I. HOT ISSUE
New Customs Code of Ukraine entered into force on June 1, 2012
On March 13, 2012 the Parliament of Ukraine adopted the new Customs Code of Ukraine No.8130-д with proposals submitted by the President of Ukraine.
New Customs Code contains a number of positive changes that can ease the activity of business entities. However, some amendments may become effective only in case of adoption of the respective by-laws and fair application of them by customs authorities.
New Customs Code provides for:
II. REGIONAL TRADE LIBERALIZATION
EU-Ukraine Agreement on Association is initialed|1|
On March 30, 2012 in Brussels, the Agreement on Association between the EU and Ukraine was initialed. According to an explanation by the European side it means that the parties had reached an agreement on the wording of the text.
FTA with EFTA entered into force on June 1, 2012|2|
The Ministry of Foreign Affairs of Ukraine finally deposited the country’s instruments of ratifications of the Free Trade Agreement between the States of the European Free Trade Association and Ukraine with the Depositary (the Government of Norway). The Free Trade Agreement between the EFTA states and Ukraine, 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 entered into force on June 1, 2012.
Rates of import duty under agreements with the EFTA States
The State Customs Service of Ukraine adopted the Letter "On Tariffs under the Agreements with the EFTA States" No.16/1-16.1/1118-EP dated May 29, 2012. The Letter provides for the finalized lists of import duty rates for 2012, calculated in accordance with agreements with the EFTA States. These lists of import duty rates are set out for each of the EFTA countries for all tariff nomenclature of the Customs Tariff of Ukraine.
III. TRADE DEFENSE REMEDIES
New composition of the Interdepartmental Commission on International Trade
On April 18, 2012 the Cabinet of Ministers of Ukraine by Resolution No. 310 approved the new composition of the Interdepartmental Commission on International Trade, headed by the Minister of Economic Development and Trade – Mr. Petro Poroshenko. According to the Resolution No.310 the Interdepartmental Commission on International Trade includes:
Anti-dumping measures imposed on import into Ukraine of float-glass originating in Russia, Bulgaria, Poland, Turkey and Belarus
On April 26, 2012, the Interdepartmental Commission on International Trade imposed the following definitive anti-dumping measures on imports into Ukraine of float glass (thermally polished glass) originating in Russia, Bulgaria, Poland, Turkey and Belarus for a period of 5 years:
1) for the Russian Federation:
for the country – from 14.93% to 16.33% (depending on glass thickness);
for the exporter-producer of "Guardian Styeklo Ryazan" – from 5.11% to 30.78% (depending on glass thickness);
2) for the Republic of Bulgaria – from 22.13% to 28.52% (depending on glass thickness);
3) for Poland:
for the country – from 17.36% to 24.60% (depending on glass thickness);
for the exporter-producer of "EUROGLAS POLSKA SP. Z.O.O." – from 12.50% to 18.49% (depending on glass thickness);
4) for Turkey – from 12.96% to 23.42% (depending on glass thickness);
5) for the Republic of Belarus from 0% to 29.95% (depending on glass thickness).
Import in Ukraine of goods without a certificate of origin or when the origin can not be determined shall performed with the payment of the final anti-dumping duty at the maximum rate – from 23.20% to 30.78% (depending on glass thickness).
The EU initiates anti-dumping investigation related to imports of Ukrainian tubes in the EU countries|4|
On March 31, 2012 the EU initiated the anti-dumping investigation related to imports of welded tubes and pipes, and hollow profiles of square or rectangular cross-section, of iron other than cast iron or steel other than stainless, originating in Ukraine, the former Yugoslav Republic of Macedonia and Turkey.
Belarus officially lifts discrimination against Ukrainian beer|5|
The Council of Ministers of the Republic of Belarus by its Resolution No.451 dated May 17, 2012 canceled compulsory licensing for imports of beer originating from Ukraine, which application in December 2010 resulted in sharp decrease of beer export volumes from Ukraine into Belarus.
Ministry of Economic Development and Trade won't excuse Kazakhstan's restrictions on sweet imports|6|
IV. UKRAINE & WTO
Ukraine files dispute against Australia|7|
On March 13, 2012 Ukraine requested consultations with Australia pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes in WTO concerning the latter’s laws and regulations that impose trademark restrictions and other plain packaging requirements on tobacco products. The Plain Packaging Act of Australia provides that "no trade mark may appear anywhere on a tobacco product" other than as permitted by the Regulations. The Plain Packaging Act further requires that tobacco product packages be "drab dark brown" in a matte finish, with no other colors, logos, or brand features visible on the package, other than the brand and variant name in a standard form and font below the graphic health warning.
