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17 January 2013

International Trade News. November-December 2012

I. HOT ISSUE

Ukraine urged to withdraw request for renegotiation of tariff commitments1

On 26 November 2012 at the WTO Council for Trade in Goods meeting 23 delegations (including Brazil, Canada, the European Union, Japan, Korea, Switzerland, Turkey, the United States, China) issued a joint statement urging Ukraine to withdraw its notification to re-negotiate its tariffs on a large number of products in the interest of the multilateral trading system and the global economy. They said that Ukraine’s notification covers 371 tariff lines, and that this goes beyond the intended scope of the WTO provision on tariff negotiations (Article XXVIII of GATT 1994). Ukraine stated that it was following the established procedures in a transparent manner and that its notification is normal practice and should not be seen as protectionist. On 11 December 2012 on the WTO General Council the delegations once again expressed concerns about Ukraine’s notification to modify its schedule of tariff concessions under Art. XXVIII of GATT 19942. On 12 December 2012, the last day of filing the applications for negotiations with Ukraine on modification of tariff commitments, another 15 countries have submitted the applications (including Australia, Croatia, Mexico, Peru, Switzerland, Turkey, Uruguay). The list of countries that earlier reserved their right to negotiate with Ukraine include Brazil, Egypt, the EU, India and others.

II. Ukraine and WTO

Mission of Ukraine to the WTO3

On 7 December 2012 the Prime Minister of Ukraine held a meeting on the revision of tariff rates under the WTO agreements. One of adopted decisions obliges the Ministry for Economic Development and Trade of Ukraine, the Ministry of Finance of Ukraine and the Ministry of Foreign Affairs of Ukraine to submit in seven days the proposals on the establishment of the Mission of Ukraine to the WTO. Just to remind: On 17 June 2008 the President of Ukraine issued a Decree "On Measures Related to Ukraine's Accession to the World Trade Organization” № 557/2008, which included the obligation of the Cabinet of Ministers of Ukraine to submit the proposals regarding the opening of the Permanent Mission of Ukraine to the WTO. The Mission of Ukraine to the WTO has not yet been created.

Dispute with Australia4

At the meeting of the WTO Dispute Settlement Body on 19 November 2012, Australia rejected the first request of Honduras to establish the panel in dispute on Australia’s measures concerning trademarks, geographical indications and other plain packaging requirements applicable to tobacco products and packaging. Ukraine shared Honduras’ concerns regarding the effect of Australia’s measures. New Zealand, Norway and Uruguay supported Australia’s measure and noted the sovereign right of the WTO members to regulate and protect public health.

Ukraine will not ban wheat exports5

On 14 November 2012 on the WTO Agriculture Committee meeting the member-states were concerned about the possibility that Ukraine might restrict wheat exports because media reports said it might do so from 15 November 2012. Concerns or questions came from Australia, the EU, Japan, the US and the Republic of Korea. Ukraine said that it will follow the WTO provisions. In addition, the Minister of Agriculture and Food of Ukraine, Mr. Mykola Prysyazhnyuk, stated on the official site of the Ministry stated that "our aim is not to restrict export, but to preserve external markets"6 .

WTO approves Tajikistan’s membership7

The General Council 10 December 2012 paved the way for Tajikistan’s membership of the WTO by approving its accession package. Tajikistan would have to ratify the deal by 7 June 2013 and would become a WTO member 30 days after the ratification.

III. REGIONAL TRADE LIBERALIZATION

FTA with Montenegro

On 16 November 2012 the Law of Ukraine “On Ratification of the Free Trade Agreement between the Government of Ukraine and the Government of Montenegro” No.5445-VI entered into force. FTA will enter into force on the first day of the second month after the receiving by diplomatic channels the last written notice of a Party of the completion of all internal procedures necessary for the entry into force of the FTA. Just to remind: The FTA with Montenegro stipulates that the Parties shall eliminate all customs duties on imports of products originating from Montenegro and Ukraine, except for some goods, such as for Ukraine – pork, parts of chickens, sugar from sugar cane or sugar beet and chemically pure sucrose, in solid form etc.

