgical industry.
- The Ukrainian government provides partial compensation of the cost of purchase of agricultural machinery and equipment of local brands for farmers (25%). The programme aims to reduce the cost of agricultural machinery and equipment of domestic production by 25% (the “25% Compensation”). The 25% Compensation is paid to Ukrainian farmers who purchase domestic agricultural machinery and equipment compliant with the localisation requirements. To benefit from the 25% Compensation, the respective products must be defined as “domestic machinery and equipment for the agro-industrial complex” and be included in the Domestic Machinery List.
- Even though Ukraine lost the EU–Ukraine dispute on the wood export ban in December 2020, as of today (December 2022) Ukraine has not eliminated the temporary export ban on unprocessed timber. There are many different programmes supporting Ukrainian business during the war, namely:
(a) compensation by the state of expenses of employers for wages of employees who have been relocated within the territory of Ukraine;
(b) grants for the small and medium businesses for creating new working places (the programme “Own Business”);
(c) compensation of interest credit rates by the state (the programme “Available Loans 5-7-9%”);
(d) grants for developing processing business;
(e) suspension of import tariffs for certain industries, eg imports of goods used for ensuring storage of grain and/or oilseed crops were exempted from import duties;
(f) state support for the enterprise’s relocation into the safer regions of Ukraine; and
(g) creation of industrial parks that will be granted different tax privileges.
See also 7.6 “Buy Local” Requirements with respect to the current legislative initiative on localisation.
7.2 Standards and Technical Requirements
Based on publicly available sources, it is hardly possible to conclude that certain technical regulations adopted in Ukraine are aimed at reducing imports.
Since Ukraine’s accession to the WTO, only two specific trade concerns have been raised by the WTO members in the TBT Committee regarding the technical barriers to trade (TBT) measures introduced by Ukraine:
- a concern expressed by the EU regarding the Draft Technical Regulation on the labelling of foodstuffs (2011); and
- a concern raised by the US regarding the restrictions on advertising, sales promotion and sponsorship of tobacco products (2013).
No information is available as to whether the above points have been resolved. At the same time, these issues have not been reiterated by WTO members.
7.3 Sanitary and Phytosanitary Requirements
Based on publicly available sources, it is hardly possible to conclude that certain sanitary and phytosanitary requirements adopted in Ukraine are aimed at reducing imports.
Since Ukraine’s accession to the WTO, four specific trade concerns have been expressed in the WTO TBT Committee regarding the sanitary and phytosanitary (SPS) measures introduced by Ukraine. Three of them have been resolved already:
- a concern raised by the EU regarding the inspection requirements of a wide range of animals and animal products (2009–10);
- a concern expressed by Mexico regarding Ukraine’s import restrictions on poultry and poultry products (2011); and
- a concern raised by the EU and US regarding the general import restrictions maintained by some WTO members due to BSE disease (2004–21).
In addition, in 2019–20, Brazil raised trade concerns regarding Ukraine’s restrictions on Brazilian pork and other swine products. No information is available as to whether the above issue has been resolved by the parties.
7.4 Policy and Price Controls
According to the Law “On Prices and Pricing” No 5007-VI, dated 21 July 2012, the state regulation of prices may be introduced on goods that have a decisive impact on the overall level/dynamics of prices, socially important products and goods manufactured by entities having a monopolistic (dominant) position on the market. In addition, state price control may be applied to entities violating the legislation on the protection of economic competition.
At the moment, Ukraine employs price controls on certain products, such as alcoholic beverages, fuels and pharmaceuticals. A detailed analysis in each case is needed to understand whether these policies/price controls aim to reduce imports and/or encourage domestic production of the respective products. Moreover, because of the war, the government of Ukraine has applied, from time to time, price control measures on certain products.
7.5 State and Privatisation Measures
Since its independence, Ukraine has been struggling with the privatisation of state-owned enterprises. According to the State Property Fund of Ukraine, at the moment, around 1,000 companies are potentially open to privatisation. The list of enterprises that cannot be privatised includes the enterprises that have strategic value or fulfil governmental functions, such as:
- enterprises of the military-industrial complex;
- natural monopolies; and
- enterprises of high social value (eg, state postal service, national rail transport operator).
During the war, Ukraine simplified privatisation procedure. As of the beginning of October 2022, the government of Ukraine had given notice that about 800 state objects would shortly be privatised.
7.6 “Buy Local” Requirements
On 16 December 2022, the Ukrainian Parliament adopted the Law of Ukraine “On Amendments to the Law of Ukraine ‘On Public Procurement’ to Create Conditions for Sustainable Development and Modernisation of the Domestic Industry” No 1977-IX. The document sets out localisation requirements as a mandatory criterion for participation in public procurements of certain goods (mainly machinery). The level of localisation required for participation in public procurements is 10% during the first year (2022). After that, this threshold has to be increased by 5% each year up to a ceiling of 40% in 2028. The aforementioned procedure shall apply for ten years.
Notably, many international trading partners have questioned the consistency of the Law on Localisation with the WTO obligations of Ukraine and its obligations under other agreements, such as the EU–Ukraine Association Agreement. However, the final version of the said Law sets out that it shall not apply to public procurement proceedings subject to the Public Procurement Agreement and in respect of the trading partners with which Ukraine has the relevant international obligations.
7.7 Geographical Protections
Following the implementation of the EU–Ukraine Association Agreement, Ukraine provides a similar treatment of geographical indications (GIs) established in the EU. Most of the GIs protected in Ukraine originate from foreign countries (eg, under the EU–Ukraine Association Agreement, Ukraine is obliged to protect more than 3,000 GIs of EU origin). Thus, the measures employed by Ukraine are not designed to reduce imports but, at the same time, aim to encourage domestic producers to protect local GIs.
8. Other Significant Issues
8.1 Other Issues or Developments
It is worth emphasising that, most probably, Ukrainian regulations in different fields will be further amended from time to time to react to the consequences of the war. For instance, since 24 February 2022, Ukraine has applied many different restrictions in the field of foreign currency payments. Namely, from 24 February until July 2022, Ukrainian companies were able to use foreign currency to pay for only those products included in the list of critical imports. Considering that, in the beginning, the list included only ten products, and it took some time to widen the list, the above restriction has considerably decreased imports of many products. Moreover, in the beginning, the list of critical imports did not cover services at all. Now it contains some types of services, but the restriction is still in place. Currently, there are many other different restrictions and requirements in the field of foreign currency payments. Since the commencement of the war, Ukraine has applied export restrictions to food products (eg, poultry, grains, eggs) as well as other products (eg, coal, fertilisers). Lists of products subject to export restrictions are being amended from time to time.
Moreover, in view of the fact that Ukraine was granted EU candidate status, there will be many legislative developments in different fields to approximate the EU acquis. As of today (December 2022), different Ukrainian authorities have already elaborated many draft laws and by-laws.
Additionally, Ukraine will improve instruments allowing for the efficient confiscation of assets belonging to the Russian Federation, its residents, as well as other individuals and legal entities somehow contributing to the Russian invasion of Ukraine. As of today, Ukraine has already adopted two laws in this field, namely: the Law of Ukraine “On Major Principles of Confiscation in Ukraine of Objects of Property Rights of the Russian Federation and its Residents” No 2116-IX, dated 3 March 2022, and the Law of Ukraine “On Amending Some Legislative Acts of Ukraine to Make More Efficiently Sanctions related to Assets of Certain Persons” No 2257-IX, dated 12 May 2022.
Source: Chambers and Partners