Trade relations between Ukraine and the Russian Federation as of 1 January 2016
As of 1 January 2016, the Russian Federation suspended the implementation of the free trade area with Ukraine within the framework of the Commonwealth of Independent States Free Trade Area Agreement (the “CIS FTA Agreement”). Thus, on 16 December 2015, the President of the Russian Federation signed the Order No. 628 “On Suspension by the Russian Federation of the Agreement on Free Trade Area regarding Ukraine”, upon which the Parliament of the Russian Federation adopted the Law “On Suspension by the Russian Federation of the Agreement on Free Trade Area regarding Ukraine”. These legal acts introduce an imposition of import customs duties on all Ukrainian goods equal to the rates of the Uniform Customs Tariff of the Eurasian Economic Union, which are applied in accordance of the MFN principle of Article I of GATT.
Besides, on 13 August 2015, the Government of the Russian Federation adopted the Resolution “On Making Amendments to the Regulations of the Government of the Russian Federation dated 7 August 2014 No. 778 and 31 July 2015 No. 774” No. 842 (the “Resolution No. 842”). The Resolution No. 842 introduced the ban on importation of certain food, agricultural products and raw materials, originating from Ukraine. In particular, it covers such goods as meat and meat products, fish, milk and dairy products, vegetables, fruits, nuts, some end products. The ban on Ukrainian imports came into force on 1 January 2016 and be effective until 5 August 2016.
Accordingly, as of 1 January 2016, two types of measures apply to Ukrainian products: (1) the import duties in the amount of the rates of the Uniform Customs Tariff of the Eurasian Economic Union with respect to all Ukrainian products and (2) the ban on certain food and agricultural products as envisaged by the Regulation No.842.
In response to actions of the Russian Federation the Ukrainian Parliament adopted the Law No. 898-VIII “On amendments to the Law of Ukraine “On foreign economic activity” on 23 December 2015 (empowering the Government to take adequate measures of economic nature to the aggressor state”). This Law empowers the Cabinet of Ministers of Ukraine to introduce a wide range of trade restrictions (including quotas, full or partial ban, safeguard duties, licensing of foreign economic operations, termination of trade preferences) with regard to the aggressor state.
By its resolution No. 1146 dated 30 December 2015 “On tariff rated for the goods originating from the Russian Federation” (“Resolution No. 1146”), the Cabinet of Ministers of Ukraine, with reference to the significant violation of the CIS FTA Agreement be the Russian Federation, imposed customs duties to the goods originating from the Russian Federation at preferential rates fixed by the Customs Tariff of Ukraine. Thus, Ukraine will levy customs duties from all Russian goods until 31 December 2016 instead of granting Russian goods a duty free regime, which was applied before adoption of Resolution No. 1146. At the same time by its resolution No. 1147 dated 30 December 2015 “On the ban on import of goods originating from the Russian Federation to the customs territory of Ukraine” (“Resolution No. 1147”) the Cabinet of Ministers of Ukraine banned import into Ukraine of a wide range of products primarily of agricultural nature until 5 August 2016. The ban covers such product categories as meat, fish, crustacean, some milk products, cheese, tea, confectionary, sweets, potato, spirit, beer, cigarettes etc. Except from food products the ban also covers railway and tram track equipment, diesel-electric locomotives, octanol, potash chloride, detergents, some agricultural chemicals. Resolution No. 1146 entered into force on 2 January 2016 and Resolution No. 1147 – on 10 January 2016.
On 20 January 2016 the Ministry of Economic Development and Trade of Ukraine informed that the list of goods originating from the Russian Federation prohibited from import into Ukraine, which was adopted by the Resolution No. 1147, was extended and now covers a number of new product categories.
The EAEU countries shall introduce the uniform system of labelling for products distributed on the market of the Union
On 8 September 2015, a decision on introduction of the uniform system of labelling of the products subjected to placement on the EAEU market was adopted on the session of the Intergovernmental Council of the Eurasian Economic Union (the “EAEU”).
