I. REGIONAL TRADE LIBERALIZATION
Ukraine ratified the Protocol to the Partnership and Co-operation Agreement between the EC and their Member States and Ukraine on the participation of Ukraine in the EU programs
The Parliament of Ukraine ratified the Protocol to the Partnership and Co-operation Agreement between the EC and their Member States, of the one part, and Ukraine, of the other part, concerning the participation of Ukraine in Union programmes by adopting the Law of Ukraine of September 21, 2011 No. 3764-VI. Pursuant to the said Protocol Ukraine is allowed to participate in different Union programs. The exact terms and conditions of the said participation as well as applicable financial contributions will be agreed upon in the relevant memorandums of understandings to be signed for each particular program.
Ukraine-EU talks over FTA1
On October 19, 2011 in Brussels Mr. Andrii Klyuyev, the First Deputy Prime Minister – the Minister of Economic Development and Trade of Ukraine, held the meeting with Mr. Karel De Gucht, the European Commissioner for Trade, to finally agree upon key parameters with regards to the deep and comprehensive free trade area between Ukraine and the EC. According to Mr. Andrii Klyuyev the achieved arrangements "…open the way to completion of negotiations on an Association Agreement by the end of the year". The said conclusion was also confirmed by Mr. Karel De Gucht. As of today the experts were instructed to finalize all technical formalities on the basis of the reached agreements.
New CIS FTA
On October 18, 2011 the prime-ministers of the CIS countries signed the new version of the CIS FTA. Contrary to the previous version of the CIS FTA of 1994, the new CIS FTA is adapted to the WTO rules as well as stipulates the exact dispute settlement mechanism to be employed by the contracting parties in case of the violation of the CIS FTA provisions. At the same time, the new CIS FTA still have lots of exemptions from the FTA regime applicable to different products, to name but a few: to oil, gas, sugar, spirits, sunflower seed, ferroalloys, cattle etc.
On October 19, 2011 the Draft Law "On Ratification of the Free Trade Agreement between Ukraine and States of the EFTA, the Agreement on Agriculture between Ukraine and the Kingdom of Norway, the Agreement on Agriculture between Ukraine and Iceland, the Agreement on Agriculture between Ukraine and the Swiss Confederation" was registered with the Parliament of Ukraine under No. 0229. The EFTA Agreement is the so called "new generation" FTA covering lots of essential commercial issues, including trade in goods and services, protection of intellectual property rights and investments, conducting government procurement, etc. Just to remind: the EFTA FTA and other agreements on agriculture were signed by Ukraine on June 24, 2010.
II. UKRAINE AND WTO
Renegotiation by Ukraine of its WTO market access commitments
According to the publicly available information2 Ukraine is considering re-negotiating its market access commitments (particularly tariff concessions) in the WTO under Article XXVIII of the GATT 1994. Presently, it is unclear which exactly tariff concessions will be subject to renegotiations by Ukraine. However, most probably, renegotiation process may concern tariffs applicable to imports into Ukraine of motor cars, light industrial goods, some animal agriculture products. Just to remind: under Article XXVIII of the GATT 1994 modification or withdrawal of tariff concessions shall be made only after the relevant consultations with (a) the WTO members with which the concession was initially negotiated; (b) the WTO members with principle interest in concession and (c) the WTO members with substantial interest in concession. In the negotiations the WTO member seeking modification or withdrawal is expected to give compensatory concession on other products. If agreement is not reached, the affected members get the right to withdraw substantially equivalent concessions initially negotiated with the member making the withdrawal3.
Consultations between Ukraine and Moldova
On October 14, 2011 in Kishinev there were the official consultations between Ukraine and Moldova in respect of WT/DS421 (Republic of Moldova – measures affecting the importation and internal sale of goods (environmental charges)) and WT/DS423 (Ukraine – taxes on distilled spirits). During the said consultations Ukraine and Moldova tried to reach an agreement on a bilateral level on the most suitable for both sides' solutions in solving the said disputes. Particularly, Moldova notified that the relevant draft law considerably amending the present order of environmental charges levying is elaborated and approved by the Government of Moldova. In the words of Moldova adoption of the said draft law will eliminate the alleged discrimination. In addition, Moldova promised to provide Ukraine with the said draft law shortly for analysis thereof. Instead, Ukraine promised to consider possible options to eliminate the alleged discrimination as to the distilled spirits. It was agreed to hold additional official consultations on November 2011.
