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18 October 2016

International Trade News. August – September 2016

WTO NEWS

WTO EXPERTS HAVE ADOPTED TWO DECISIONS AGAINST RUSSIA CONCERNING ITS TRADE DISPUTES WITH THE EU

On 12 August 2016 the Panel has issued the case report in “Russian Federation – Tariff Treatment of Certain Agricultural and Manufacturing Products|1| (with the participation of Ukraine as a third party). The Panel supported the EU's arguments and recognized that the import duty rate applied by Russia to paper, cardboard, palm oil, refrigerators and freezers exceeded the maximum allowed rates approved in the Russia’s Schedule of Tariff Commitments. Such actions were found to be in breach of Article II:1 of the GATT 1994.

On 19 August 2016, the Panel has issued another case report in favor of the EU in “Russian Federation – Measures on the Importation of Live Pigs, Pork and Other Pig Products from the European Union.”|2| This time the Panel found that a complete ban on the importation of live pigs, pork and other pig products from the EU (including the area where no cases of African swine fever had been identified) violated the WTO Agreement on the Application of Sanitary and Phytosanitary Measures. Russia appealed the Panel’s report to the WTO Appellate Body on 23 September 2016.

UKRAINE INITIATED THE PROCEDURE FOR CHALLENGING THE TRANSIT BAN IMPOSED BY RUSSIA

On 14 September 2016, the Ministry of Economic Development and Trade of Ukraine started the procedure of challenging the trade restrictive measures imposed by the government of Russia in the WTO. The dispute concerns introduction of the ban on transit of Ukrainian goods through Russian territory to third countries. Such embargo was introduced by Russia in early 2016. Ukraine is supported by a number of countries including Canada, the USA, the EU, Japan, Australia, Switzerland, Korea and Turkey.|3|

REGIONAL TRADE LIBERALIZATION

UKRAINIAN EXPORTERS ENTERING ASIAN MARKET

Upon the negotiations between Ukraine and Indonesia, the parties have signed the Memorandum of cooperation in the field of agriculture. The parties have agreed to start consultations regarding establishment of a free trade zone, the agreement was reached during the official visit of the President of Ukraine Petro Poroshenko to Indonesia having place on 5-7 August 2016.|4|

Furthermore, the Agricultural Committee of the Chinese Commerce Association and the Ukrainian Association of Gardening and Berries-Growing have signed the Memorandum of cooperation resulting from the negotiations on the entrance of Ukrainian exporters to Chinese market. The next step in this regard shall be the visit of Ukrainian delegation to China allowing Ukrainian farmers to get acquainted with the peculiarities of the local market functioning and with some technical aspects of export of agricultural products to China.|5|

UKRAINE APPLIES FOR ACCESSION TO THE PAN-EURO-MED CONVENTION

Ukraine has referred to the General Secretariat of the EU Council with the application for accession to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (the “Pan-Euro-Med”).

Pan-Euro-Med establishes the unified rules of origin for its members. This provides new opportunities for economic cooperation and establishment of trade relations. As for now, there are 42 members of the Pan-Euro-Med, including the EU, Switzerland, Norway, Iceland, Liechtenstein, Egypt, Israel, Jordan, Turkey, Moldova, etc. Participation in the Pan-Euro-Med will allow Ukraine to export its goods applying the principle of diagonal cumulation, which a simplified method for establishing the country of goods’ origin.|6|

TRADE LIBERALIZATION WITH BELARUS

On 10 September 2016, the Interdepartmental Commission on International Trade (the “Commission”) published notification on cancellation of the Decision No. 345/2015/4411-06 dated 13 November 2015 “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 Ukrainian Foreign Economic Entities – Confectionary and Brewing Enterprises” (the “Decision”).

By this Decision the additional duty on certain Belarusian goods was imposed at the rate of 39,2 per cent. On 13 January 2016, the Commission temporarily suspended the Decision and postponed the application of the duties taking into account the results of consultations with the competent authorities of Belarus and the position of Ukrainian enterprises. On 8 September 2016 upon review of the materials submitted by the Ministry of Economic Development and Trade of Ukraine the Commission decided to cancel the abovementioned decision.|7|

RUSSIA BANNED IMPORT ON SALT FROM UKRAINE

In accordance with the Regulation of the Russian Government dated 10 September 2016|8| a list of goods prohibited for importation to Russia from certain countries was supplemented by salt (HS code 01.25.00). The ban concerns import of food and raw salt to Russia from Ukraine and other countries, including the USA and the EU. The ban shall come into force on 1 November 2016.