The first pilot project based on this decision will be the application of special Radio Frequency Identification Designations (the “RFID”) to the fur products. Therefore, trade in fur products without RFID will be prohibited. Moreover, the prohibition on trade in fur products that are not marked with special designations will apply to the goods produced in the EAEU as well as to the imported goods. The implementation of the pilot project will start as of 1 April 2016.
The USA imposed the duty-free import regime for certain Ukrainian goods within the GSP
On 30 September 2015, the US Trade Representative Office announced the decision to return certain goods exported by Ukraine under the operation of the General System of Preferences (GSP) and, therefore, allowed their duty-free importation into the US territory.
In particular, the operation of the GSP effect is resumed with regard to the following groups of products:
Ukraine initiated the interim review of the anti-dumping measures against import into Ukraine of asbestos-cement corrugated sheets (slate) originating from the Russian Federation
According to the Decision of the Interdepartmental Commission on International Trade No. AD-333/2015/4442-06 dated 3 September 2015, the interim review of the anti-dumping measures against import into Ukraine of the asbestos-cement corrugated sheets (slate) originating from the Russian Federation classified under UCGFEA (HS) code 6811 40 00 10 was initiated. The review was initiated upon request of the Association “Ukrainian Chrysotile Union”. The Decision of the Commission came into force on 12 September 2015.
Just to remind: according to the Decision of the Commission “On Application of Definitive Anti-Dumping Duties against Import into Ukraine of Asbestos-Cement Corrugated Sheets (Slate) Originating from the Russian Federation” No. AD-151/2007/143-42 dated 20 April 2007 the definitive anti-dumping duty was established at the rate of 21.8 per cent. According to the Decision of the Commission “On Extension of Application of the Anti-Dumping Duties against Import into Ukraine of Asbestos-Cement Corrugated Sheets (Slate) Originating from the Russian Federation” No. АD-289/2013/4423-06 dated 24 April 2013 the measures were extended for five years.
The period of the anti-dumping investigation against import into Ukraine of caustic soda originating from the Russian Federation was extended
According to the Decision of the Interdepartmental Commission on International Trade “On Extension of Period of the Anti-Dumping Investigation against Import into Ukraine of the Caustic Soda Originating from the Russian Federation” No. AD-343/2015/4411-06 dated 6 November 2015 the period of the anti-dumping investigation was extended for 14 months.
Just to remind: the anti-dumping investigation against import of the caustic soda from the Russian Federation classified under UCGFEA (HS) code 2815 12 00 10 was initiated according to the Decision of the Commission “On Initiation and Conduct of the Anti-Dumping Investigation against Import into Ukraine of the Caustic Soda Originating from the Russian Federation” No. AD- 324/2014/4421-06 dated 3 November 2014.
Ukraine imposed safeguard duties on a wide range of products imported from the Republic of Belarus
On 25 November 2015, the Interdepartmental Commission on International Trade considered the materials regarding imposition of adequate measures in response to discriminatory and unfriendly actions of Belarus in respect of Ukrainian confectionary and brewing enterprises. Following consideration, the Commission adopted the Decision No. 345/2015/4411-06 “On Application of Adequate Measures in Response to the Discriminatory and Unfriendly Actions of the Republic of Belarus regarding the Lawful Rights and Interests of Subjects of Foreign Economic Activities of Ukraine – Confectionary and Brewing Enterprises”. The additional duty was imposed to certain Belarussian products at the rate of 39.2 per cent. The list of products that are subject to the duty is provided in Annex to the Commission’s Decision.
On 13 January 2016 the Commission adopted the Decision No. 349/2016/4411-06 suspending its previous decision and delaying imposition of duties until 1 May 2016. The new decision was taken with regard to the consultations with the authorized agencies of the Republic of Belarus and the position of Ukrainian enterprises.
Ukraine imposed the additional duty on motor vehicles imported from the Republic of Uzbekistan
The Interdepartmental Commission on International Trade considered the materials submitted by the Ministry of Economic Development and Trade and adopted the Decision No. 346/2015/4411-06 “On Application of Adequate Measures in Response to the Discriminatory and Unfriendly Actions of the Republic of Uzbekistan regarding the Lawful Rights and Interests of Subjects of Foreign Economic Activities of Ukraine– Automobile Enterprises”. According to this decision the additional duty at the rate of 12.12 per cent was imposed on the products classified under UCGFEA (HS) codes 8703 21 10 00; 8703 22 10 00 and 8703 23 19 10.
