International trade in goods and services in Ukraine: overview

In response to the annexation of Crimea and military actions in the eastern part of Ukraine, Ukraine:

• applied an import ban on certain Russian products;
• imposed most-favoured-nation (MFN) import duties on Russian-origin products; and
• imposed sanctions against specific Russian individuals and legal entities.

Since then, both countries have expanded the scope of their mutual restrictions. For example, at the end of 2017, Russia expanded an existing food embargo against Ukrainian goods, while Ukraine has extended the scope of its import ban. Sanctions introduced by the President of Ukraine are also subject to revision and extension. The most recent of these took place in June 2018 (see Question 18). In November 2018, Russia imposed special economic measures on certain individuals and legal entities of Ukraine that include freezing of their bank accounts, uncertificated securities and property in Russia and a ban on transfers of money from Russia.

These restrictions have resulted in an increase in the number of WTO disputes between the two countries. Ukraine has initiated three disputes against Russia (DS 499, DS 512 and DS 532), while Russia has initiated one (DS 525).

International trade agreements. One of the ongoing trends in Ukrainian international trade regulations is the conclusion of free trade agreements (FTAs) to facilitate bilateral trade. Ukraine has concluded 16 FTAs covering 46 states. FTAs with the EU and Canada entered into force in 2017. In 2018, Ukraine acceded to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (Pan-Euro-Med Convention). Negotiations of FTAs with Israel and Turkey are currently underway. See Question 2.

Trade remedies and application of WTO instruments. Ukraine actively applies trade defence remedies to protect domestic producers, as these measures are the only ones directly allowed by the WTO. Ukraine has also been actively participating in different WTO activities. For example, Ukraine has been making increasing numbers of statements in the WTO committees, initiating more disputes, and so on.

Export strategy. One of the benchmark objectives of the Ukrainian government is the facilitation of exports. At the end of 2017, the Cabinet of Ministers of Ukraine (CMU) approved the Export Strategy of Ukraine for 2017-2021. This is an action plan that indicates the key strategies for export development in Ukraine, including institutional reform and improvement of agencies focusing on the promotion of exports. The government is also currently conducting many different institutional and educational activities to facilitate exports.

Trade agreements

Is your jurisdiction a member of the World Trade Organization (WTO)? What are the main international, regional or bilateral trade agreements to which your country is a party?

International trade agreements

Ukraine joined the WTO on 16 May 2008 and is a member of the Marrakesh Agreement establishing the WTO. It is a party to the following multilateral agreements:

• General Agreement on Tariffs and Trade 1994 (GATT 1994) and 12 other multilateral agreements on trade in goods (including the WTO Trade Facilitation Agreement);
• WTO General Agreement on Trade in Services 1994 (GATS) and its Annexes;
• WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS);
• Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU);
• Trade Policy Review Mechanism (TPRM).

In addition, since 2016, Ukraine has participated in the Government Procurement Agreement (GPA), a WTO plurilateral agreement.

Ukraine has also ratified the:

• Protocol amending the TRIPS Agreement (which allows certain flexibilities for WTO members with respect to compulsory licensing and export of pharmaceuticals);
• Trade Facilitation Agreement (aimed at cutting red tape at the borders and speeding up customs clearance procedures), which came into force on 22 February 2017.

Regional and bilateral trade agreements

Ukraine has concluded 16 FTAs covering 46 countries in total, but is not a member of any customs union. Ukraine is a member of the following FTAs:

• Deep and Comprehensive FTA between the EU and Ukraine (within the framework of the Association. Agreement between the European Union and its Member States, on the one part, and Ukraine, on the other part), which entered into force on 1 September 2017 and provisionally applied since 1 January 2016 (DCFTA).
• Canada-Ukraine FTA, which entered into force on 1 August 2017 (CUFTA);
• FTA between the Government of Montenegro and the Government of Ukraine, which entered into force on 1 January 2013 (Ukraine-Montenegro FTA);
• Commonwealth of Independent States FTA, which entered into force on 20 September 2012 (CIS FTA);
• The CIS FTA was concluded by Armenia, Belarus, Kazakhstan, Kyrgyz Republic, Tajikistan, Uzbekistan, Moldova, and the Russian Federation. However, as of 1 January 2016, the Russian Federation and Ukraine have suspended the operation of the FTA with respect to each other;
• FTA between EFTA States and Ukraine, which entered into force on 1 June 2012 (EFTA-Ukraine FTA);
• Agreement on Free Trade between the Republic of Macedonia and Ukraine, which entered into force on 5 July 2001 (Ukraine-Macedonia FTA);
• Agreement on Free Trade between the Government of Ukraine and the Government of the Republic of Azerbaijan, which entered into force on 26 August 1996 (Ukraine-Azerbaijan FTA).
• Agreement on Free Trade between the Government of Ukraine and the Government of Republic of Georgia, which entered into force on 4 June 1996 (Ukraine-Georgia FTA);
• Agreement on Free Trade between the Government of Ukraine and the Government of Turkmenistan, which entered into force on 4 November 1995 (Ukraine-Turkmenistan FTA).