According to the Ukrainian request for consultations, Australia's measures appear to be inconsistent with a number of Australia's obligations under the TRIPS Agreement, the TBT Agreement, and GATT 1994, including but not limited to:
The said consolations with Australia were held on April 12, 2012 in Geneva, during which the parties exchanged their arguments. In the meantime, several countries joined Ukraine’s complaint as a third party, namely: Brazil, Canada, the European Union, Guatemala, New Zealand, Nicaragua, Norway and Uruguay.
Ukraine blocks the accession of Laos and Yemen to WTO|8|
Ukraine accused of blocking entry to the WTO of Yemen and Laos. Western media call Ukraine a new "hooligan" WTO. However, Ukraine explains its policy as the desire to meet the standards of fair trade. Kyiv seeks opportunities to resolve all disputes with Yemen and Laos, allowing them to join the WTO this year, and will resist any external pressure. Defending its economic interests, Ukraine asks Yemen and Laos to reduce tariffs on imports of steel and agriculture. Agency Reuters, in turn, insists that both Laos and Yemen have a very small share of Ukrainian exports and unlikely strongly affects its profits.
Turkey voiced its concerns in the WTO as to compliance of anti-dumping proceedings conducted in Ukraine as to imports of float-glass|9|
Turkey said that Ukraine did not meet the WTO criteria within the framework of anti-dumping investigation related to import into Ukraine of float glass originating in Russia, Bulgaria, Poland, Turkey and Belarus (please see for details above) and thus, requested to terminate the applied anti-dumping measures.
Import duties for about 500 commodity items will be increased
The Parliament of Ukraine suggests increasing import duties for about 500 commodity items to the maximally possible level agreed with the World Trade Organization (WTO). The respective Draft Law “On Amending the Law of Ukraine on Customs Tariff of Ukraine (concerning implementation of import duty rates in line with WTO criteria)” No. 9241-d was adopted in the first reading in the Parliament of Ukraine on May 15, 2012.
For example, the Draft Law proposes to increase import duties on alternating-current motors, traction motors, tables, consoles, bench panels from 0 to 2; phosphoric acid, calcined magnesia from 0 to 5,5; hyacinths, tulips, narcissuses, gladioluses from 5 to 15 etc. Just to remind: under Article 1 of GATT 1994 Ukraine has the right to increase unilaterally the rates on goods to maximum level set forth in its schedule of market access commitments without any approvals from the side of the WTO members.
Quotas on scrap were imposed in breach of WTO Agreements and Ukrainian legislation|10|
On May 23, 2012 the Resolution of Cabinet of Ministers of Ukraine "Certain Issues related to Export Operations with Metal Scrap" No. 388 dated May 3, 2012 came into effect.
At the same time, as it is believed at the Department for Cooperation with WTO and Trade Remedies of the Ministry of Economic Development and Trade of Ukraine, the approval of the Resolution without the consent of the said Department has resulted in a violation of provisions of WTO Agreements and Ukraine's WTO accession commitments as well as Ukrainian laws. The Law "On the Export Customs Duty on Waste and Scrap of Ferrous Metals" is at present in force. In the meanwhile, the other Law of Ukraine "On Foreign Economic Activity" imposes the ban on the simultaneous application of a quota and an export tax in relation to the same product.
V. CUSTOMS RELATED ISSUES
Granting the guarantee to customs authorities for the protection of intellectual property rights
On April 6, 2012 the Order of the Ministry of Finance of Ukraine “On Approval of the Order of Granting Pledge or Equivalent Guarantee to Reimburse the Costs connected with the Actions of Customs Authorities of Ukraine for the Promotion of Intellectual Property Rights and Form of Note on the Inclusion of an Object of Intellectual Property Rights in the Customs Register” No.1762 dated December 28, 2011 entered into force. The Order determines the types, size, and a mechanism for providing pledge or equivalent guarantee by the owners of IP objects registered in the Customs Register of IP objects to reimburse the expenses incurred because of suspension by customs authorities of customs clearance of goods imported with infringement of IP rights. The guarantee amount shall be equal to 1000 EUR.
