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19 February 2015

International Trade News. November 2014 – January 2015

І. WTO NEWS

WTO adopted a global Agreement on Trade Facilitation

On 27 November 2014, the WTO General Council in Geneva adopted a Protocol of Amendment to insert the WTO Trade facilitation Agreement into Annex 1A of the WTO Agreement; a Decision on public stockholding for food security purposes, and a Decision on a “post-Bali roadmap”.|1| It is an important stepfor a realization of the Bali package including the Agreement on Trade Facilitation. In particular, the adoption of the Protocol of Amendment will lead to the ratification of the Trade Facilitation Agreement that will enter into force once two-thirds of members have completed their domestic ratification process.

The Decision on public stockholding for food security purposes,  which India stood upon during the long period, envisages that programs addressed to create the domestic food reserves by developing countries will not be subjected to the WTO Dispute Settlement procedure until the final resolution of the matter. In addition, the parties agreed to implement effectively the decisions relating to the Bali package and negotiate on other issues of the Doha Round.

The Trade Facilitation Agreement relating to the Bali package contains provisions to facilitate the movement, clearance of goods, including goods in transit. In addition, it envisages the measures on effective cooperation between customs and other relevant bodies in the field of trade facilitation and compliance with customs regulations.

Ukraine will join the consultations with the Russian Federation on import duties in the WTO

Ukraine filed a request to the WTO for joining the consultations with Russia initiated by the EU. The consultations will cover the issues of the tariff policy of the Russian Federation in respect of certain types of agricultural and industrial products. As provided in the document, being a major producer and exporter of the goods in these sectors, Ukraine has a considerable commercial interest to participate in these negotiations.|2|

At the end of October 2014, the EU initiated the consultations with the Russian Federation regarding the import duties on certain agricultural and industrial products. Consultations are the first step in the dispute settlement procedure, upon the accomplishment of which the matter may be submitted for the consideration of the panel.

ІІ. REGIONAL TRADE LIBERALIZATION

The Order on granting and termination of the status of authorized (approved) exporter came into force
 

On 23 December 2014, the Order of the Ministry of Finance of Ukraine “On Adoption of the Order on Granting and Termination by the Customs Authorities of the Status of Authorized (Approved) Exporter” No. 1013 of 07 October 2014 (the “Order”).|3| Granting and termination of the status is carried out according to the provisions of the EFTA-Ukraine Free Trade Agreement, Montenegro – Ukraine Free Trade Agreement and other international treaties of Ukraine, which provide for such procedure.

The authorized exporter is an exporting company, legal entity registered in Ukraine, except the customs broker, which regularly supplies goods on the conditions of the agreements and is granted the right to independently fill in the declaration irrespectively of the price of the product. The Order also envisages criteria, which the authorized (approved) exporter shall comply with.

The status of an authorized (approved) exporter is granted by customs authorities during 30 days from the date of the submission of application and documents specified in the Order. The exporter receives the personal number for simplified customs control procedure of the Ukrainian goods of preferential origin.

The Rules of filling and issuing of EUR.1 certificate by customs authorities was adopted
 

The Ministry of Finance of Ukraine by its Order No. 1142 of 18.11.2014 adopted “The Rules of Filling and Issuingby Customs Authorities of the Certificate for Transporting of Goods EUR.1 according to the Association Agreement between the European Union and the  European Atomic Energy Community and their member states, of the one part, and Ukraine, of the other part |4|.

EUR.1 certificate is a document confirming the preferential origin status for the goods exported from Ukraine to the EU according to the EU – Ukraine Association Agreement. This certificate is filled and issued by the customs authorities for every consignment of goods exported to the EU. The Order will enter into force on the same date with the EU – Ukraine Association Agreement, but not earlier than the date of its official publication.