III. TRADE REMEDIES
Extension of term of anti-dumping investigation related to import into Ukraine of methyl alcohol originating from Russia
On October 20, 2011 the Interdepartmental Commission on International Trade extended for 3 months the term of anti-dumping investigation related to import into Ukraine of methyl alcohol originating from Russia by its decision No. АД-262/2011/4403-29. The respective official notification was officially published on 21 October 2011. Just to remind: the said anti-dumping investigation was initiated on July 21, 2010.
Extension of term of safeguard investigation related to import into Ukraine of oil products notwithstanding the country of origin and export
The Interdepartmental Commission on International Trade adopted a decision No. СП-263/2011/4402-41 of October 20, 2011. Under the said decision the term of safeguard investigation related to import into Ukraine of oil products notwithstanding the country of origin and export was extended for 60 days. Just to remind: the said safeguard investigation was initiated on January 29, 2011.
Extension of applying safeguards to import into Ukraine of steel pipes
On September 30, 2011 the Interdepartmental Commission on International Trade adopted the decision No. СП-261/2011/4423-28. Pursuant to the said decision application of safeguards in the form of quotas to import in Ukraine of steel pipes classified under codes 7304 29 10 00 and 7304 29 30 00 is extended for 3 years i.e. by September 30, 2014. Annual volume of quota is divided between Russia, Austria, Poland, Romania, Slovakia, India, China and other countries. Allocation of quotas is confirmed by special licenses issued by the Ministry of Economic Development and Trade. Just to remind: the initial safeguards were applied on July 30, 2008.
Cabinet of Ministers of Ukraine applied quotas to imports of motor cars from Uzbekistan
On October 12, 2011 the Cabinet of Ministers of Ukraine adopted the Regulation "On Application of Licensing Regime and Establishment of Quotas for Imports of Motor Cars Originating from Uzbekistan" No. 1073. The said Resolution is aimed at implementation of the decision of the Interdepartmental Commission on International Trade adopted on the basis of the anti-discriminatory investigation initiated at the request of the Association of the Ukrainian Car Producers "Ukravtoprom".
According to the said Resolution the following quotas shall apply:
Motor cars imported from Uzbekistan
Terms for application of quotas
Customs code under the UCG FEA
New motor cars and other motor vehicles designed primarily for transportation of passengers (except motor vehicles under the commodity item 8702), including van automobiles for passengers and commercial use and racing cars with cylinder capacity under 1000 cubic cm, over 1000 cubic cm but not exceeding 1500 cubic cm, over 1500 cubic cm but not exceeding 2200 cubic cm.
15.11.2011 – 14.11.2012
8703 21 10 00
8703 22 10 00
8703 23 19 10
15.11.2012 – 14.11.2013
8703 21 10 00
8703 22 10 00
8703 23 19 10
15.11.2013 – 14.11.2014
8703 21 10 00
8703 22 10 00
8703 23 19 10
Anti-discriminatory remedies legislation may be amended
On September 20, 2011 the Draft Law "On Amending Certain Laws of Ukraine regarding Protection of National Producers from Discriminatory and/or Unfriendly Actions of Foreign States, Customs Unions or Economic Groups" of May 26, 2011 No. 8571 was adopted by the Parliament of Ukraine in the first reading. The Draft Law was submitted by the Government of Ukraine and is expected to facilitate the application of the so called anti-discriminatory remedies by Ukraine as provided by Article 29 of the Law of Ukraine "On Foreign Economic Activities". In particular, the Draft Law provides for the following major amendments:
(i) The right to apply embargo will be included in the authority of the Parliament of Ukraine, the Cabinet of Ministers of Ukraine will have the authority to use licensing regime, and the Interdepartmental Commission on International Trade will be authorized to apply other measures provided by the Ukrainian legislation;
(ii) Indicative prices are excluded from the list of anti-discriminatory measures. Notably, the said anti-discriminatory remedies may not be applied to the WTO Members as according to the Law of Ukraine "On Foreign Economic Activities" in case Ukraine and the country, customs union or the economic group applying discriminatory measures are members of the same international intergovernmental organization (e.g. the WTO), the dispute over discriminatory measures is settled in accordance with the rules and procedures of such organization.