Terms of customs control and customs clearance of goods
The State Customs Service of Ukraine issued the Order "On Approval of the Recommendations on the Timing of Customs Control and Clearance of Goods for Customs Declaration" No. 205 dated April 5, 2012. According to the Order it is recommended to perform customs control and clearance of Cargo Customs Declaration (ССС), which contains no more than 10 product subcategories, with 4 working hours since the acceptance of CCC for customs clearance. The said term shall not include time necessary for customs procedures out of location of the customs authorities; for inspection of goods; for research (analysis, expertise) of goods samples; for consideration of requests by officials of the customs authorities, to which such requests are directed; for suspension of customs clearance in accordance with the Law of Ukraine "On State Market Surveillance and Control of Non-food Products", etc. The recommended term shall not also apply to cases when the additional documents are needed for the specific reasons listed in the annex of the Recommendations (for example, in case of conducting a customs inspection of goods with the participation of other regulatory authorities; delay in submission of the goods by the declarant for customs clearance; drawing up protocol on violation of customs rules etc).
A number of by-laws are adopted in connection with the entrance into force of the new Customs Code of Ukraine
In connection with the adoption of the new Customs Code of Ukraine, the Ministry of Finance of Ukraine, as the competent authority in customs matters, has already adopted a number of the orders, the content of which is very similar to the previously existing orders of the State Customs Service of Ukraine, to name but a few: the Order "On Approval of Completion of the Customs Value Declaration" No. 416 dated March 29, 2012; the Order “On Approval of the Order of Adoption of the Preliminary Decisions on the Classification and Codification of Goods under UCG FEA” No.1740 dated March 16, 2012; the Order “On Approval of the Order of Application of the Customs Regime of Refusal for the Benefit of the State for the Goods Crossing the Customs Border of Ukraine, and the Application Form for Refusal for the Benefit of the State” No.386 dated March 21, 2012 etc.
Moreover, a number of by-laws regulating customs related issues were adopted by the Cabinet of Ministers of Ukraine to implement provisions of the new Customs Code of Ukraine, to name but a few: the Resolution "On Approval of List of Goods, which are Under Restrictions on Crossing of the Customs Border of Ukraine" No. 436 dated May 21, 2012; the Resolution "On Approval of the Order on Inclusion of Royalties and Other License Fees to the Price Actually Paid or Payable for the Products Evaluated during the Determination of Customs Value" No. 446 dated May 21, 2012; the Resolution "On Approval of the Order of Special Simplifications Application Provided to the Authorized Economic Operator" No. 447 dated May 21, 2012; the Resolution "On Amending the Procedure on Preliminary Documentary Control at the State Border of Ukraine Crossing Points" No. 449 dated May 21, 2012; the Resolution "On Issues Related to the Customs Declarations Application" No. 450 dated May 21, 2012; the Resolution "On Amending the Resolution of the Cabinet of Ministers of Ukraine No. 1031 dated October 5, 2011" No. 452 dated May 21, 2012; the Resolution "On Approving the List of Goods whose Import into the Customs Territory of Ukraine and/or Moving Through Ukraine and Inland Transit shall Be Subject to the Mandatory Providing for Customs Authorities the Customs Duties Payment Guarantee" No. 461 dated May 21, 2012 etc.
Notably, a number of by-laws will be adopted by the Cabinet of Ministers of Ukraine, the Ministry of Finance of Ukraine and the State Customs Service in Ukraine shortly.
The list of equipment and components for shipbuilding industry exempted from import duty
The Resolution of the Cabinet of Ministers of Ukraine "On Approval of the List of Equipment and Components Not Produced in Ukraine and Imported into the Customs Territory of Ukraine by Domestic Companies of Shipbuilding Industry (Class 35.11 Group 35 National Classification of Business activities DK 009:2005) for Use in Economic Activity, which Temporarily Exempted from Import Duty during Importation into the Customs Territory of Ukraine and the Premises in the Customs Regime of Import" No. 466 dated May 28, 2012 entered into force on June 1, 2012.