China extends the list of its trade partners
 

On 17 November 2014, the negotiations on the Australia – China Free Trade Agreement, which lasted for 10 years came to the end. In particular, the ministers of trade of both countries have signed the Declaration on intentions to prepare the agreement for signing, which is expected to take place in 2015.

The agreement will gradually open the markets of both states for trade in goods as well as for trade in services. While China is the largest exporting market for Australia (almost third part of all goods and services is exported to China) the agreement has large potential for liberalization of trade between the countries.|5|

At the same time during the meeting between the leader of PRC Xi Jinping and the President of the Republic of Korea Park Geun-hye, which took place on 10 November 2014 the parties agreed the main points on the future free trade zone between China and South Korea|6|. After the meeting in the presence of leaders of both states the minister of commerce of PRC Gao Hucheng and the minister of trade, industry and energy of South Korea Yoon Sang-jick on behalf of their governments signed a protocol of the meeting on accomplishment of negotiations. Both states agreed to eliminate 90% of import duties for the products in bilateral trade.

China – South Korea free trade negotiations started in May 2012. China is one of the major trade partners of the Republic of Korea, which accounts for 20% of its general export of goods.

ІІІ. TRADE DEFENCE MEASURES AND BARRIES TO TRADE

Ukraine will introduce import surcharge on goods
 

On 28 December 2014, the Ukrainian Parliament adopted the Law of Ukraine “On measures for stabilization of the balance of payments of Ukraine according to Article XII of GATT 1994” No.73-VIII|7| and the Law “On making changes to the Customs Code of Ukraine for stabilization of the balance of payments” No. 74-VIII.|8| These legal acts impose for 12 months import surcharge according to Article XII of GATT 1994 and Understanding on the Balance-of-Payments Provisions of the General Agreement on Tariffs and Trade 1994.

The import surcharge will be levied on goods imported into the customs territory of Ukraine irrespectively of the country of their origin and the effective free trade agreements signed by Ukraine (in particular on goods imported from the EU). The rate of the surcharge is set at the level of 10% for food products (groups 1-24 of the Ukrainian Commodity Classification for Foreign Economic Activity (“UCCFEA”)) and 5% for non-food products (groups 25-97 UCCFEA). The import surcharge will not be levied on the vital goods the list of which includes oil, natural gas, nuclear fuel, electric energy, coal, gasoline, fuel oil, diesel oil, certain medical products, goods which are on a free-of-charge basis supplied to Ukraine by governments of other states or by international organizations within the framework of international (intergovernmental) agreements and some other goods.

International obligations of Ukraine in particular within the WTO and the EU – Ukraine Association Agreement allow imposing import surcharge in case of critical situation with the balance of payments. However, according to Article XII of GATT 1994 imposition of such surcharge is possible upon the consultations in the WTO Committee on Balance-of-Payments Restrictions. The situation with the balance of payments shall also be confirmed by the IMF.|9|

Ukraine has already held preliminary consultations with the EU on the new initiative. The media inform that EU representatives did not directly approve the imposition of import surcharge, however they may agree with such initiative in case of compliance with all the procedures envisaged by the WTO rules|10|. Earlier the EU has unilaterally introduced a preferential regime for all Ukrainian goods, the conditions of this regime are in general similar to those, which will apply after the economic part of the EU – Ukraine Association Agreement enters into force. The major part of Ukrainian goods is not charged with import duty when imported into the EU, certain food products are subject to tariff quotas.

The laws, which impose import surcharge will become effective after publication of the decision of the Cabinet of Ministers of Ukraine on the end of the consultations with international financial organizations.

Ukraine initiated an antidumping investigation against import of sodium hydrate from the Russian Federation into Ukraine

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|11| which entered into force on 7 November 2014 (UCCFEA code – 2815 12 00 10). The investigation was initiated at the request of PJSC “Dniproazot”.

