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1 November 2012

International Trade News October 2012

I. HOT ISSUE

Ukraine's renegotiation request raised concerns among its WTO trading partners|1|

Nearly 60 countries raised concerns over the "systemic and commercial" implications of Ukraine’s request to renegotiate its tariff schedule at the meeting of the WTO Committee on Market Access on October 16, 2012. The group included such countries as Canada, the US, the EU, Brazil, Turkey, Korea, Japan, China and others. "The EU is of the firm opinion that the procedure under Article XXVIII of the General Agreement on Tariffs and Trade 1994 (GATT) is not meant for renegotiating a significant part of the accession commitments of WTO members," the EU Ambassador, Angelos Pangratis, told on October 3, 2012 at the General Council meeting. "The EU considers that Ukraine’s request raises very serious systemic concerns as it risks undermining the credibility of members’ commitments to their WTO obligations".

Just to remind: In a document marked "secret" sent to members of the WTO on September 14, 2012, Ukraine states that it intends to raise the limit on the tariffs it can legally impose on more than 350 goods. The proposal is based under Article XXVIII of GATT 1994. Since creation of the WTO in 1995, Article XXVIII of the GATT 1994 has been used about 30 times, mostly for small or technical adjustments to countries' tariffs, and almost always for fewer than 10 tariffs at a time.

Increase of import duties in relations with non-WTO countries

On October 26, 2012 the Draft Law "On Amendments to the Law of Ukraine "On Customs Tariff of Ukraine" developed by the Ministry of Finances of Ukraine was published on the official web-site of the Ministry of Economic Development and Trade of Ukraine|2|. The Draft Law proposes to increase the import duties in twice on 7400 goods' categories. It is assumed that the Draft Law will apply to goods: a) from countries with which Ukraine has no agreements providing most favored nation treatment (including Andorra, Bahamas, Bhutan, Ethiopia, Yemen, Iraq, Laos, Liberia, Seychelles, Sudan and others); b) for which it is impossible to establish the country of origin; c) imported by citizens on sum more than EUR 10,000 or excisable goods, which can not be attributed to private goods. It is proposed that the Draft Law will not be applied to goods from the WTO members-states.

II. REGIONAL TRADE LIBERALIZATION

Kazakhstan ratified new CIS FTA

On October 4, 2012 the Parliament of Kazakhstan ratified new CIS FTA. On October 25, 2012 the President of Kazakhstan signed the Law "On Ratification of Free Trade Agreement between CIS States". Kazakhstan became the 6th CIS country which ratified new CIS FTA after Armenia, Belarus, Moldova, Russia and Ukraine. Just to remind: On September 20, 2012 new CIS FTA came into effect in Belarus, Russia and Ukraine. Contrary to the previous version of the CIS FTA of 1994, the new Agreement is adapted to the WTO rules and stipulates the exact dispute settlement mechanism to be employed by the contracting parties in case of the violation of the CIS FTA provisions.

CIS FTA on Services|3|

At the meeting of the CIS Heads of Governments, held in Yalta at the end of September 2012, it was decided to start negotiations on the signing of the Free Trade Agreement on Services within the CIS states. The Agreement should be drafted in six months. It is noted that, taking into consideration the membership of some CIS countries in the WTO and their respective liabilities, the development of transitional provisions for a number of services may be needed. In addition, the Agreement unlikely will address issues of access to pipelines and related problems.

III. TRADE DEFENSE REMEDIES

New decisions of the Interdepartmental Commission on International Trade|4|

At a meeting on October 3, 2012 the Interdepartmental Commission on International Trade decided to:

(a)        initiate the sunset review of anti-dumping measures against the bulbs originating in China based on the relevant request of the Ukrainian manufacturer "Iskra". Just to remind: anti-dumping investigation on imports of bulbs from China was initiated by the complaint of the Ukrainian manufacturer "Iskra" on August 5, 2005 and resulted in application of anti-dumping duty (at the rate of 74,63%) for 5 years.

(b)       initiate anti-dumping investigation on imports into Ukraine of suspension polyvinyl chloride from USA based on the application of LLC "Karpatnaftohim", according to which in the last year imports of these products from the United States increased by 93.1%.