The Resolution approved the list of equipment and components being not produced in Ukraine and imported in Ukraine by domestic shipbuilding companies that shall be temporarily exempted from import duty. The said list includes 22 items, including: a flexible enclosure; safety belts and vests, aluminum structures, sheets, profiles, pipes, etc. and containers for different substances; zinc anodes for cathodic protection system, water gas generators, engines and power plants, etc.
Goods prohibited for export by citizens
On May 28, 2012 the Cabinet of Ministers of Ukraine adopted the Resolution "On Approving the List of Goods, the Export (Transfer) of which by the Citizens Outside the Customs Territory of Ukraine shall not be Permitted" No. 468. The Resolution entered into force on June 1, 2012. It abolished the Resolution of Cabinet of Ministers of Ukraine "On Approval of List of Manufactured Goods, Export of which is prohibited for Ukrainian citizens, foreigners and stateless persons outside the customs territory of Ukraine" No.1911 dated December 13, 2002.
Compared with the previous list, the current one is greatly extended in part of fuel wood and chips, ferroalloys, nonferrous metals, metal waste and scrap, etc.
The use of stamps on confirmation of the results of radiological and ecological control of vehicles
The Ministry of Environment and Natural Resources of Ukraine adopted the Order "On Approval of the Descriptions and Samples of Stamps to Confirm the Results of the State Inspectors of Environmental Radiological and Ecological Control of Vehicles and Cargo and the Application of Stamps" No.162 dated March 19, 2012. The Order approves: the description of stamps to confirm the results of environmental radiological and ecological control of vehicles and cargo by the state inspectors; samples of the said stamps; procedure for applying the said stamps by the state inspectors.
The order is binding for state inspectors during radiological and ecological control of vehicles and goods at checkpoints on the state border.
Agricultural products insurance with state support
On March 2, 2012 the President of Ukraine signed the Law of Ukraine "On Peculiarities of Agricultural Products Insurance with State Support" No. 4391-VI dated February 9, 2012. The Law will come into force on July 1, 2012. In particular, the Law provides for that the typical insurance agreements are to be worked out for every product or separate crop and approved by both the Ministry of Agrarian Policy and Food of Ukraine and the national commission for the regulation of the financial services markets of Ukraine. Moreover, only agricultural commodity producers established in Ukraine and complying with the criteria set forth by the Cabinet of Ministers of Ukraine are allowed to enjoy the said state support.
The objects of insurance may be agricultural products (goods) specified in groups 1 – 24 of UCC FEA according to the Law of Ukraine "On Customs Tariff of Ukraine", namely: harvest crops; perennial crops; livestock, poultry, rabbits, fur animals, bees, fish and other aquatic resources and livestock products.
State support of agricultural insurance is the provision of the state budget funds to agricultural producers in the form of grants for reimbursement of insurance payments (premiums) actually paid by them under contracts of insurance of agricultural products. The list of agricultural products and insurance risks, as well as the part of insurance payments (premiums), subsidized by the state budget, shall be approved by the Cabinet of Ministers of Ukraine for every financial year.
State price regulation
The Cabinet of Ministers of Ukraine adopted of the Resolution “On Approving the List of Objects of State Price Regulation with the Determination of the Regulatory Period in 2012-2013” No.180 dated March 5, 2012. The Resolution establishes the list of goods subject to state price regulation:
Objectsof state price regulation
Term of state price regulation
1July 2012 –30June 2013
meslin (mixture of wheat and rye)
1October 2012 –30September 2013
granulated (beet) sugar
1September 2012 –31August 2013
1September 2012 –31August 2013
State regulation of prices for sugar
The Cabinet of Ministers of Ukraine adopted the Resolution "On State Regulation of Production of Sugar and Sugar Beet in the Period from September 1, 2012 to September 1, 2013" No. 290 dated April 11, 2012. The Resolution establishes the limiting size of the quota of sugar supply on the domestic market (quota "A") for the period from September 1, 2012 to September 1, 2013 in the amount of 1833 tons. The Resolution also approves the minimum prices for sugar beet, which will be supplied for the production of sugar within the quota "A" (without VAT): sugar beet / factory – 339.85 UAH per tone; white crystalline sugar – 4925.14 UAH per tone.