In addition to the CIS FTA, a number of bilateral FTAs with CIS countries (namely Belarus, Tajikistan, Kazakhstan, Kyrgyz Republic, Armenia, Moldova and Uzbekistan) remain in force but are expected to be terminated.

Ukraine also recently acceded to the Pan-Euro-Med Convention, which sets uniform rules of origin for trade in products manufactured in countries with which the EU has FTAs and customs unions.

Official publications of the international agreements concluded by Ukraine are available on the website of the Parliament of Ukraine (in Ukrainian) at: www.rada.gov.ua.

Trade negotiations

What are the authorities responsible for negotiating trade agreements? How long does it usually take to conclude a trade deal with your country?

Both the Ministry of Economic Development and Trade of Ukraine (MEDT) and the Ministry of Foreign Affairs of Ukraine (MFA) are responsible for the negotiation of trade agreements in Ukraine. The MEDT:

• Is the primary negotiator of trade agreements;
• Prepares economic evidence in relation to the conclusion of trade agreements;
• Signs agreements falling under its competence;
• At the same time, the MFA provides diplomatic maintenance and assistance in negotiations on potential trade agreements.

There is no fixed time limit for the duration of negotiations. For example, Ukraine is currently negotiating FTAs with Israel and Turkey. Negotiations of the FTA with Israel started on 22 July 2013. The negotiations were suspended in 2013 due to the political situation in Ukraine, and were resumed in the second half of 2015. Finally, following 11 rounds of talks, negotiations with Israel were completed on 28 March 2018. The parties plan to sign the Israel- Ukraine FTA by the end of November 2018. The negotiations of the FTA with Turkey started on 24 January 2011. On 4 May 2018, the tenth round of talks was completed, and the parties plan to sign the FTA by the end of 2018.

Does your country apply interim rules during trade negotiations?

As a WTO Member, Ukraine complies with the requirements of Article XXIV of the GATT 1994 when concluding any FTAs, including its obligation to notify its FTAs to the WTO Secretariat. Ukraine does not apply interim rules during negotiations.

Supply of services

Is your jurisdiction a party to international agreements on cross-border trade in services? Is your jurisdiction taking part in the negotiations of the Trade in Services Agreement (TiSA)?

On accession to the WTO, Ukraine became a party to the GATS and made a considerable level of commitments in relation to trade in services (horizontal commitments and sector-specific commitments). Sector-specific commitments are commitments made regarding specific services sectors or sub-sectors. According to Ukraine’s Schedule of Commitments, the country liberalised modes one to three (cross-border trade, consumption abroad and commercial presence) in:

• Business services (professional services, computer and related services, research and development services, real estate services, certain rental and leasing services, and other business services);
• Communication services (including postal and courier services (subject to licensing procedures)) and telecommunication services (subject to a specific regulatory framework);
• Construction and related engineering services;
• Distribution services;
• Educational services (with certain limitations);
• Environmental services;
• Financial services (including insurance, insurance-related services, banking and other financial services, with certain limitations);
• Health-related and social services (subject to certain exceptions);
• Tourism and travel-related services;
• Recreational, cultural and sporting services (subject to certain exceptions);
• Transport services (including maritime, internal waterway, air, rail, road and pipeline transportation, as well as auxiliary and other services, but with certain exceptions).

This liberalisation has been undertaken with respect to both market access and national treatment obligations.

Horizontal commitments apply to all sectors included in the Schedule of Commitments. Ukraine left mode four (presence of natural persons) in all these categories unbound. In general, foreign nationals must obtain a work permit, but certain categories of employees are excluded from this requirement, such as:

• Intra-corporate transferees;
• Service sellers;
• Natural persons providing services without a commercial presence;
• Natural persons responsible for establishing a commercial presence.

Ukraine has also scheduled exemptions and reservations relating to national treatment with respect to land ownership and access to subsidies and other forms of state support.

In addition, Ukraine has committed to publish promptly its legislation relating to trade in services and to allow any interested parties to submit their comments and proposals.

Ukraine is not currently participating in the TiSA negotiations being held under the framework of the WTO.