For reference: The Order of the President of Russia No. 560 dated 6 August 2016 prohibited import of certain types of food products to Russia. The list of goods prohibited for importation into Russia is envisaged by the Government Resolution No. 778 of 7 August 2014. The ban concerns the imports of food and agricultural raw materials of Ukrainian origin as well.

SANITARY AND PHYTOSANITARY MEASURES

BAN ON IMPORT OF UKRAINIAN PORK

Starting from 1 September 2016 Belarus imposed a temporary ban on import of pigs and pork products from Volyn Region and Vinnytsa Region|9|, subsequently, starting from 6 September 2016 the same ban was imposed on the products from Kharkov region.|10| The ban has been justified by the cases of African swine fever identified in those regions. It concerns the import to Belarus of live pigs, pork, pork raw materials obtained from the animals of susceptible species, feed which was in use, maintenance and pig slaughter equipment.

Similar measures have been adopted by Armenia. In this case, the ban on import of live pigs concerns the import of pork, as well as of all genetic animal materials, raw materials, finished goods and hunting trophies.|11|

Moldova, in turn, has temporary banned the import of meat from Ukraine, as well as food and animal by-products from animals susceptible to the disease.|12|

BAN ON IMPORT OF CATTLE TO UKRAINE

As a result of the outbreak of dermatitis disease of cattle, starting from 8 September 2016, the import of cattle, its genetic materials, products and raw materials (except for the products and raw materials processed in a way which ensures the destruction of virus) to the territory of Ukraine was prohibited. This prohibition concerns Turkey, Bulgaria, Albania, Iraq, Kazakhstan, Russia, etc. The relevant ban was communicated by the Letter of the State Fiscal Service No. 30044/7/99-99-18-03-01-17 dated 8 September 2016.|13|

TRADE DEFENCE MEASURES

TAIWAN HAS IMPOSED ANTIDUMPING DUTIES ON HOT-ROLLED SHEET FROM UKRAINE

On 16 August 2016 Taiwan imposed anti-dumping duties on hot-rolled steel sheet from Ukraine, India and South Korea classified under HS codes 7208.51.10.10, 7208.51.10.20, 7208.51.10.30, 7208.51.20.00, 7208.51.30.00, 7208.51.40.00, 7208.52. 10.20, 7208.52.20.20, 7208.52.30.20, 7208.90.10.00, 7208.90.21.00, 7208.90.30.00, 7208.90.40.00, 7211.14.10.10, 7211.14.10.20, 7211.14.10.30, 7211.14.20.20, 7211.14.30.20, 7211.14.40.20, 7225.40.00.90.|14| The anti-dumping duty rate for Ukrainian producers amounts to 26,57 per cent.|15|

CANADA HAS EXTENDED ANTIDUMPING DUTIES ON HOT-ROLLED STEEL SHEET FROM UKRAINE

On 12 August 2016 Canadian International Trade Tribunal extended the anti-dumping duties on hot-rolled steel sheet from Ukraine, Brazil and China|16| classified under HS codes 7208, 7211, 7225 and 7226. The anti-dumping duty for Ukrainian producers reaches 77 per cent. Such duty was introduced in 2001 and was further extended by Canadian International Trade Tribunal through sunset reviews in 2006|17| and in 2011.|18|

AGRICULTURE

THE CABINET OF MINISTERS OF UKRAINE HAS APPROVED THE RULES FOR THE PRODUCTION OF ORGANIC PRODUCTS

On 31 August 2016 the Cabinet of Ministers of Ukraine approved the Decree No. 587 “On Approval of the Detailed Rules for the Production of Organic Products (Raw Material) of Plant Origin” (the “Rules”). The Rules are aimed at governing relations between economic entities and the state in regard of organic production and at unification of the requirements for product certification and its cultivation for export.|19| This shall contribute to the further integration of the Ukrainian agricultural sector into the world market.

STATE FINANCING OF UKRAINIAN FARMERS HAS INCREASED

On 8 September 2016, the Cabinet of Ministers of Ukraine adopted amendments to the procedure of using funds from the state budget for the farmers’ support, approved by the Regulation of the Cabinet of Ministers of Ukraine No. 1102 of 25 August 2004. In particular, the maximum amount of financial support for the farmers on a return basis was increased from UAH 250.000 to UAH 500.000. Such support can be received only on a competitive basis.|20|

PHARMACEUTICALS

ALTERNATIVE DRAFT LAW ON HEALTH INSURANCE

The Parliament of Ukraine has registered the draft law No. 4981-2 “On Compulsory State Social Health Insurance in Ukraine” (the “Draft Law No. 4981-2”), proposed by the Head of the Verkhovna Rada Committee of Health, Olga Bohomolets. The Draft Law No. 4981-2 differs from the earlier registered alternate Draft Law No. 4981 “On Compulsory Social Health Insurance in Ukraine” (the “Draft Law No. 4981”).