Just to remind: application of anti-discriminatory measures is regulated by the Law of Ukraine "On Foreign Economic Activity". The anti-discriminatory remedies (e.g. licensing regime, import duties, embargo etc.) are applied following the anti-discriminatory investigation, which aims at the detection of discriminatory actions i.e. trade barriers for products originated in Ukraine. Basically, the said measures are applied as countermeasures against discrimination of Ukrainian products abroad. Prior to the application of said trade remedies Ukraine conducts negotiations with its foreign partners, where discrimination occurs, aimed at elimination of discrimination. So far Ukraine successfully agreed on the elimination of discrimination in the Republic of Belarus with regard to caramel products (2010), certain household appliances (2008), and anti-discriminatory measures were not applied. At the same time, on October 12, 2011 anti-discriminatory measures to import of motor cars originating from Uzbekistan in the form of quotas were applied (please see in details above).
IV. CUSTOMS ISSUES
The order of preliminary documentary control of the imported commodities holding in Ukraine was changed
On October 5, 2011 the Cabinet of Ministers of Ukraine adopted the Regulation "On Some Questions regarding Performance of Preliminary Documentary Control at Customs Border Points of Ukraine," No. 1030, with the effect from October 14, 2011. The Regulation establishes the order for carrying out of preliminary documentary control (PDC), prescribes for the list of documents to be submitted for PDC purposes as well as the reasons for PDC termination.
Approval of information about actual export of commodities from Ukraine
The State Customs Service of Ukraine posted on its website the Draft Resolution of the Cabinet of Ministers of Ukraine "On Introducing the Order for Approving Actual Export of Commodities from the Customs Territory of Ukraine" 4elaborated with the aim to improve the refund of VAT related to export operations as well as to avoid unjustified VAT refund. The said Draft Resolution stipulates the order of issuing by the relevant customs authorities of approvals of the actual export of commodities from Ukraine.
Documents of Ministry of Health of Ukraine to be submitted for customs clearance purposes
The Ministry of Health of Ukraine adopted the Order "On Determination of Codes under Ukrainian Classification of Goods for Foreign Economic Activity (UCCFEA), for which the Ministry of Health of Ukraine Issues Documents Necessary for Customs Control and Customs Clearance" No. 607 dated September 22, 2011 with the effect from October 21, 2011. The said Order defines the list of products for which obtaining of any approvals/permits of the Ministry of Health of Ukraine is required as well as the list of such documents to be issued for customs clearance purposes.
Draft Law regarding taxation of temporary imported commodities into Ukraine
On September 29, 2011 the Parliament of Ukraine registered the Draft Law "On Amending Certain Legislative Acts of Ukraine regarding Taxation of Temporary Imported Commodities to Ukraine" under No. 9226. The said Draft Law stipulates, among others, payment of 3% of the import duty to be paid if the said products were released in free circulation on the Ukrainian market, for each full or non-full month, during which the said products are declared to stay in Ukraine.
Draft Order on preliminary decisions on classification and codes of commodities in Ukraine5
The Ministry of Finance of Ukraine published on its website the Draft Order "On Approval of the Order for Adopting Preliminary Decisions on Classification and Codes of Commodities pursuant to Ukrainian Classification of Commodities for Foreign Economic Activity". The new Draft Order addresses in details the order of adoption of preliminary decisions on classification and codes of commodities starting from filing of the respective application, consideration of the latter by the relevant authorities and finishing by ceasing to be effective or by cancellation of the said preliminary decision.
V. AGRICULTURAL MARKET
Export duties for certain agricultural products are abolished
On October 19, 2011, the President of Ukraine signed the Law of Ukraine "On Amendments to the Law of Ukraine "On Introduction of Changes to the Tax Code of Ukraine and on Export Duty Rates for Certain Types of Grain Crops" No. 3906-VI dated October 7, 2011 with the effect from October 22, 2011. The said Law stipulates export duty at the rate of 14%, but not less than 23 EUR per metric ton applicable only to barley. Meanwhile, export duties for maize, spelt, meslin, wheat and emmer wheat are abolished.
Memorandum of Understanding between Ukrainian grain traders and Ministry of Agrarian Policy of Ukraine
On October 10, 2011 the Ministry of Agrarian Policy of Ukraine, the American Chamber of Commerce, the Ukrainian Grain Association, the Ukrainian Agrarian Confederation, the European Business Association signed the Memorandum of Understandings, which expected to ensure legal transparency and predictability to grain traders in Ukraine for the period of 2011/2012. The Memorandum obliges the Ministry of Agrarian Policy of Ukraine to send written notifications about the introduction of grain export restrictions 2 months prior application of the respective restrictions provided that the grain export volumes reach the agreed 80%. In their turn, the grain market participants agreed to inform the Ministry of Agrarian Policy of Ukraine of their export volumes on a weekly basis. In addition, also it was agreed to export 24,77 million tons of grain provided that grain harvest yielded 50,25 million tons.