Three of Ukraine’s FTAs provide for liberalisation in service sectors, the:

• DCFTA;
• EFTA-Ukraine FTA;
• Ukraine-Montenegro FTA.

What domestic legislation and international rules apply to the supply of financial services, legal services and retail sales in your jurisdiction? What are the main requirements that suppliers must comply with?

Financial services

Regulatory framework. The general legal framework is established by the Law On Financial Services and State Regulation of Financial Services Markets No 2664-III dated 12 July 2001. Certain financial services, such as banking activities, insurance business and securities transactions, are also subject to special laws, including the:

• Law On Banks and Banking Activity No 2121-III dated 7 December 2000;
• Law On Insurance No 85/96-VR dated 7 March 1996;
• Law On Securities and Stock Market No 3480-IV dated 23 February 2006.

The provision of financial services is subject to licensing/registration by the competent Ukrainian authorities. Generally, only legal entities incorporated in Ukraine are eligible to obtain the relevant licence/registration. Therefore, with certain exceptions, there are no express rules governing the financial activities of foreign financial institutions in Ukraine. Special care must therefore be taken by foreign financial institutions when contacting clients/prospects in Ukraine. The rules relating to foreign institutions include that:

Foreign banks and foreign insurance companies can establish branches in Ukraine and provide their services in Ukraine though such branches;

The cross-border supply of certain insurance services into Ukraine is permitted for foreign insurance companies if those services are limited to:

• maritime and air transportation;
• spaceship and satellite launching;
• reinsurance services.

In addition, there are rules applicable to customers of cross-border financial services in Ukraine that inevitably affect foreign suppliers of such services. In particular, these rules relate to cross-border loans taken by Ukrainian borrowers. Ukrainian borrowers must generally register cross-border loan agreements with the National Bank of Ukraine (NBU). Ukrainian legislation establishes maximum permitted rates of interest for Ukrainian borrowers (generally, 11% per annum or three-month USD LIBOR +750 bps).

The cross-border supply of financial services into Ukraine may be substantially liberalised for European suppliers in the mid-term. Under Articles 93 (Market Access) and 94 (National Treatment) and Annexes XVI-B and XVI-E to the EU-Ukraine Association Agreement, Ukraine is under an obligation to:

• Allow cross-border supply of services by EU suppliers of banking and other financial services;
• Grant EU suppliers of such services treatment no less favourable than Ukraine accords to its own suppliers;
• Main requirements. The main requirements differ according to the financial institution concerned, as follows: – banks. The banking system in Ukraine is a two-tier structure made up of the central bank, the NBU, and commercial banks or branches. A commercial bank or branch can only carry out exclusive banking activities (taking deposits, opening bank accounts and investing raised funds) with a banking licence issued by the NBU. To operate with foreign currency, Ukrainian banks and branches must obtain a general currency licence from the NBU. The minimum authorised capital of a newly established bank or branch is UAH500 million. Commercial banks and branches must become members of the deposit guarantee fund and remit to that fund an initial contribution of 1% of their authorised capital and certain regular quarterly contributions. The NBU also requires the holding of mandatory reserves of at least 3% to 6.5% of deposits and current account balances. Banks and branches must submit to the NBU annual and interim financial statements, information on related parties, statistical data, and so on. Generally, NBU approval is required for the ultimate beneficial owners to establish or acquire over 10% of the equity in a bank or branch;
• Other financial institutions. Other kinds of financial institutions have their own requirements. A licence/registration and a minimum authorised capital is usually required (UAH1 million for securities brokers, EUR10 million for life insurers, and EUR1 million for other insurers). Generally, approval is required for the ultimate beneficial owners to establish or acquire over 10% of the equity in a financial institution.

Legal services

Regulatory framework. The legal requirements depend on the nature of the legal services provided. For example, the Law On State Registration of Legal Entities, Individual Entrepreneurs and Public Organisations No 755-IV dated 15 May 2003 applies to all non-governmental providers of legal services based in Ukraine (such as law firms, notaries or advocates). The activity of law firms is not regulated by specific legislation. However, some legal services are regulated in detail, for example:

• Advocacy is regulated by the Law On Advocacy and Advocacy Activities No 5076-VI dated 5 July 2012;
• Notary activities are regulated by the Law On Notaries No 3425-XII dated 2 September 1993.

Main requirements. Ukrainian and foreign legal entities, and individual entrepreneurs or public organisations, can provide consultancy on domestic or international law without special legal qualifications, except for in relation to advocacy. The main requirement is state registration of an entity that provides legal services either for free or on a commercial basis.