The term of application of definitive antidumping measures against import of syringes into Ukraine from the Kingdom of Spain, the Federal Republic of Germany, the United Kingdom of Great Britain and Northern Ireland and the People’s Republic of China has expired

On 6 November 2014, the term of application of antidumping measures against import of syringes originating in the Kingdom of Spain, the United Kingdom of Great Britain and Northern Ireland, the Federal Republic of Germany and the People’s Republic of China into Ukraine expired|12|. The said antidumping measures were applied according to the decision of the Interdepartmental Commission on International Trade of 29 September 2009 No.АД-216/2009/4402-37 “On application of final antidumping measures against import into Ukraine of syringes originating in the Kingdom of Spain, the United Kingdom of Great Britain and Northern Ireland, the Federal Republic of Germany and the People’s Republic of China”.

The antidumping measures against import of railroad turnouts originating in the Russian Federation into Ukraine were extended

On 25 November 2014, the Interdepartmental Commission on International Trade adopted a decision No. АД – 325/2014/4421-06 “On extension of the antidumping measures against import into Ukraine of railroad turnouts originating in the Russian Federation|13| which entered into force on 29 November 2014. According to this decision the antidumping measures imposed by the Commission’s decision of 5 July 2002 No. АД-43/2002/52-63as amended and extended by the Commission’s decision of 26 November 2008 No.АД-193/2008/4403-45 were further extended for the following five years. The antidumping measures concern the railroad turnouts from the Russian Federation (UCCFEA code 8608001000); the rate of duty is 59,4 %.

Ukraine introduced the antidumping measures against import of weldless stainless pipes from China

On 27 November 2014, the Interdepartmental Commission on International Trade adopted the decision No. АД–326/2014/4421-06  “On application of final antidumping measures against import into Ukraine of weldless stainless pipes originating from the People’s Republic of China”.|14| According to this decision the definitive antidumping measures against import into Ukraine of pipes from the PRC (classified under UCCFEA codes 7304 41 00 90; 7304 49 93 00 and7304 49 95 00) were implemented. The antidumping duty was set at the level of 41,07%.The definitive antidumping measures are applied for five years. At the same time the Interdepartmental Commission accepted the undertaking of the company Zhejiang Longda Stainless Steel Co., Ltd of 18 November 2014 on termination of the dumped import of weldless stainless pipes into Ukraine. The decision of the Commission came into force on 29 December 2014.

The safeguard measures on import of Ukrainian pipes to the Customs Union were cancelled

On 1 November 2014, the term of safeguard duties on import of stainless pipes, including ones originating from Ukraine to the Customs Union of the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation expired (currently the Eurasian Economic Union)|15|. The press office of the Ministry of economic development and trade informed that now Ukrainian producers can supply stainless pipes to the market of the Customs Union without any restrictions.

The said measures were applied by the Russian Federation to Ukrainian pipes, the major exporter of which is “Interpipe”. The duty rate was 9,9% of the customs value. On 1 October 2011, the safeguard duty on stainless pipes was extended to the whole territory of the Customs Union and on 23 September 2012 it was substituted by the quota allocation.

European Commission terminated antidumping duties on Ukrainian welded pipes

On 26 January 2015, European Commission adopted EU Regulation 2015/110 which introduced antidumping duties on import of welded pipes from Belarus, the People’s Republic of China and the Russian Federation. The rates of duties are at the level from 10,1% to 90,6%. The same decision terminated antidumping duty on import of welded pipes from Ukraine.|16|

Antidumping duties were imposed to Ukrainian producers in 2002 (CN codes 7306 30 41, 7306 30 49, 7306 30 72, 7306 30 77). The duty for the Ukrainian producer “Interpipe” (“Interpipe Novomoskovsky pipe plant” and “Nyzhnyodniprovsky pipe plant”) was 10,7%, the duty for other producers was 44,1%.

Alongside with termination of antidumping duties for the Ukrainian pipes the European Commission extended the same duties for the welded pipes from Belarus, the People’s Republic of China and the Russian Federation for the additional five-year period.