The measures shall apply from 5 December 2015 until the end of the discriminatory and unfriendly action of the Republic of Uzbekistan. Goods imported to the customs territory of Ukraine without the certificate of origin, if it is impossible to identify the origin of such goods, shall also be subject to the duty established by the Decision.
The anti-dumping measures against imports into Ukraine of float glass sheets from a number of countries were cancelled
The Interdepartmental Commission on International Trade repealed by its decisions No. AD-337/2015/4442-06; AD-338/2015/4442-06; AD-339/2015/4442-06 and AD-340/2015/4442-06 the anti-dumping measures against imports into Ukraine of float glass sheets (thermally polished glass) originating from the Republic of Bulgaria, the Republic of Poland, the Republic of Turkey and the Republic of Belarus. The decisions to repeal the measures were adopted by the Commission with regard to the national interests of Ukraine. The decisions in respect of Bulgaria, Poland and Turkey came into force on 10 October 2015, and the one in respect of Belarus came into force on 29 November 2015. Thus, as of December 2015 the anti-dumping measures regarding float glass sheets are applied exclusively against the goods originating from the Russian Federation.
Just to remind: anti-dumping measures in respect of float glass sheets, which are classified under UKTZED (HS) codes 7005 29 25 90, 7005 29 35 90, 7005 29 80 90 were imposed by the Commission’s decision No. AD-273/2012/4423-08 dated 26 April 2012 for the period of 5 years.
Ukraine imposed countervailing measures against imports of cars from the Russian Federation
The Interdepartmental Commission on International Trade by it Decision No. AS-344/2015/4411-06 dated 13 November 2015 imposed countervailing measures against imports of cars classified under UKTZED (HS) code 8703 into Ukraine. Countervailing measures were imposed upon the results of anti-subsidy investigation for the period of 5 years. Countervailing duty rate varies from 10.41 per cent to 17.66 per cent and is levied since 2 December 2015.
Ukraine initiated anti-dumping investigation against imports of grinding wheels from the Russian Federation
The Interdepartmental Commission on International Trade by its decision No. AD-347/2015/4411-06 dated 13 November 2015 initiated an anti-dumping investigation against imports into Ukraine of ceramic grinding wheels manufactured from normal and white electrocorundum, black and green silicon carbide classified under UKTZED (HS) code 6804 22 30 00, originating from the Russian Federation. Investigation was initiated upon the request of PJSC “Zaporizhsky abrasivny combinat”.
The Tenth WTO Ministerial Conference took place in Nairobi
During the week of 15-19 December 2015, the Tenth WTO Ministerial Conference was held in Nairobi (Kenya), in the scopes of which the trade ministers reached an agreement on a series of international trade initiatives (the “Nairobi package”).
The Nairobi package includes six Ministerial Decisions, the most remarkable of which is the Decision disciplining agricultural export competition, i.e. the commitmentof the WTO member statesto abolish export subsidies and other types of export support instruments for farm exports. According to this Decision, export subsidies of developed countries shall be eliminated immediately excluding the subsidies on processed products, dairy products and pork that may be kept by the developed countries until 2020. The developing countries have committed to remove their export subsidies by the end of 2018 except for those developing countries, which made the proper export subsidy notifications in the WTO. These countries will enjoy additional time to eliminate their export subsidy entitlements – by the end of 2022. The least developed countries and net food-importing developing countries will benefit from the export subsidies until the end of 2030.
The other substantive decisions in the field of agriculture cover public stockholding for food security purposes, special safeguard mechanism (SSM) for developing countries and cotton related measures.
Another significant Decision of Nairobi package relates tothe IT trade deal. In particular, the WTO Members representing the major exporters of IT products agreed on the timetable for implementation of the Information Technology Agreement (the “ITA”). The aim of ITA is elimination of import duties on 201 high-tech products valued at over USD 1.3 trillion per year and covering 10 per cent of world trade in goods.