To obtain the status of advocate in Ukraine a person must:

• Have acquired a full higher legal education;
• Speak Ukrainian;
• Have practised in the field of law not less than two years;
• Have passed the bar exam;
• Have completed a six-month internship as an advocate (an internship is not required for individuals who have practised as advocate assistants for at least one year during the last two years on the date of the bar exam);
• Take the advocate oath;
• Obtain the advocate certificate of enrolment.

Foreign advocates can provide advocacy services in Ukraine if they are included in the Unified Advocates Register of Ukraine (the Advocate Council of Ukraine determines the necessary documentation for this).

Notary services can only be provided by Ukrainian citizens.

Retail sales

Regulatory framework. There is no single instrument specifically regulating retail sales in Ukraine. The primary legislation applying to this field consists of the:

• Law On Protection of Consumers’ Rights No 1023-XII dated 12 May 1991;
• Law On General Safety of Non-food Products No 2736-VI dated 2 December 2010;
• Law On State Market Surveillance and Control of Non-food Products No 2735-VI dated 2 December 2010;
• Law On Ensuring the Sanitary and Epidemiological Well-Being of the Population No 4004-XII dated 24 February 1994;
• Law On Main Principles and Requirements for Safety and Quality of Food Products No 771/97-VR dated 23 December 1997.

Additional sector-based legislation may be applicable depending on the type of product sold (for example for pharmaceuticals, alcoholic beverages, tobacco or fertilisers).

Main requirements. The basic requirements for selling food or non-food products relate to safety and quality requirements, obtaining the relevant permits, and so on. There are additional requirements for certain products (including licensing, price regulation and excise taxes), for example:

• Only registered medicinal products can be sold in Ukraine. To sell medicinal products in Ukraine, the seller must obtain a licence for sale and comply with the licensing terms. Medicinal products can only be sold for retail in pharmacies or their branches. Trade in medicinal products can only be provided through pharmaceutical establishments and cannot be provided through any electronic commercial means, by post, or by establishments other than pharmaceutical ones (some exclusions are envisaged for rural areas where medicinal products can be sold by certain health care institutions);
• Alcoholic beverages and tobacco. Ukraine has a strict state policy for the regulation of production and turnover of alcoholic beverages and tobacco products. Retail sales of industrial ethyl alcohol and alcohol distillates are prohibited. Retail trade in alcoholic beverages or tobacco products can be carried out by legal entities if they have a licence. Places of storage of alcoholic beverages and tobacco products must be entered in the state register.

Are there restrictions on market access for specific services sectors?

Under the Law On Licensing of Economic Activity Types No 222-VIII dated 2 March 2015, the services sectors that are subject to special licensing terms include:

• Banking and financial services;
• Television and radio broadcasting;
• Telecommunications;
• Medical services;
• Production, importation, wholesale and retail trade of pharmaceuticals;
• Educational services;
• Tour operator activities;
• Services in the energy sector;
• Certain construction works.

The full list is available at http://zakon3.rada.gov.ua/laws/show/222-19/print1503429277421995.

Corresponding CMU Resolutions determine the special licensing terms for each of the listed activities, for example:

• The supply of medical services is licensed under CMU Resolution On Approval of Licensing Conditions on Commercial Activity related to Medical Services No 285 dated 2 March 2016;
• Manufacturing, wholesale and sale of medicinal products is licensed under CMU Resolution On Approval of Licensing Conditions on Commercial Activity related to the Production of Medicines, Wholesale and Retail of Medicinal Products, Import of Medicinal Products (except for Active Pharmaceutical Ingredients) No 929 dated 30 November 2016;
• Educational services provided by educational institutions are licensed under CMU Resolution On Approval of Licensing Conditions on Educational Activity of Educational Institutions No 1187 dated 30 December 2015.

In addition, the list of natural monopolies of Ukraine is approved by the Anti-monopoly Committee of Ukraine (AMCU) and comprises both state-owned and private enterprises. It includes, among others, a wide range of companies supplying natural gas, electricity, water and water drainage, and transporting heat energy. It is available on the AMCU website: www.amc.gov.ua.

Imports

Customs authority

What is the authority responsible for enforcing customs laws and regulations?

The State Fiscal Service of Ukraine (SFS) is responsible for enforcing customs laws and regulations in Ukraine. The webpage of the SFS is available at: http://sfs.gov.ua/en.

As specified in the Regulation on the SFS of Ukraine, approved by CMU Resolution No 236 dated 21 May 2014, the SFS performs, among others, the following functions in the field of customs regulation:

• Control and supervision;
• Customs clearance;
• Administers customs duties, fees and other related payments;
• Administers customs statistics and Ukrainian Foreign Economic Activity Commodity Classification;
• Ensures sanitary-epidemiological, veterinary-sanitary, phytosanitary and ecological control of goods crossing the border, and documentary control over the movement of culturally valuable goods;
• State export control;
• Prevention and suppression of customs violations.