In particular, the Draft Law No. 4981 provides that financial institutions which are registered in the established order and licensed to carry out the compulsory social health insurance, are members of the self-regulatory organization of insurers offering this type of insurance services, fulfill the relevant requirements and are accredited by the authorized body can become insurers. At the same time, the Draft Law No. 4981-2 provides that there is only one insurer – the Health Insurance Fund with branches in the regions and in Kyiv.|21|

AMENDMENTS TO THE LEGISLATION ON PUBLIC PROCUREMENT OF DRUGS THROUGH SPECIALIZED ORGANIZATIONS

On 31 August 2016, the Order of the Cabinet of Ministers of Ukraine No. 559 of 23 August 2016 came into force. It amends the existing procedure of public procurement of drugs and medical devices through specialized organizations engaged in public procurement. According to the existing order, the Ministry of Health of Ukraine adopts a decision on the choice of the specialized organizations engaged in public procurement of drugs based on the criteria established by the Cabinet of Ministers of Ukraine.|22| The amendments cancel the requirement to provide the price of goods as one of these criteria.

As noted, the price of goods is determined by the specialized organization after the selection of suppliers according to the internal procedures and thus is available only after the relevant contracts with such suppliers are signed.|23| Therefore, there is no need to require the specialized organizations to provide the price of goods up to that moment.

THE ANTIMONOPOLY COMMITTEE OF UKRAINE HAS FINED FIVE PHARMACEUTICAL COMPANIES FOR THE AMOUNT OF UAH 1.5 MILLION

Five pharmaceutical companies have been fined for the violation of the Ukrainian legislation on economic competition protection. The Antimonopoly Committee of Ukraine has concluded that specific provisions of the distribution agreements concluded by these companies entailed increase of the prices for medicines within public procurement procedures. According to the Antimonopoly Committee of Ukraine, such actions of the companies violate the Law of Ukraine “On Protection of Economic Competition” in the part of concerted actions.|24|

ABOLISHMENT OF THE TENDER PROCEDURE FOR PUBLIC PROCUREMENT OF MEDICINAL PRODUCETS IN CASE OF EPIDEMIC DISEASES HAS FAILED

The Parliamentary Committee on Combating Corruption (the “Committee”) has ruled that, the Draft Law No. 4934 “On Amendments to Article 2 of the Law of UkraineOn public procurement” (the “Draft Law”) is inconsistent with the relevant provisions of anti-corruption legislation. The Draft Law was aimed at abolishment of the tender procedure for public procurement of medical supplies, goods, services and works necessary for the implementation of sanitary and anti-epidemic measures in the event of infectious and massive non-infectious diseases.

As noted by the Committee, such abolishment of tender procedures creates the risk of corruption since the Draft Law does not contain a clear and exclusive list of cases and terms for procurement without tender procedures.|25|

OTHER NEWS

THE NATIONAL BANK OF UKRAINE HAS SIMPLIFIED THE TERMS OF PAYMENT FOR IMPORTS OF SERVICES

The amendments approved by the Order of the Board of the National Bank of Ukraine No. 372 of 18 August 2016 “On Declaring Null and Void Some Regulations of the National Bank of Ukraine” have abolished a requirement for residents to obtain a cost examination certificate from the State Information and Analytical Center when purchasing services from non-residents,irrespective of their value.

The National Bank of Ukraine explains that such abolishment does not weaken the control over the conduct of foreign operations on import of services, while being an important step towards the implementation of policy of gradual liberalization of the currency market regulations.|26|

THE CABINET OF MINISTERS OF UKRAINE HAS APPROVED THE PROCEDURE OF SUBMISSION AND ISSUING OF E-DOCUMENTS BY LICENSING AUTHORITIES

The procedure for filing electronic documents to the licensing authorities and receipt of electronic documents from them through electronic services has been approved by the Resolution of the Cabinet of Ministers of Ukraine No. 561 of 23 August 2016. Upon consultations with the Ministry of Economic Development and Trade of Ukraine, the licensing authorities shall adopt the relevant forms of electronic documents, publish and update them on their official web sites as well as on the Single State Portal of Administrative Services.|27|

UKRAINE AND GEORGIA HAVE SIGNED THE AGREEMENT ON RAIL COMMUNICATION THROUGH THE PORTS

On 13 September 2016, during the International Maritime Forum, the Cabinet of Ministers of Ukraine and the Government of Georgia signed the agreement on organization of direct international railway traffic through the ports of Ukraine and Georgia.|28|

|1|https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds485_e.htm#bkmk485r

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