The Ukrainian delegation was leaded by Ms Nataliya Mykolska, the Deputy Minister of Economic Development and Trade of Ukraine, Trade Representative. Thus, Ukraine held a number of bilateral negotiations with other WTO members including negotiations with Israel and Turkey on further conclusion of the free trade agreements and negotiations with Canada regarding the implementation of the Canada-Ukraine Free Trade Area.
Ukraine ratified the WTO Trade Facilitation Agreement
On 4 November 2015, the Parliament of Ukraine adopted the Law “On Ratification of the Protocol Amending the Marrakesh Agreement Establishing the World Trade Organization” envisaging Ukraine’s accession to the WTO Trade Facilitation Agreement after its entry into force.
Just to remind: the WTO Trade Facilitation Agreement is a constituting part of the Bali Package, adopted during the Ninth WTO Ministerial Conference in December 2013. In particular, the purpose of this Agreement is facilitation of customs procedures by reduction of related financial expenses and time of procedures, provision of transparent and objective rules, corruption therapy and introduction of new technologies. The document also sets the base for the effective cooperation between customs and other relevant bodies in the field of trade facilitation. The Protocol Amending the Marrakesh Agreement Establishing the World Trade Organization, which opened the door to the ratification of the Agreement, shall come into force after the completion of the national ratification procedures by two thirds of the WTO member states.
Ukraine joined the WTO Government Procurement Agreement
On 12 November 2015, the members of the WTO Committee on Government Procurement unanimously agreed on the Ukraine’s accession to the WTO Government Procurement Agreement (the “GPA”). However, the GPA has not come into force yet: Ukraine shall reform the effective legislation in line with the GPA prima facie and ratify the Agreement. Only 30 days after the submission of ratification instrument to the WTO Secretariat, the GPA will come into force.
Just to remind: the WTO GPA is a plurilateral agreement with a limited number of participants amounting to forty-five WTO members, including twenty-eight EU countries, the USA, Canada, Hong Kong, Switzerland, Israel, Japan and Korea. In 2015, Montenegro, New Zealand and Moldova also acceded to the GPA; and Australia, China, Tajikistan, Albania, Georgia, Jordan, Oman, Kyrgyzstan are in the process of accession. Ukraine initiated the negotiation process on the GPA accession in 2011.
Ukraine requested the consultations with the Russian Federation in the WTO over the measures affecting the importation of railway equipment
On 21 October 2015, Ukraine submitted to the WTO Dispute Settlement Body the request for consultations with the Russian Federation regarding the measures affecting the importation of railway equipment: railway rolling stock, railroad switches, other railroad equipment and parts thereof (DS 499) (the “Request”).
Pursuant to the Request, since 2014 the Russian Federation has imposed a number of restrictions without sufficient legal grounds, which made the importation of Ukrainian railway products de facto impossible. In particular, the previously issued conformity assessment certificates were suspended, the issuance of new certificates was restricted as well as the recognition of the conformity assessment certificates, issued by the laboratories of the Republic of Belarus and in the Republic of Kazakhstan was denied. Thus, according to the information provided in the Request, the exports of Ukrainian railway products that reached USD 1.7 billion in 2013, decreased to USD 600 million in 2014 and continue to decrease: the export value amounted to only USD 51 million in the first half of 2015.
In particular, the restrictions affected such Ukrainian producers as: the PJSC “Kryukov Railway Car Building Works”, the PJSC “Dnipropetrovsky Strilotchny Zavod”, the PJSC “Azovobschemash” and the State Enterprise “Kharkov Machinery Plant ”FED”.
Kazakhstan became the 162nd WTO member
On 30 November 2015, Kazakhstan became the 162nd WTO member after 20 years of negotiations on terms of accession. Just to remind: on 27 July 2015, the terms of accession of the Republic of Kazakhstan to the WTO were adopted at the General Council meeting. On the same day, the President of Kazakhstan, Mr. Nursultan Nazarbayev and WTO Director-General, Mr. Roberto Azevêdo, signed the Protocol of Accession of Kazakhstan to the WTO. The Protocol was ratified by the Parliament of Kazakhstan on 31 October 2015.