Ukraine acceded to International Convention for Unification of Certain Rules Relating to the Arrest of Sea-Going Ships
On September 7, 2011, the Parliament of Ukraine passed the Law "On Ukraine's Accession to the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships (Brussels, 1952)" No. 3702-VI with the effect from October 10, 2011. Roughly speaking, the Convention is expected to regulate the main rules for arrest of vessels of the member states in the ports of Ukraine as well as arrest of Ukrainian vessels in the other member states. At the same time, Ukraine reserved a right not to apply the provisions of the said Convention in relation to the warships and other state-owned vessels being operated non-commercially.
Ukraine ratified Air Communication Treaty with Georgia
On September 7, 2011 the Parliament of Ukraine adopted the Law of Ukraine "On Ratification of Air Communication Treaty between the Cabinet of Ministers of Ukraine and the Government of Georgia" No. 3703-VI with the effect from October 10, 2011. The Treaty stipulates new conditions for granting permissions to operate flights, right of Ukraine and Georgia to check aviation enterprises for their compliance with standards of the International Civil Aviation Organization, including in part of tariffs approving procedures.
VII. MEDICINE & PARMACEUTICALS
Falsification of medicines to be punished in Ukraine
On October 14, 2011 the President of Ukraine, signed the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine regarding Prevention of Medicine Falsification" No. 3718-VI dated September 8, 2011 with the effect from November 1, 2011. The said Law directly prohibits such actions as production, purchase, transportation, delivery or storage with the aim to sell or sale of the falsified medicines. For performance of the above activities the persons shall be brought either to criminal or administrative liability depending on damages caused. For instance, the Law stipulates the following types of criminal liability: a fine equal to 1,000-2,000 of citizen tax free minimum incomes (approximately 2200-4400 USD), imprisonment or restriction of liberty for the period by 3 years with the confiscation of falsified medicines, raw materials and equipment used for their production.
New regulations on registration of wholesale prices for medicines and medical products
The Ministry of Health of Ukraine introduced new form of the registers of wholesale and release prices for medicines and medical products. The forms were introduced by its Order "On Approval of Regulations on Register of Wholesale and Release Prices for Medicines and Medical Products, the Order for Introduction of Changes therein and the Form of Applications for Registration of Wholesale and Release Prices for Medicines and Medical Products," No. 602 dated September 21, 2011.
The said Regulations shall apply not only to medicines (as it is now), but also to medical products. Therefore, starting from October 17, 2011 wholesale and release prices for medicines and for medical products will be registered in different registers. In addition, the Ministry of Health of Ukraine is authorized to generate and administer the said register. Particularly, wholesale and release prices for medicines and for medical products will be registered by the relevant orders of the Ministry of Health of Ukraine orders on price registration. Besides, the information on prices will be placed on the official web-site of the Ministry.
VII. OTHER DEVELOPMENTS
Personal data protection issues
On September 2011 the public council of the State Service of Ukraine for Personal Data Protection was organized6. The representatives of 30 sector associations (e.g. of banks, insurers, debt collectors, human resources companies, mass media, direct marketing companies, stock market players, securities deposittees) have joined in order to elaborate and implement clear procedures for processing personal data as the Law of Ukraine "On Personal Data Protection" No. 2297-VI of June 1, 2010 has numerous "loopholes". Elaboration of the said procedures are vitally important since starting from January 1, 2012 the companies, which activities with personal data are not in compliance with the Law of Ukraine "On Personal Data Protection", will be brought to liability.
Product liability issues
On September 17, 2011 the Law of Ukraine "On Liability for Damages Caused by Defective Products" No. 3390-VI entered into force. The said Law shall apply if defective products cause damage defined as (a) damage caused by personal injuries or by other damage to health; (b) damage caused by death; or (c) damage to, or destruction of, any item of property other than the defective product itself. Besides, the injured person is allowed to claim for damages against either producer, importer, seller of the defective products jointly or alternatively to one of them separately.
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3Please see for details: Tariff Negotiations and Renegotiations under the GATT and the WTO: Procedures and Practice. Anwarul Hoda / Cambridge University Press, 2002