Turkey initiated an antidumping investigation against hot-rolled steel

The Government of Turkey initiated an antidumping investigation against hot-rolled steel originating from China, France, Ukraine, Slovakia, Romania, Japan and the Russian Federation|17|. The investigation was initiated upon the request of the domestic industry represented by companies Ere?li Demir Çelik T.A.?., Tosçelik Profilve Sac Endüstrisi A.?. and Çolako?lu Metalurji A.?.The notification about the initiation was published on 28 January 2015.

The new investigation is the biggest antidumping investigation in the history of Turkey. Experts, however, doubt whether there was real injury to the Turkish national producer due to supposed dumped import. The companies, which initiated the investigation have increased the amount of sales and profits for the last year and Ere?li Demir Çelik became one of the most profitable companies of the Istanbul stock exchange.

According to the rules of the WTO, the member of which is Turkey, there are three cumulative conditions for the imposition of antidumping duties, i.e., dumped imports, material injury to a domestic industry and a causal link between the dumped imports and the injury.

IV. PRODUCT SAFETY

The Ukrainian Parliament adopted the Law “On Technical Regulations and Conformity Assessment”

On 15 January 2015, the Ukrainian Parliament adopted the Law of Ukraine “On Technical Regulations and Conformity Assessment|18| (Draft Law No. 1065 of 27 November 2014) which lays down the general legal and procedural basis for development, adoption and application of technical regulations and conformity assessment procedures and prescribes the rules of conformity assessment. Adoption of this Law is one of the main steps on the way of Ukrainian products to the European market. The Law provides for the consolidation of the legal rules of the Law “On Confirmation of Conformity” No. 2406-III of 17 May 2001 and “On Standards, Technical Regulations and Conformity Assessment Procedures” No.3164-IV of 01 December 2005. After the Law “On Technical Regulations and Conformity Assessment” comes into effect the said legal acts will lose their force.

Ukraine is required to harmonize its legislation with a number of European legal acts to facilitate export of goods from Ukraine to the EU. The new Law allows the Ukrainian producer to test products in Ukraine and to receive certificates recognized in the EU. This will help business to cut expenses for certification, conformity assessment procedures and the procurement of relevant documents.

A draft of the Technical regulation for certain goods packed by weight and volume to the ready-made packing was developed
 

The Ministry of economic development and trade of Ukraine initiated a public debate in respect of the draft of the Order of the Cabinet of Ministers of Ukraine adopting the new Technical regulation for certain goods packed by weight and volume to the ready-made packing.|19| The draft of the technical regulation offers new requirements for the size of numerals which specify the nominal quantity (nominal weight or nominal volume) of packed product. The new requirement also concerns the label or the sign to identify the importer or the packer. The Regulation provides for labeling of the goods with conformity sign in the form of letter “e” which guarantees the conformity of the packed product with the requirements of technical regulation. The draft also fixes the acceptable deviation of the weight or volume of the packed product from the specified nominal quantity.

V. FOOD PRODUCTS

The Ukrainian Parliament cancelled the ban on sale of meat and dairy products of domestic origin

On 30 December 2014, the President of Ukraine signed the Law “On Making Amendments to the Law of Ukraine “On Safety and Quality of Food Products” (Concerning Sale on Agricultural Markets of Products of Domestic Origin and Home Slaughter)” No. 1499?1 of 18 December 2014.|20|

This Law makes amendments to the rules of sale of domestic products of vegetable and animal origin on agricultural markets. In particular, the Ukrainian Parliament cancelled a rule, which prohibited the farm households to sell the meat and dairy agricultural products on the markets from 1 January 2015.

Now such products will be sold upon confirmation of their conformity based on results of testing by the state veterinary and sanitary lab or state inspector. The relevant goods will be marked with the conformity label. The goods inappropriate for human consumption, which pose a serious risk will be destroyed under control of the state inspector.