The SFS operates directly or through its territorial offices represented in each region of Ukraine. The list of territorial offices is available at: http://sfs.gov.ua/en/about-sfs/structure/territorial-offices.

Depending on the type of violation, both fiscal authorities and courts have the power to hear cases on the violation of customs rules (Article 522, Customs Code). Under the Code on Criminal Procedure, state courts have exclusive competence in criminal proceedings, including to impose criminal penalties for violations of customs rules under the Criminal Code (Article 30, Code on Criminal Procedure).

See Question 18 for the application of special sanctions for violation of customs rules.

Import duties, tariffs and rates

What are the main customs import tariffs and duties?

General tariffs and rates

Ukraine bound 100% of its tariff lines on accession to the WTO. Currently, Ukraine’s average bound rate is 5.8% (10.9% for agricultural products and 5% for non-agricultural products) and average applied rate is 4.5% (9.2% for agricultural goods and 3.7% for non-agricultural goods). Approximately 30% of all tariff lines are bound at 0%. The Customs Tariff for Ukraine is available at: http://zakon0.rada.gov.ua.

Preferential tariffs

Preferential tariffs are applied to goods originating from countries that have concluded FTAs with Ukraine. These include the:

DCFTA. The EU and Ukraine have agreed to eliminate 98.1% and 99.1% of duties in trade value respectively. The level of liberalisation with respect to agricultural products is lower than with respect to industrial goods. Import duties on products originating from the EU and Ukraine (and included in the EU or Ukraine’s tariff schedule attached to the DCFTA) are:

• fully liberalised immediately;
• gradually liberalised over the indicated period (up to ten years for Ukraine); or
• subject to tariff rate quotas (meaning that producers can export a pre-determined volume of goods duty-free but once the quota is filled, MFN rates apply).

The parties undertook not to maintain or introduce any export duties, and Ukraine is obliged to eliminate its existing export duties in accordance with the schedule annexed to the agreement. The DCFTA also provides for temporary (for the first 15 years of operation of the agreement) special safeguard mechanisms with respect to passenger cars that may be used by Ukraine.

EFTA-Ukraine FTA. Most goods originating in EFTA states and destined for Ukraine were granted immediate duty-free access, while the remaining tariffs covered by the agreement must be gradually eliminated over the transitional period of a maximum of ten years. The level and conditions of liberalisation with respect to agricultural goods is governed by bilateral agreements on agriculture between Ukraine and the respective EFTA states.

CUFTA. Ukraine has granted immediate duty-free access with respect to 72% of products. Another 27% are subject to the gradual elimination over three-, five- or seven-year periods. The agreement envisages special safeguard mechanisms (referred to as emergency actions) that can be applied by the parties during the transitional period in cases where, following liberalisation, imports from one party are injuring or threatening to injure the domestic industry of the other party.

CIS FTA. This covers more than 90% of total intra-CIS trade and envisages the elimination of most import and export duties in trade between the parties, with the exception of several tariff lines reserved by each party. The parties have also agreed not to increase their bound rates of export duties.

Ukraine-Montenegro FTA. Import duties on products originating in Ukraine and Montenegro are eliminated and no new customs duties will be introduced. However, certain goods were excluded by Ukraine from the scope of the agreement (for example, certain pork, poultry and sugar products), and are therefore not subject to any commitments.

Ukraine-Macedonia FTA. Ukraine undertook to eliminate existing import duties and not to introduce new ones on industrial products (with some exceptions, for example, certain chemicals, wood products and textiles). Trade liberalisation with respect to agricultural products is limited, as the scope of liberalisation only comprises certain tariff lines, all of which are subject to tariff rate quotas. Export duties are also eliminated.

Ukraine-Georgia FTA, Ukraine-Azerbaijan FTA, Ukraine-Turkmenistan FTA and bilateral FTAs with CIS countries. These agreements are classified as “old generation” FTAs and all contain similar provisions. The parties agreed to eliminate any existing import and export duties. All of the agreements set out that if the parties decide to exclude certain goods from the free trade regime, an appropriate separate instrument (protocol) listing those goods must be drafted and constitute a part of the respective agreement. For example, such protocols are available for the Ukraine-Kazakhstan and Ukraine- Moldova FTAs and they exclude certain industrial goods, such as certain types of raw hides or skins exported from Ukraine to Kazakhstan (meaning that Ukraine can apply export duties on such products).