Ukraine and Vietnam begin negotiations on FTA8

Vietnam offers Ukraine to launch negotiations in January 2013 on establishing a free trade area between the two countries. This was announced by the Deputy Prime Minister of the Socialist Republic of Vietnam, Mr. Hoang Trung Hai, at the meeting held on 3 December 2012 in Kiev with Ukraine's Prime Minister, Mr. Mykola Azarov. The Deputy Prime Minister of Vietnam said that Vietnam is also interested in the soonest signing of an agreement on mutual protection of investments and implementation of agreements on plant quarantine cooperation with Ukraine in the sphere of defense, especially in the modernization of military equipment.

Negotiations on Regional Comprehensive Economic Partnership

China, Japan, South Korea and the ASEAN countries are going to create the largest free trade zone in the near future. The start of the talks was given at the East Asia Summit in Phnom Penh held on 16-20 November 2012. The main outcome of the Summit was the agreement of the leaders of 16 countries in the region, with total GDP of $ 20 trillion, to begin negotiations on the establishment of a Regional Comprehensive Economic Partnership (RCEP). The new union is planned to unite the ASEAN countries, China, Japan, South Korea, India, and Australia and New Zealand. It will create the world's largest free trade zone. The negotiations on RCEP are to be completed by 2015.

IV. TRADE DEFENSE REMEDIES

Contradictory decisions of the Interdepartmental Commission on International Trade on matches 9

On 5 November 2012 the Interdepartmental Commission on International Trade adopted the Decision “On Continuation of Safeguard Measures concerning Import into Ukraine of Matches, Regardless of Country of Origin and Export” No. СП-285/2012/4423-08 continuing the special measures concerning import into Ukraine of matches for 3 years, stating in the Decision that "it is still necessary to apply the measures to prevent significant harm to national producers" and "national producer is in the process of adaptation to the conditions of competition".

On 27 November 2012 the Commission adopted the Decision "On Cancellation of Safeguard Measures concerning Import into Ukraine of Matches, Regardless of Country of Origin and Export" No. СП-286/2012/4423-08, in which it convinced that "the continuation of the special arrangements for import of matches to Ukraine, regardless of country of origin and export is contrary to the national interests of Ukraine".

The respective official notifications were published in the newspaper "Uryadovyy Kuryer" on 6 November 2012 and 28 November 2012.

V. CUSTOMS RELATED ISSUES

Establishment of the Ministry of Returns and Duties of Ukraine

On 24 December 2012 the President of Ukraine issued the Decree “On Some Measures of Optimization of the System of Central Executive Bodies” No. 726/2012 reorganizing the State Customs Service of Ukraine and the State Tax Service of Ukraine into the Ministry of Returns and Duties of Ukraine. The Ministry will also administrate the single payment for mandatory state social insurance.

Bringing import duty rates into conformity with the WTO Criteria

On 23 November 2012 the President of Ukraine signed the Law of Ukraine “On Amendments to the Law of Ukraine “On Customs Tariff of Ukraine” (On Bringing Import Duty Rates into Conformity with the WTO Criteria)” No. 5476-VI adopted by the Parliament of Ukraine on 6 November 2012. The Law provides for increasing the import duties on more than 700 types of goods, in particular the plastics, polymer materials and products, chemical products, machinery and equipment, organic and inorganic chemistry, etc.

Proceedings in the cases on violation of customs regulations

On 2 November 2012 the State Customs Service of Ukraine issued the Order "On Amendments to the Order of the State Customs Service of Ukraine No. 936 dated 30 December 2004" No. 601. Under the Order the violation of customs rules constitutes the administrative violation and entails the administrative liability under the Customs Code of Ukraine. The administrative liability is to be held if the relevant violations under the Customs Code of Ukraine do not result in criminal liability. The Order provides for the cases when the individuals or entities do not hold administrative liability, for example, when the relevant actions are determined by the Customs Code of Ukraine as violations, but are committed in a state of emergency to eliminate the danger which threatens the state or public order, property, rights and freedoms of citizens, etc. The Order entered into force on 1 December 2012.