(c)        impose definitive anti-dumping measures to slate from Belarus. As a result of the investigation carried out on the complaint of the Association "Ukrainian Chrysotile Union", the Commission launched a 5-year anti-dumping duty of 33.19% on imports to Ukraine asbestos cement sheets (slate) originating from Belarus. The said anti-dumping duty will not be applied to PJSC "Krychevtsementoshyfer" as the latter made price undertaking to stop dumped imports dated August 10, 2012.

The respective official notifications were published in the newspaper "Uryadovyy Kuryer" on October 5, 2012.

IV. CUSTOMS RELATED ISSUES

Currency control without the paper copies of the cargo clearance declarations (CCDs)|5|

On October 5, 2012 the Resolution of the Board of the National Bank of Ukraine "On Amendments to the Instruction on the Procedure of Control over the Export, Import Transactions" No. 364 dated August 31, 2012 entered into force.The Resolution amended the Resolution of the Board of the National Bank of Ukraine No. 136 dated March 24, 1999 and enabled the withdrawal of foreign economic operations from currency control using electronic registry of CCDs of the State Customs Service of Ukraine without their hard copies. Just to remind: after the entry into force of the Customs Code of Ukraine lots of companies clear goods using the CCD in electronic form. However, the banks continued to demand paper copies of CCDs for currency control purposes, as it was envisaged by the relevant regulations of the National Bank of Ukraine.

Pilot Project of Information Exchange between customs services of Ukraine and the EU in 2013

Ukraine and the European Union are considering the possibility for developing a Pilot Project of Information Exchange between their customs services in 2013 as the customs officials stated on the seminar held in Kyiv on October 11, 2012. The participants have decided that in the first half of 2013 the Project Group will complete the evaluation of the successful data exchange systems, particularly between Ukraine and Moldova, and consider the possibility for creating the EU-Ukraine Pilot Project for the exchange of information on their basis. Fifteen countries of the EU, including Ukraine's neighbours, have declared their readiness to join the Project. It is planned that information for exchange would include data about weights, codes of goods, descriptions and information on the sender and recipient of cargo. The parties are not discussing the possibility of informing each other about customs values of cargos yet.

Completion of the customs declaration on the form of the single administrative document

On October 1, 2012 the Order of the Ministry of Finance of Ukraine No. 651 dated May 30, 2012 providing the Procedure for Completion of Customs Declarations on the Form of the Single Administrative Document and the Order of the Ministry of Finance of Ukraine "On the Classifiers Used in the Customs Declaration" No. 1011 dated  September 20, 2012 entered into force. The Order No. 651 introduced sufficient changes into the procedure of filling the customs declarations, in particular, it provides new types of declarations, customs regimes, reduction of the list of documents that are specified in the customs declaration on the form of a single administrative document etc.

Performance of Customs Formalities under the Declared Customs Regime

In connection with the adoption of the new Customs Code of Ukraine, the Ministry of Finance of Ukraine adopted the orders, which content is similar to the previously existing, and abolished orders of the State Customs Service of Ukraine. On October 30, 2012 one more Order of the Ministry of Finance of Ukraine "On the Performance of Customs Formalities under the Declared Customs Regime" No. 657 dated May 31, 2012 entered into force. The Orderestablished the Procedure of the Performance of Customs Formalities under the Declared Customs Regime. Under the Order the performance of customs formalities is done with the usage of information technologies, in particular the Electronic Digital Signature and Public Key Certificates.

The Procedure determines the particular features of completion of customs formalities under the customs regimes of: a) temporary importation; b) temporary exportation; c) customs warehouse; d) processing in and outside the customs territory; e) destruction or breakdown; f) refusal in favour of the state. The Order established the Procedure for the Customs Clearance of Goods crossing the Border with ATA Carnets and Instruction for the Completion of the ATA Carnets by Customs Authorities.

The permits for the import of goods under measures of supervision

The Cabinet of Ministers of Ukraine developed the Draft Resolution "On Approval of the Procedure of Issuance of Permits for Import to Ukraine of Goods under the Measures of Supervision or Regional Supervision according to Decisions of the Interdepartmental Commission on International Trade". The Procedure provides that the authorization to import goods under the measures of supervision to Ukraine will be given free of charge by the Ministry of Economic Development and Trade of Ukraine. For obtaining the permission an importer shall submit an application to the Ministry of Economic Development and Trade of Ukraine. Forms of application and import permit and the procedure for consideration of applications shall be set forth by the Ministry of Economic Development and Trade of Ukraine. The decision to grant / refuse to grant a permission shall be issued by the Ministry within 7 working days from the date of registration of the application.