Non-tariff barriers to imports

Are there non-tariff barriers to imports into your jurisdiction?

On importation into the territory of Ukraine, goods must comply with sanitary and phytosanitary measures, depending on their characteristics, as well as relevant technical requirements (including packaging, marking or labelling regulations). Imports of certain goods covered by embargoes and sanctions are restricted.

Import restrictions apply to goods specified in CMU Resolution No 436 dated 21 May 2012, which include certain types of:

• Drugs, psychotropic substances and their precursors;
• Timber and sawn wood;
• Cultural goods;
• Experimental plant varieties;
• Fish and fish food products of foreign origin;
• Goods designated for military purposes and dual-use goods;
• Currency valuables;
• Goods subject to conformity assessment in accordance with technical regulations;
• Seeds and planting materials;
• Radioactive materials;
• Radio-electronic equipment and radiating circuits of special designation;
• Printed materials.

Exports and imports subject to licensing and quotas are approved by CMU resolution on an annual basis. As of 2018, the relevant lists of goods were approved by CMU Resolution No 1018 dated 20 December 2018 specifying:

• Quotas for goods whose export is subject to licensing in 2018 (including for valuable metals);
• A list of ozone-depleting substances and of goods that may contain ozone-depleting substances, the export and import of which is subject to licensing in 2018;
• A list of goods for which import from the Republic of Macedonia is subject to licensing within the tariff quota under the Ukraine-Macedonia FTA (including products such as sheep or goat meat, certain fruit and vegetables, sugar confectionery, chocolate and other food preparations containing cocoa, some prepared foods, and so on);
• Goods subject to export licensing in 2018 (only anthracite is listed).

Can customs decisions and import restrictions be challenged?

Customs decisions can be challenged through judicial and administrative procedures, while import restrictions (see Question 18 to Question 21) can only be challenged before a court.

Customs decisions

Any person has the right to administratively challenge decisions, acts or omissions by the customs authorities by filing a complaint with the head of the relevant customs body. If a decision, act or omission is taken by the head of a customs post, the petition can be filed with the relevant customs house (of which the customs post is a structural division). If the action is taken by the head of the customs house, specialised customs body or customs organisation, it can be challenged before the SFS as the central executive authority responsible for formulating and implementing the state tax and customs policy (Articles 24-30, Customs Code of Ukraine No 4495-VI dated 13 March 2012 (Customs Code)).

A ruling issued by the customs office on a customs offence can also be appealed to the SFS. Filing an appeal suspends the enforcement of the customs offence ruling until the appeal is finally considered (Articles 529-533, Customs Code).

Customs decisions and import restrictions

Both customs decisions and import restrictions can be challenged before an administrative court of Ukraine at any time. The decisions of a first instance administrative court can be appealed to the relevant Administrative Court of Appeal and then to the Highest Administrative Court of Ukraine, the decisions of which can be revised by the Supreme Court of Ukraine (on limited grounds).

Trade remedies

Regulatory framework

What are the main regulations on trade remedies? What are the authorities responsible for investigating and deciding on trade remedies?

Regulatory framework

In addition to the WTO legislative framework, trade remedies are regulated at the national level in Ukraine by the following laws:

• Law On Protection of National Producers from Dumped Imports No 330-XIV of 22 December 1998 (Anti-Dumping Law);
• Law On Protection of National Producers from Subsidised Imports No 331-XIV dated 22 December 1998 (Anti-Subsidy Law);
• Law On the Application of Safeguard Measures against Imports to Ukraine No 332-XIV dated 22 December 1998 (Safeguard Law);
• Law On Foreign Economic Activity No 959-XII dated 16 April 1991 (Foreign Economic Activity Law). Article 31 establishes deadlines for challenging decisions relating to the application of trade remedies in Ukraine.

Regulatory authority

The following state authorities are involved in trade remedies proceedings:

The Interdepartmental Commission on International Trade (Commission), which is responsible for key decisions during proceedings, including on the:

• initiation of investigations;
• existence of dumping, specific subsidies or surges in imports, and their amounts;
• existence of injury; and
• termination of proceedings with or without trade remedies.

The MEDT, which is responsible for procedural issues, including:

• registration of interested parties;
• collecting answers to questionnaires;
• holding hearings and consultations; and
• drafting preliminary and definitive reports following preliminary or final results of investigations with the relevant recommendations to the Commission on the decisions to be adopted.

The Ministry of Finance of Ukraine and the SFS, which are responsible for providing the MEDT with all relevant statistics related to trade remedies proceedings.