The said prohibition had to be imposed from 1 January 2015 according to the previous version of the Law of Ukraine “On Safety and Quality of Food Products” No. 771/97-ВР of 23 December 1997 and had to remain in force until 20 September 2015 when the amendments to the said Law will enter into force. From 20 September 2015, the Law No. 771/97-ВР will receive a new name “On Main Principles and Requirements to Safety and Quality of Food Products”. The new text of the Law contains substantial changes which purpose is to harmonize Ukrainian legislation in the sphere of food products with the EU legislation.

The Russian Federation imposed export duty on wheat

On 25 December 2014, the Government of the Russian Federation adopted the Regulation “On Imposition of Export Duty for the Wheat and Establishment of its Rate” No. 1495|21|. By this Regulation the Russian Federation imposed an export duty for the wheat in the amount of 15% of its customs value plus EUR 7,5 but no less than EUR 35 per ton. The export duty will remain in force until the middle of 2015.

The Ministry of economic development of the Russian Federation says that such measure was introduced to normalize the situation on the domestic market of grain while the prices have significantly increased in the last months. High prices of the world market and currency fluctuations have increased the export supplies of the grain and entailed significant increase of the grain prices on the domestic market despite the almost record-braking harvest.

VІ. PHARMACEUTICALS

The Ukrainian Parliament has cancelled licensing for import of medical ingredients

On 1 February 2015, the Law of Ukraine “On making amendments to certain laws of Ukraine for cancellation of licensing of import of active pharmaceutical ingredients” No. 126-VIII of 15 January 2015|22| entered into force. This Law canceled the obligatory licensing of imports of active pharmaceutical ingredients (AFI) which was to enter into force from 1 January 2015 according to the Law of Ukraine “On making amendments to certain Laws of Ukraine on licensing of import of pharmaceuticals and definition of the term active pharmaceutical ingredients”” No. 5038-VI of4 July 2012.

The Law made changes to Article 17 of the Law of Ukraine “On medicinal products” No. 123/96-ВР of 4 April 1996 which prescribes that import of medicinal products into the territory of Ukraine is possible with the quality certificate for the lot of medicinal products issued by the producer and the license for imports of medicinal products (except AFI).

Furthermore, amendments were made to Article 9 of the Law “On licensing of certain forms of commercial activity” No. 1775-III of 01 June 2000 which now also envisages that import of AFI is not subject to licensing.

Import procedure for medicinal products «in bulk» is simplified

On 12 November 2014, the Cabinet of Ministers of Ukraine adopted the Order “On making amendments to the Procedure of state quality control of medicinal product imported into Ukraine” No. 601.|23| By this Order the Government allowed the resident producers of pharmaceuticals to independently carry out laboratory tests of “in bulk” products. The distributors of such pharmaceuticals were allowed to place the relevant products on the licensed storehouses of the producers for the laboratory tests. This cancels duplication of functions in respect of laboratory tests during the state control and the inward control. Moreover, commercial entities, which do not produce the pharmaceuticals and only sell the imported products in bulk can place them on the licensed storehouses of the producers giving the latter the possibility to take samples for laboratory testing.

The simplification of the procedure of registration and sale of medicinal products

On 23 January 2015, the Order of the Ministry of Health of Ukraine “On making amendments to the Procedure of prohibition (temporary prohibition) and renewal of circulation of medicinal products on the territory of Ukraine” No. 954 of 1 2 December 2014|24| entered into force. This document changes the rules of circulation of medicinal products in Ukraine. In particular, after the end of the period for which the use of the pharmaceutical was allowed in Ukraine its further use is allowed after re-registration. After this, the period of use of such pharmaceutical in Ukraine is not restricted and subsequent registration is not required. The pharmaceuticals placed on the market of Ukraine during the period when their use was allowed in Ukraine, may be used and sold until their expiration date printed on the package.