The Government has approved the list of pharmaceuticals and medical products to be procured through international organizations
On 8 October 2015, the Cabinet of Ministers of Ukraine adopted the Regulation No. 787 “On Approval of the List of Pharmaceuticals and Medical Products Procured According to Agreements (Contracts) for Procurement with Specialized Procuring Organizations”.
Pursuant to this Regulation, the government procurement shall be concentrated in twelve major spheres: “Centralized procurement of immunobiological preparations for immunobiological preventative medication”, “Centralized procurement of products for temperature control of immunobiological preparations”, “Centralized procurement of pharmaceuticals for tuberculosis treatment” etc.
The agreement between the MOH of Ukraine and UNDP for international procurement of pharmaceuticals was signed
On 27 October 2015 the Ministry of Health (MOH) of Ukraine and the United Nations Development Program (UNDP) signed the agreement for government procurement of pharmaceuticals through the UNDP. The agreement was signed pursuant to the Law of Ukraine No. 269-VIII dated 19 March 2015 “On Amendments to Certain Laws of Ukraine (Concerning Guarantee of Timely Access of Patients to Essential Medicinal Products and Medical Devices through Public Procurement with Participation of Specialized Organizations Engaged in Procurement“. This Law introduced the procedure of procurement of pharmaceuticals for the budget funds through international organizations which provide such services to states and other counterparties (in particular the UNDP, Crown Agents, UNICEF).
The State Service of Ukraine on Medicinal Products got back its powers in the sphere of licensing
On 7 October 2015 the Cabinet of Ministers of Ukraine adopted the Regulation No. 829 “On Amendments to the List of Licensing Authorities”. According to this Regulation the State Service of Ukraine on Medicinal Products is designated as the licensing authority for economic activities regarding production, wholesale trade, retail trade and import of pharmaceuticals (except active pharmaceutical ingredients). In turn, the State Service of Ukraine on Drug Control is designated as licensing authority for economic activities regarding cropping of plants included to the list of drugs, psychotropic preparations and precursors.
Just to remind: according to the Government Regulation dated 5 August 2015 No. 609 “On Approval of the List of Licensing Authorities and Termination of Certain Regulations of the Cabinet of Ministers of Ukraine” the State Service of Ukraine on Medicinal Products was deprived of its licensing powers which were transferred to the State Service of Ukraine on Medicinal Products and Drugs Control, established by the Government Regulation dated 10 September 2014 No. 442 “On Optimization of the System of the Central Executive Government Agencies”. However, due to delay of the process of transfer of these powers to the new Agency, it was decided to temporarily return them to the State Service of Ukraine on Medicinal Products.
Draft license conditions regarding activities in the field of medical practice have been published
On 2 December 2015 of the Ministry of Health of Ukraine published the Draft Resolution of the Cabinet of Ministers of Ukraine “On approval of licensing conditions for business in the sphere of medical practice“. Medical practice, according to the conditions is defined as a kind of economic activities in health care sector, which is performed by healthcare entities or medical offices of business entities without establishing a healthcare entity or by individual entrepreneurs to provide medical care and medical services. Medical practice may be performed according to the medical specialties (except for certain types of forensic specialties) and specialties of junior specialists with medical education.
The draft resolution provides for a uniform system of management and control of the quality of healthcare and aims to increase the efficiency of the licensing authority in the sphere of compliance assessment of persons who apply to a license and have practice in healthcare sector.
A draft resolution on simplification of conformity assessment procedures for medical devices procured through specialized procurement organizations has been published
In order to simplify public procurement procedures the Ministry of Health of Ukraine has drafted and published for discussion a draft resolution of the Cabinet of Ministers of Ukraine, which has to amend the Resolution of the Cabinet of Ministers of Ukraine of 2 October 2013 No. 753 “On Approval of the Technical Regulation for Medical Products“; the Resolution of the Cabinet of Ministers of Ukraine of 2 October 2013 No. 754 “On approval of the Technical Regulations for Medical Products for in vitro Diagnosis” and the Resolution of the Cabinet of Ministers of Ukraine of 2 October 2013 No. 755 “On Approval of the Technical Regulation for the Active Implantable Medical Devices“. In particular, it is proposed to establish a simplified procedure for conformity assessment of products which are procured through public procurement procedures under agreements executed by the Ministry of Health with specialized organizations engaged in procurement and which are covered by these technical regulations. Placement of such medical devices on market and labelling them with the national mark of conformity will not require certain procedures envisaged by the technical regulations, provided that the conformity assessment body recognizes results of assessment carried out outside of Ukraine.