Investigations and enforcement

What are the requirements and procedure to start trade remedies investigations?

Anti-dumping, anti-subsidy and safeguards investigations are initiated following the submission of an application by a domestic industry (that is, the whole or a major proportion of the domestic producers of like or directly competing products in Ukraine). The applicable thresholds for the domestic industry in Ukraine are the same as those set out by the relevant WTO agreements. To initiate an investigation, an application must contain evidence of:

• Likeness of the products manufactured by the domestic producers and those imported into Ukraine;
• Dumping, prohibited (actionable) subsidies, or surges in imports caused by unforeseen developments;
• Material or serious injury and a causal link between the dumping, subsidies or increase in imports and the injury;
• Compliance of potential remedies with Ukraine’s national interests.

On initiation, all interested parties registered by the MEDT (including foreign producers, exporters, importers, customers and governmental authorities) can participate in the investigation by, among other things:

• Submitting their commentaries and answers to the questionnaires;
• Participating in hearings;
• Commenting on the draft definitive report of the MEDT with conclusions on the results of the investigation;
• Accessing case materials.

The list of pending trade defence proceedings and effective trade defence remedies is available on the MEDT website: http://me.gov.ua.

Appeals

Is there a right of appeal against the authority’s decision? What is the applicable procedure?

A decision by the Interdepartmental Commission on International Trade on the application of trade remedies can be challenged before the administrative court not later than one month after imposition of the relevant remedies (Article 31, Foreign Economic Activity Law). See Question 11 for the structure of administrative courts in Ukraine.

Exports

Regulatory framework

What are the main requirements to export goods from your jurisdiction? What are the authorities responsible for enforcing export regulations and controls?

The Customs Code is the main legal instrument setting out export requirements. Chapter 15 deals with the export of goods. The procedure for completing a customs declaration is defined in Chapter 40 of the Customs Code and the CMU Resolution On Questions related to the Application of Customs Declarations No 450 dated 21 May 2012.

Depending on the nature of the transaction, some specific regulations may be applicable, for example, starting from 7 February 2019, the Law On Currency and Operations Connected with Currency dated 21 June 2018 will regulate foreign currency payments involving Ukrainian companies.

A number of legal acts specify special procedures, including export permits, conduct of state inspections and so on, for the export of specific goods, including, for example:

• Goods designated for military purposes and dual-use goods;
• Goods of cultural value;
• Drugs, psychotropic substances and their precursors.

The SFS generally enforces controls on the importation and exportation of goods through the customs border. However, depending on the type of products, specific authorities are responsible for the issuance of export permits and for export controls. For example:

• Exports of goods designated for military purposes and dual-use goods are subject to special control by the State Service of Export Control of Ukraine;
• Exports of goods of cultural value are controlled by the Ministry of Culture of Ukraine;
• Exports of drugs, psychotropic substances and their precursors are under the control of the State Service of Ukraine on Medicines and Drugs Control.

Are certain categories of goods subject to specific export quotas, restraints or other controls?

A number of export duties and restrictions apply that Ukraine has committed to gradually reduce on its accession to the WTO. The list of products subject to export duties includes:

• Live cattle;
• Raw hides and skins;
• Oilseeds;
• Natural gas in liquefied or gaseous form (natural gas export duties are no longer applied to Energy Community members as of 2014);
• Ferrous metal scrap (Ukraine has applied an export duty of EUR42 per tonne for ferrous metals scrap effective until 15 September 2019, although under Report of the Working Party on the Accession of Ukraine to the WTO, the maximum level of this export duty cannot be higher than EUR10 per tonne).

The country has also introduced a ten-year ban on exports of unprocessed timber starting from 1 November 2015, and a ban on exports of pine logs applicable from 1 January 2017.

Penalties

What are the consequences of non-compliance with export regulations?

Products will not be cleared for export if it is established, in the course of customs controls, that the goods are not authorised for export due to non-compliance with export regulations.

Depending on the nature of the violation, type of exported product, intention of the infringer and other factors, violations of export regulations can lead to administrative and criminal liability, for example:

Failure of an exporter to declare precisely and accurately information with respect to the exported goods (description of the goods, quantity and so on) is punishable by a fine equal to 100% of the value of the exported goods and seizure of the goods (Article 472, Customs Code).

Circumvention (hiding from) customs control when exporting products (for example, by giving one product the appearance of others, hiding goods, or the submission of documents containing false descriptions of goods or their country of origin, or false information necessary to determine tariff classification and customs value) is punishable by a fine equal to 100% of the value of the exported goods and seizure of the goods (Article 483(1), Customs Code).