V. AGRICULTURE

Ukraine is planning to ban wheat exports|6|

On October 24, 2012 the Minister of Agriculture and Food of Ukraine, Mr. Mykola Prysyazhnyuk, told the international news agency Reuters that the country would ban wheat exports from November 15, 2012 after the harvest was damaged by the weather. The Minister told that there will be a government order on this issue. Egypt, the leading global wheat importer, warned that Ukraine risked damaging its credibility on international grain markets. The European Union's top officials warned Ukraine to avoid any measures that would increase global grain prices and disturb traditional trade flows. In addition, on October 19, 2012 the Ministry of Agriculture and Food of Ukraine stated on its official web-site|7| that on November 15-20, 2012 the export opportunities of Ukraine in respect of wheat may be exhausted. In this regard, the grain traders were recommended to approach the continuation of foreign wheat contracts carefully as on October 19, 2012 the concluded contracts cover 5.4 million tons of wheat.

VI. PHARMACEUTICALS

Cancellation of the list of non-prescription pharmaceuticals banned for advertising|8|

On October 25, 2012 the Order of the Ministry of Heath of Ukraine "On Cancellation of Certain Orders of the Ministry of Heath of Ukraine" No. 709 dated September 10, 2012 was published. The Order cancelled the Order of the Ministry of Heath of Ukraine No.639 dated August 17, 2012 providing the list of non-prescription pharmaceuticals banned for advertising. The Order stipulates that the new list should be developed and submitted to the Ministry of Justice of Ukraine for the state registration shortly.

Ban on imports of pharmaceuticals of doubtful quality is to be imposed in 2013

The Head of the State Service on Pharmaceuticals of Ukraine, Oleksiy Solovyov, stated at a roundtable held with governmental representatives and entities operating on the pharmaceutical market that from 2013 the import of pharmaceuticals that do not have proof of their quality will be banned. The Cabinet of Ministers of Ukraine is developing the relevant Resolution regulating this issue in detail. Such action could lead to a ban of imports of around 20% of pharmaceuticals to Ukraine. Just to remind: Under the Law of Ukraine "On Amending Certain Laws of Ukraine on Licensing the Import of the Pharmaceuticals and the Definition of "Active Pharmaceutical Ingredient" No.5038-VI dated July 4, 2012 the import to Ukraine of pharmaceuticals registered in Ukraine will be allowed from March 1, 2013 subject to certification of quality issued by the manufacturer and license on import of the pharmaceuticals issued to an importer (manufacturer or a person representing the manufacturer in Ukraine) in the manner provided by law.

Licensing the activities of pharmacies

On October 8, 2012 the Order of the Ministry of Health of Ukraine "On Amendments to the License Conditions on Economic Activity for the Production of Pharmaceuticals, Wholesale, Retail Trade of Pharmaceuticals" No. 707 dated September 7, 2012 entered into force. The Order provides amendments to the Order of the Ministry of Health of Ukraine No.723 dated October 31, 2011 and stipulates that there should be a sign indicating the type of institution on the facade of the building of a pharmacy institution; there should be information about the location of the (twenty-four-hour) pharmacy on duty and the nearest pharmacy in a conspicuous place in front of the pharmacy institution (now this requirement applies only to pharmacies and their departments) etc. Moreover, the Order forbids to use any information regarding the level or any other statements on the price and social orientation of pharmacy in the name, trademark, signboard and outdoor advertising of a pharmacy.