Cooperation of State Tax Authorities and Customs Authorities of Ukraine10

On 2 November 2012 the Ministry of Finance of Ukraine published the Draft Order “On Approval of the Procedure of State Tax Authorities and Customs Authorities Cooperation during Providing Control over Import Transactions by Entities Engaged in Foreign Economic Activities”. The Draft Order stipulates the following mechanisms of cooperation: interagency exchange of information and materials regarding violations of the laws of Ukraine on customs regulation; introduction of risk criteria of import operations and selection of such operations on the stage preceding the submission of customs declarations; appropriate forms of control on risk import operations; presence of the responsible officials of the State Tax Service of Ukraine during the customs inspection of goods for risky imports etc.

VI. AGRICULTURE

Cancellation of obligatory registration of export contracts for agricultural products11

On 28 November 2012, the Cabinet of Ministers of Ukraine published the Resolution “On Amendments and Abolishment of Certain Resolutions of the Cabinet of Ministers of Ukraine on Registration of Foreign Economic Contracts” No.1079 dated 31 October 2012 on its official web-site. The Resolution abolished obligatory registration and conclusion of export contracts for agricultural products on agricultural stock exchange. The Resolution is an important step towards liberalization of the agricultural industry, because obligatory registration brought additional costs hampering competitiveness of Ukrainian agricultural products.

Stimulating the development of domestic machinery for agriculture

On 6 November 2012 the Parliament of Ukraine adopted the Law "On Amendments to the Law of Ukraine "On Stimulation of Domestic Machinery for Agriculture” No. 5478-VI. The Law entered into force on 29 November 2012. The Law provides: that the Law “On Stimulation of Domestic Machinery for Agriculture" will have permanent duration (before amendments it was in force in 2003-2010); a new definition of the term "domestic machinery and equipment for agriculture", now it means machinery and equipment, made by the domestic machine building enterprises for agricultural sector, if the degree of localization is more than 60% (before amendments it was more than 50%), etc. In addition, the Law excluded supervisory, licensing and registration functions from the exclusive competence of the Ministry of Agrarian Policy and Food of Ukraine.

Regulation of agrarian receipts

On 6 November 2012 the Parliament of Ukraine adopted the Law “On Agrarian Receipts” No.9610 dated 19 December 2011. The Law introduces the possibility for business entities to use agricultural receipts in their activities. Agrarian receipt shall mean a document of title to the goods that captures the unconditional obligation of the debtor, which is secured by the pledge, to supply agricultural products or pay money under conditions specified in an agrarian receipt. The agricultural receipts may constitute the additional credit resources for legal entities operating on the agrarian market.

Ukrainian poultry farmers can sell their products in the EU12

According to the State Veterinary and Phytosanitary Service of Ukraine on 4 December 2012 Ukraine received permission to export eggs, egg products, poultry and meat of wild birds in the EU market. However, before exports will actually be allowed, the EU should make appropriate changes to its regulations, and the Ukrainian side should submit the application to control the content of salmonella in accordance with the European standards.

VII. PHARMACEUTICALS

Ban on advertising of over 300 medicines

The Order of the Ministry of Health of Ukraine “On the Approval of a List of Medicine Sold without Prescriptions which Advertising is Banned” No. 876 took effect on 10 December 2012. The Order provides for the list of medicines which advertising is banned in Ukraine. The said list includes 327 medicines which are mainly cold medicines and anesthetics. Just to remind: at first, the list of medicines, which advertising is banned, was stipulated by the Order of the Ministry of Health of Ukraine “On the Approval of a List of Medicine Sold without Prescriptions that are Banned from Being Advertised” No. 639 dated 17 August 2012 has not entered into force and was abolished by the Order “On Abolition of Certain Orders of the Ministry of Health of Ukraine” No.709 dated 10 September 2012 because it was not registered in the Ministry of Justice of Ukraine.

New regulation of import of pharmaceuticals in Ukraine from 1 March 2013

The State Service for Pharmaceuticals of Ukraine stated in its Letter No. 23050-1.1/3.1 / 17-12 dated 1 November 2012 that from 1 March 2013 the sale of imported pharmaceuticals or their usage in the manufacturing of business entity will be possible only if the entity attaches the copy of a document issued by the State Service for Pharmaceuticals of Ukraine confirming compliance with the requirements of the Good Manufacturing Practice (GMP) (under the Resolution of the Cabinet of Ministers No. 793 dated 8 August 2012) within 5 business days after the customs clearance.