The new procedure of pharmaceuticals quality control came into force

On 16 December 2014, the Order of the Ministry of Health of Ukraine “On adoption of the Procedure of Pharmaceuticals Quality Control during the wholesale and retail trade” No. 677 of 29 September 2014 came into force.|25| This Order establishes the procedure of inward control over the quality of pharmaceuticals in pharmacies, testing the quality of pharmaceuticals sold by the wholesale traders and the state control over the quality of pharmaceuticals during the wholesale and retail trade. The inward control over the quality of pharmaceuticals in pharmacies shall be conducted by a Responsible person appointed by the order of the head of the company. This person is responsible for the quality of pharmaceuticals sold into the pharmacy. The Responsible person is also obliged to conduct a list of medicinal products supplied into the pharmacy and to conduct in the paper or electronic form the list of decisions in respect of the quality of pharmaceuticals adopted by the central executive body responsible for the state policy in the sphere of quality and safety control over pharmaceuticals.

A Responsible person may become a professional with complete higher pharmaceutical education and working experience in the relevant sphere no less than 2 years, entrusted by the commercial entity to effectively manage the system of quality of medicinal products during wholesale and retail trade, as well as to conduct the inward control over the quality of pharmaceuticals.

VII. OTHER NEWS

The Civil Platform envisaged by the EU – Ukraine Association Agreement started its operation
 

On 7 November 2014, the Ukrainian part of the Civil Society Platform, the creation of which was envisaged by Articles 469 and 470 of the EU-Ukraine Association Agreement, started its operation. According to Article 469 of the EU-Ukraine Association Agreement the Civil Society Platform consists of the representatives of the civil society of Ukraine, on one part, and the members of the European economic and social committee (EESC), on the other part, and is the forum for meetings and exchange of ideas between them.

The civil society of Ukraine is represented by 170 non-governmental organizations. Among their representatives the coordinators of 15 working groups are elected: EU-Ukraine political dialogue and foreign policy; democratic reforms; human rights; fighting against corruption; migration policy; non-tariff, tariff and technical regulation; trade in services; industrial and scientific cooperation; environmental issues; energy and transport; labor issues and social policy; education; transport and interregional cooperation.|26|

The new excise tax rules came into effect
 

On 28 December 2014, the Ukrainian Parliament adopted the Law of Ukraine “On making amendments to the Tax Code of Ukraine and Certain Legal Acts of Ukraine on Tax Reform” No. 71-VІІІ|27|. This act introduced, inter alia, the new amended rules of the excise taxation. Thus, the list of products subject to excise tax was supplemented with electric energy, products used as components for motor fuels, alternative motor fuel, trucks and buses.

The list of excise tax payers was supplemented with commercial entities engaged in retail trade and sale of excisable products. According to the Letter of the State Fiscal Service of 16.01.2015 р. No.722/5/99-99-19-01-01-16 the persons operating in the sphere of retail shall pay excise tax from excisable products from 1 January 2015. The tax is levied on the local budgets of municipalities where the sale points of excisable products are located. The excise rate is 5%; such tax rate may be changed by the decision of local councils.

The Cabinet of Ministers designated the National standardization body
 

On 26 November 2014, the Cabinet of Ministers of Ukraine adopted the Order “On designation of the state company performing the functions of the National standardization body” No. 1163-р.|28| By this Order the Government delegated to the state-owned company “Ukrainian scientific and research centre for the issues of standardization, certification and quality” the functions of the National standardization body. This decision was taken in execution of the Law “On standardization” No. 1315-VII of 5 June 2014. Creation of the national standardization body was also envisaged by the EU-Ukraine Association Agreement.

According to the Law the National standardization body is a special body recognized on the national level which has the right to be a national member of the relevant international and regional standardization organizations. Such body belongs to the state property and can not be aimed at receiving profit. Its powers include organization and coordination of development, amendment and cancellation of national standards, their adoption, cancellation, harmonization with international standards, participation in the development of international standards, etc.

 

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