Three Ukrainian plants resuming cheese supplies to Russia|11|
On April 18, 2012 three of the seven Ukrainian plants are resuming supplies of cheese to Russia subject to inspection of Rospotrebnadzor. It concerns such enterprises as Prometey (Chernihiv region), Pyriatyn Cheese Plant (Poltava region) and Hadiachsyr (Poltava region), which were inspected by Rospotrebnadzor. Just to remind: in February 2012 Rospotrebnadzor banned the supply and sale in Russia of dairy products of seven Ukrainian enterprises: Prometey, Pyriatyn Cheese Plant and Hadiachsyr, as well as Bashtanka and Lozova cheese factories, Khmelnytsky butter and cheese factory and Bel Shostka Ukraine.
Minimum prices for milk may be applied in Ukraine
The Draft Law "On Amending the Law of Ukraine "On Milk and Dairy Products" (on the Purchase Prices for Milk) No. 10443, that proposes to introduce minimum prices of milk, was registered in the Parliament of Ukraine on May 10, 2012. The document states that minimum prices will be s et by the Cabinet of Ministers of Ukraine every year, and their level will cover average sector expenses and ensure that there is a minimum profit margin for manufacturers. An explanatory note to the Draft Law provides for that over the past four months a fall in prices of milk was seen in Ukraine.
On April 23, 2012, the Ministry of Agrarian Policy and Food of Ukraine and milk processors signed a memorandum regarding the stabilization of prices of milk bought from the public. However, the Ministry says that in some regions prices of milk continue falling.
Ban on tobacco advertising
On March 13, 2012 the President of Ukraine signed the Law “On Amending Certain Laws of Ukraine concerning the Ban on Tobacco Advertising, Sponsorship and Promotion of Tobacco Products”. The Law provides: a) ban on advertising and sales promotion of tobacco products, as well as trademarks under which the tobacco products are produced; b) ban on tobacco sponsorship (providing by manufacturers of tobacco products or related organizations financial or other support of events, individuals or groups, including parties, athletes, artists, schools, etc.); c) administrative responsibility for violation of requirements regarding the ban on tobacco advertising and sponsorship of tobacco products (citizens can be fined 5-25 tax-free allowances, officials – 100-350 tax-free allowances); financial sanctions for the economic entities in case of violation of the ban on tobacco advertising, promotion and sponsorship of tobacco products (30,000 – 50,000 UAH for every fact of advertising or a separate event). The Law shall come into force within six months from the date of publication.
Cancellation of technical specifications for “branded” petrol
The cancellation of some technical specifications for petrol and diesel fuel issued by the Ukrmetrteststandard state-run enterprise by the Ministry of Economic Development and Trade of Ukraine will create favorable conditions for the development of motor biofuel. The Order issued by the Ministry No. 327 dated March 15, 2012 does not apply to technical specifications for production of alternative types of motor fuels with biological agent content of at least 33% (the quality and composition of which is confirmed by a certificate of the State Agency on Energy Efficiency and Energy Saving of Ukraine (SAEE), which allows it to be foreseen that there will be a rise in the interest of market players in biofuel. The first stage of negotiations on cooperation between some Ukrainian oil companies and producers of biological compounds was held as a part of a roundtable on the Ukrainian REF-2012 forum held in Kyiv on April 25-26, 2012.
Minimum assortment of pharmacy institutions
On May 8, 2012 the Order of the Ministry of Health of Ukraine "On Approval of the Mandatory Minimum Assortment of (Socially Oriented) Pharmaceuticals and Domestically Produced Medical Products to Pharmacy Institutions" No.1000 dated December 29, 2011 entered into force. The Order establishes the relevant mandatory minimum assortment of 102 drug items and 15 medical product items. It shall not apply to pharmacy stalls and pharmacy stores (bases) that are engaged exclusively in the wholesale trade of medical gases or drugs in the form of a substance, or the export of medicines; have a license for manufacture of medicines; are the official and/or the exclusive representatives of manufacturers of drugs and/or own the registration certificates of medicines and sale the pharmaceuticals of only such producers.
State Financial Support for Export Activities
On May 17, 2012 the Draft Law "On State Financial Support for Export Activities" No. 9373 was adopted as a whole. The Draft Law defines the principles of state financial support for export activities and is aimed at creating state mechanisms for such regulation. The state support will be implemented through: insurance of foreign trade agreements and export credits from commercial and non-commercial risks; provision of guarantees to Ukrainian exporters on performance of the obligations. A special public financial institution in the form of public joint stock company will be established for this purpose.