VII. FOOD RELATED ISSUES

Amendments to regulation of activity of food market operators

On October 2, 2012 the Draft Law "On Amendments to Certain Laws of Ukraine on Reducing the Number of Permits Obligatory for Food Market Operators" No. 11288 was registered in the Parliament of Ukraine|9|. The Draft Law provides complex amendments into the nineteen Laws of Ukraine in order to remove requirements on obtaining certificates, approvals, examinations, etc. by operators of food market. In particular, the Draft Law: a) provides the exclusion of concept of animal products for human consumption from the Law of Ukraine "On Veterinary Medicine"; b) abolishes the necessity to provide information on the sanitary state of production and safety at work in applying for a license to manufacture ethyl, cognac and fruit alcohol, ethyl rectified grape, alcoholic beverages and others under the Law "On State Regulation of Production and Turnover of Ethyl, Cognac and Fruit, Alcoholic Beverages and Tobacco Products"; c) stipulates that the Law of Ukraine "On State Regulation of Agricultural Imports" will no longer regulate the certification during import of agricultural products etc.

Amendments to labelling the products not containing GMO

On October 3, 2012, the Cabinet of Ministers of Ukraine approved the Draft Law "On Amending Certain Laws of Ukraine on Informing the Public about the Content of Genetically Modified Organisms in Food Products" No.11299.The Draft Law bans the turnover of foodstuff containing GMOs or produced using GMOs in Ukraine before the state registration of the GMO. Moreover, the Draft Law provides that the manufacturers of food products not containing genetically modified organisms or the share of GMOs in which constitutes less than 0.9% are not required to label products with "No GMO".

Tax exemption of baby food

On October 24, 2012 the Cabinet of Ministers of Ukraine issued the Resolution "On Amendments to the List of Own-Produced Special Baby Food, Business Profits from the Sale of Which in the Customs Territory of Ukraine Shall Be Exempt from Taxation" No. 969. The Resolution approved a new, shorter, list of baby food, which sale shall be exempt from income tax. The List includes special milk for newborns in a pressure package, not more than 500 g, more than 10% of fat; bottled water for preparing baby food and/or drink; ready-made homogenized products of meat and meat by-products etc.

Implementation of the system of food safety

The Ministry of Agriculture and Food of Ukraine adopted the Order "On Approval of Requirements for the Development, Implementation and Use of Permanent Procedures based on the Principles of the System of Food Safety (HACCP)"(Hazard Analysis and Critical Control Points) No. 590 dated October 1, 2012. The Order shall enter into force on May 2, 2013. The Requirements do not apply to slaughterhouses daily producing less than 10 heads of cattle, 30 pigs, 50 sheep and goats. The Requirements established the provisions regarding: the implementation of programs-prerequisites; development of permanent procedures on the principles of the HACCP system; some procedures to ensure effective functioning the programs-prerequisites and HACCP system; a simplified approach to the application of the HACCP system etc.

VIII. OTHERS

WTO trade and tariff data|10|

On October 23, 2012 the WTO released its annual package of trade and tariff data, providing detailed statistics on import/export trade flows and tariff rates in 2011 together with the interactive trade map|11|. This package includes the 2012 editions of its annual publications: International Trade Statistics, Trade Profiles and World Tariff Profiles, plus an update of the WTO Statistics Database and other data sources. The statistics reveal that world merchandise exports increased by 5 per cent in 2011 in volume terms. The United States remains the world’s biggest trader (in value terms), China and Germany rank second and third respectively.

Ukraine gains the 50th place for volume of export and 28 – for import. The average final bound tariff of Ukraine is 5,8% and the average applied tariff – 4,5%.

Procedure of Imposing Fees for Violation of Legislation on Advertising

The Cabinet of Ministers of Ukraine issued the Resolution “On Amendments to Section 4 of the Procedure of Imposing Fees for Violation of Legislation on Advertising” No. 885 dated September 26, 2012. The Resolution is issued in connection with the taking force of the Law of Ukraine "On Amending Certain Legislative Acts of Ukraine regarding the Prohibition of Advertising, Sponsorship and Promotion of Tobacco Products" No. 3778-IV. The Resolution is aimed on bringing the Resolution of the Cabinet of Ministers of Ukraine No. 693 dated May 26, 2004 in line with the Law. The Resolution provides some prohibitions on advertising alcohol and tobacco products. In particular, the Resolution stipulates that the penalty will be imposed on the advertiser who a) creates the impression that the consumption of alcoholic beverages or tobacco products or smoking is helping to solve personal problems or that most people smoke or drink alcohol; b) depicts in the advertisements of beer and beverages, based on beer, images of doctors and other medical professionals; c) advertises tobacco products, trademarks for goods and services, in places of public events of political, educational, religious, sporting character and recreational activities designed to minors; d) places the advertisements of tobacco products and trademarks in Internet, except in web-pages for adults, the obligatory condition for access to which is the identification of age etc.