The import surcharge is cancelled by the Parliament of Ukraine
On 24 December 2015, the Parliament of Ukraine adopted the Draft Law “On Measures regarding Stimulating of Foreign Trade Activities” No. 3533 cancelling import surcharge starting from 1 January 2016.
Just to remind: the import surcharge is levied starting from 26 February 2015. It was imposed by Ukraine according to the Article XII of the General Agreement on the Tariffs and Trade for the purpose of stabilization of the balance of payments of Ukraine.
The objects of the surcharge are the imported goods irrespective of their origin at the following rates:
Law on Public Procurement was adopted
On 25 December 2015, the Parliament of Ukraine passed the Draft Law “On Public Procurement” No. 3559 (the “Law”) providing for a legal base for procurement of goods, works and services to meet state and municipal needs.
In particular, the Law sets a framework for ProZorro electronic procurement system, which at the moment is operating in a pilot mode. According to the assessment of the Ministry of Economic Development and Trade, the electronic procurement system, envisaged by the Law, will raise competition, reduce corruption and save approximately UAH 30 billion per year.
The central executive bodies and the purchasers operating in specific areas (listed in the Law) shall handle their state procurements via the ProZorro e-system as of 1 April 2016, whereas other purchasers will be transferred to the system as of 1 August 2016.
New Approach towards Food Safety Regulation
On 20 September 2015, the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Regarding Food Products” No. 1602-VII dated 22 July 2014 came into force (the “Law”). Being based on the principle “from farm to fork“, the Law introduces all basic EU standards applicable to the cycle of production, processing and distribution of agricultural food (e.g. the principles of HACCP, traceability, responsibility of business operators). Besides, the Law envisages a new approach towards (1) the responsibility of the food market operators and (2) the system of state supervision and control on the market.
The single competent authority implementing the state policy in the field of food safety shall be the State Service of Ukraine on Safety of Foodstuffs and Consumer Protection. As far as this authority is still in development, its functions are exercised by the State Veterinary and Phytosanitary Service of Ukraine.
The mandatory certification of alcoholic beverages and motor vehicles has been cancelled
On 20 September 2015, the Ministry of Economic Development and Trade of Ukraine issued the Order permitting importation of alcoholic beverages without mandatory certification by UkrSEPRO.
Besides, according to the Order of the Ministry of Economic Development and Trade “On Amendments to the List of Products Subject to Mandatory Certification in Ukraine, and Recognition as Invalid of Some Orders Issued by the State Committee of Ukraine for Standardization, Metrology and Certification“ No. 451 dated from 5 June 2015, the mandatory certification of road vehicles, accessories and parts thereof shall be cancelled as of 1 January 2016.
Ukrainian-German Chamber of Commerce with the headquarters in Kyiv was established
On 23 October 2015, the agreement on establishment of German-Ukrainian Chamber of Commerce with headquarter in Kyiv was signed. The document was signed by the Governments of Ukraine and Germany within the framework of Ukrainian-German business forum. It is expected that the activity of German business in Ukraine will increase due to the functioning of this institution.
Kazakhstan cancelled the restrictions on import of dairy products from Ukraine
According to the notification of the State Veterinary and Sanitary Service of Ukraine, beginning from 25 September 2015 temporary restrictions on import of dairy products from Ukraine to the Republic of Kazakhstan were terminated. Moreover, the additional laboratory control regime was terminated for such producers as PJSC “Kupyansky Molochnokonservny Kombinat” and LLC “Klub Syru”. However such treatment was established for products produced by PJSC “Lactalis Mikolayiv” and LLC “Molochniy Dim”. According to the notification the restriction was cancelled following submission of a guarantee by the State Veterinary and Sanitary Service.
Also Ukraine submitted the application to the competent authority of the EAEU to add certain Ukrainian enterprises to the register of foreign companies entitled to import milk products into the Union.