VIII. OTHERS

Currency regulation of export13

On 19 November 2012 the Regulations of Board of the National Bank of Ukraine "On the Change of Terms of Payments for Transactions on Exports and Imports of Goods and Mandatory Sale of Foreign Exchange Earnings" No. 475 and "On Determining the Amount of Compulsory Sale of Foreign Exchange Earnings" No. 479 came into force. Resolutions reduced the term for settlement of transactions in the export and import of goods for six months – from 180 to 90 days and introduced a mandatory sale on the interbank currency market of Ukraine 50% of foreign exchange earnings from the sale of goods in foreign trade contracts.

The ban on indication in advertisements the prices not in the national currency

On 6 November 2012 the Parliament of Ukraine adopted the Law "On Amendments to Article 8 of the Law of Ukraine "On Advertising" about the Ban on Indication of Prices of Goods, Works and Services not in the Monetary Unit of Ukraine" № 5481-VI. The Law established that the information on the prices of goods, tariffs on services listed in the advertisement, which is placed or distributed in Ukraine, shall be set forth in hruvnya – UAH. The Law entered into force on 29 November 2012.

Amendments to the Law “On Personal Data Protection”

On 20 November 2012 the Parliament of Ukraine adopted the Law “On Amending the Law “On Personal Data Protection” No. 5491-VI with the proposals of the President of Ukraine. The Law introduces numerous changes, in particular: a) The Law applies to activities on the processing of personal data carried out in whole or in part with the use of automated means, as well as to the processing of personal data contained in the files, or to be included in the index cards with the use of non-automated means; b) The Law does not apply to activities on the processing of personal data carried out solely to individuals for personal or household use or artistic or literary workers, including journalists, for professional purposes, provided the balance between the right to privacy and the right to self-expression; c) The Law provides for that the consent for the processing of personal data may not be taken in written form, but in a form that allows to conclude on consent’s provision, etc. In addition, the Law includes the abolition of compulsory registration of databases of personal data, keeping them due to the labour relations; personal data of members of public, religious organizations, trade unions and political parties; an opportunity not to obtain consent to the processing of data from individuals during the conclusion and execution of the transaction, i.e. contract, as well as the founders, shareholders of the entities etc.

The Law entered into force on 20 December 2012.

Disposal of vehicles withdrawn from service

On 20 November 2012 the Draft Law "On the Disposal of Vehicles Withdrawn from Service" No. 11259 dated 27 September 2012 was approved as a basis by the Parliament of Ukraine. The Draft Law proposes to introduce a system for the collection, removal, disposal and recycling of wheeled vehicles of categories M and N withdrawn from service (cars, trucks, buses and special vehicles) and waste formed during their utilization, the system of reduction of the negative impact of waste on the environment and human health. In particular, the Draft Law proposes to set: the criteria for vehicles to be withdrawn from service and transfer for disposal; procedure for recycling of such vehicles; registration procedure and requirements for entities engaged in manufacture of vehicles and undertaking the obligation to ensure the disposal of vehicles produced by them after their withdrawal from service.

1http://www.wto.org/english/news_e/news12_e/good_26nov12_e.htm

2http://www.wto.org/english/news_e/news12_e/sum_gc_dec12_e.htm

3http://wto.in.ua/?lang=ua&get=3&id=2669

4http://wto.in.ua/?lang=en&get=wto_news&id=2641

5http://www.wto.org/english/news_e/news12_e/agcom_14nov12_e.htm#exportrestrictions

6http://www.minagro.gov.ua/uk/node/2699

7http://www.wto.org/english/news_e/news12_e/acc_tjk_10dec12_e.htm

8http://www.kmu.gov.ua/control/uk/publish/article;jsessionid=6DB847446BB295F57D288573790682AD?art_id=245847611&cat_id=244276429

9http://wto.in.ua/?lang=ua&get=3&id=2649

10http://www.minfin.gov.ua/control/uk/publish/article?art_id=355472&cat_id=42320

11http://www.kmu.gov.ua/control/uk/publish/article?art_id=245833608

12http://wto.in.ua/?lang=ua&get=3&id=2655

13http://wto.in.ua/index.php?&page=1&get=3&id=2640

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