Cancellation of registration of manufacturer's declaration of conformity

On October 2, 2012 the Parliament of Ukraine adopted the Law of Ukraine "On Amending Certain Laws of Ukraine on Cancellation of Registration of Declaration of Conformity" to fulfil Ukraine's obligations within the WTO. The Law amends Article 32 of the Law of Ukraine "On the Standards, Technical Regulations and Conformity Assessment Procedures" No.3164-IV dated December 1, 2005 by excluding provisions on the obligatory registration of declarations of conformity at the central executive power bodies. In addition, the rules regarding the requirement to specify the registration numbers of declarations in accompanying documents were excluded from the Law of Ukraine "On Conformity Assessment" No. 2406-III dated May 17, 2001 and the Law of Ukraine "On Consumer Rights' Protection" No. 1023-XII dated May 12, 1991.

Working Group on amending the Language Law

The working group chaired by the Vice-Premier-Minister of Ukraine and the Minister of Health of Ukraine, Raisa Bohatyriova, held a meeting on October 12, 2012, on which the amendments to the Law of Ukraine "On the Principles of the State Language Policy" No. 5029-VI dated 3 July 2012 were approved. The Draft Law will be sent to the Ministry of Justice of Ukraine and thereafter to the Cabinet of Ministers of Ukraine for approval. The version of the Draft Law available in public resources requires that labelling of goods and instructions for their use to be done in state language only. Under decision of a producer the text on state language may be supported by its translation of other languages.

Just to remind: On July 3, 2012 the Parliament of Ukraine adopted the Law of Ukraine "On the Principles of the State Language Policy" No. 5029-VI. On August 8, 2012 the President of Ukraine signed the Law. Article 26(3) of the Law requires that the labelling of goods and instructions for their use shall be done in state language and regional or minority language. Notably, as of today the Law lists 18 regional and minority languages.

Avoidance of doubletaxation and prevention of tax evasion between Ukraine and Mexico

On October 2, 2012 the Convention between the Government of Ukraine and the Government of the Kingdom of United States of Mexico "On the Avoidance of Double Taxation and Prevention of Tax Evasion with Respect to Taxes on Income and Property and its Protocol" was ratified by the Law of Ukraine No. 5297-VI. The entrepreneurs of two countries will obtain guaranties that profits from business activities in the territory of another country, as well as from sources in that other country in the form of dividends, interest and royalties, will not be subject to double taxation. The Convention also ensures that businesses of one country will be taxed in the other State on the same conditions as the entrepreneurs of that other State.

Cabinet of Ministers of Ukraine proposes to increase excise duty on cigarettes

On October 16, 2012 the Cabinet of Ministers of Ukraine proposed to increase the excise duty on cigarettes by 47% compared to the current duty rate. According to the Draft Law No. 11285 registered in the Parliament of Ukraine, the duty for cigarettes without filters will grow from UAH 49.48 to UAH 72.70 per 1,000 cigarettes, and that for cigarettes with filters from UAH 110.64 to UAH 162.60 per 1,000 cigarettes. The Draft Law provides excise duty on tobacco materials at UAH 217.60 per 1 kilo, while today zero duty is applied.


|1|http://wto.in.ua/?lang=en&get=3&id=2608

|2|http://me.kmu.gov.ua/control/uk/publish/category/system?cat_id=32862

|3|http://ictsd.org/i/news/bridgesrussian/146703/

|4|http://wto.in.ua/?lang=ua&get=3&id=2597

|5|http://www.bank.gov.ua/control/uk/publish/article?art_id=122645&cat_id=55838

|6|http://www.reuters.com/article/2012/10/24/ukraine-grain-wheat-idUSL5E8LO2SM20121024

|7|http://www.minagro.kiev.ua/uk/node/2005

|8|http://www.moz.gov.ua/ua/portal/dn_20120910_709.html

|9|http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=44563

|10|http://www.wto.org/english/news_e/news12_e/stat_23oct12_e.htm

|11|http://www.wto.org/english/res_e/statis_e/statis_maps_e.htm

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