Submission by an exporter of false information on a customs declaration with the purpose to evade customs duties is punishable by a fine equal to 300% of the unpaid customs duties and charges due (Article 485, Customs Code).

Smuggling (that is, the movement of certain goods across the customs border of Ukraine bypassing customs control (including cultural valuables, poisonous, strong, radioactive or explosive substances, and weapons and ammunition)) is punishable by imprisonment for a term of three to seven years. The same actions committed by a group of persons with prior collusion, by a person previously convicted of this criminal offence, or by a public officer is punishable by imprisonment for a term of five to 12 years and by confiscation of the goods (Article 201, Criminal Code).

International trade restrictions

Trade sanctions

Are there specific restrictions on trade with certain jurisdictions?

Trade sanctions are applied in Ukraine based on:

• The law On Sanctions No 1644-VII dated 14 August 2014 (Sanctions Law);
• Article 29 of the Foreign Economic Activity Law;
• Article 37 of the Foreign Economic Activity Law (ineffective as of 7 February 2019).

Under the Sanctions Law, sanctions can be imposed on, among others:

• Foreign countries;
• Foreign citizens (personal sanctions);
• Foreign legal entities (personal sanctions);
• An unlimited number of persons that conduct certain type of activities (sectoral sanctions).

No sectoral sanctions have so far been applied by Ukraine.

There are currently personal sanctions against individuals and legal entities (sanction lists) related to the Russian Federation listed in the Decision of the National Security and Defence Council of Ukraine On Application of and Amendments to Special Personal Economic and Other Restrictive Measures (Sanctions) dated 21 June 2018 and enacted by Decree of the President No 176/2018 dated 21 June 2018. See: www.president.gov.ua/ documents/1762018-24362.

The sanction lists were initially introduced in September 2015 for a one-year period. New sanction lists were adopted between October 2016 and June 2018. According to the sanction list currently in force, sanctions are applicable to legal entities and natural persons for periods of one to three years, or permanently.

The Sanctions Law specifies the following grounds for the introduction of sanctions:

Actions of a foreign country, legal entity, an individual, or other actors that:

• create a real or potential threat to the national interests, security, sovereignty and territorial integrity of Ukraine;
• contribute to terrorist activity and/or violate the rights and freedoms of Ukrainian individuals and citizens, or the interests of society and the state;
• lead to the occupation of Ukrainian territory, expropriation or restriction of property rights, damage to property, or the obstruction of sustainable economic development or the full exercise by citizens of Ukraine of their rights and freedoms; or any such actions executed in relation to any other country, its legal entities or citizens.
• Resolutions of the UN General Assembly and Security Council;
• Resolutions and regulations of the EU Council;
• Violations of the UN Universal Declaration of Human Rights 1948 and the UN Charter;

Sanctions under the Sanctions Law include:

• Asset freezes;
• Limitation of trading operations;
• Bans on the export of capital;
• Suspension of economic and financial transactions;
• Annulment or suspension of permits/licences to carry out particular economic activities.

Special sanctions under Article 37 of the Foreign Economic Activity Law apply to domestic and foreign legal entities for violations in relation to foreign business activities of currency controls or customs, tax or other legislation. The Foreign Economic Activity Law provides for three types of special sanctions that can be applied:

• Financial penalties (fines);
• Individual licensing regimes;
• Temporary suspension of foreign economic activities.

A list of effective special sanctions is available at: http://me.gov.ua/SpecialSanctions/List?lang=uk-UA.

As of 7 February 2019, the mechanism of special sanctions in Ukraine will be abolished.

Under Article 29 of the Foreign Economic Activity Law, the CMU can introduce trade restrictions (retaliatory measures) in response to discriminative or unfriendly actions by a state recognised by the Parliament of Ukraine as an aggressor and/or an occupier. The restrictions that can be introduced under Article 29 include, among others:

• Quotas;
• Full or partial bans on trade;
• Safeguard duties;
• Licensing of foreign economic operations;
• Termination of trade preferences.

The following trade restrictions have been enacted in relation to the Russian Federation under Article 29 of the Foreign Economic Activity Law:

• Imposition of customs duties on goods originating from the Russian Federation at preferential rates fixed by the Customs Tariff of Ukraine. Russian goods therefore do not benefit from a duty-free regime under the CIS FTA. The measure is applicable until 31 December 2018 (CMU Resolution On Tariff Rates for Goods Originating from the Russian Federation No 1146 dated 30 December 2015);
• Ban on imports of certain products originating from the Russian Federation, in force until 31 December 2018 (CMU Resolution On the Ban on Import of Goods Originating from the Russian Federation into the Customs Territory of Ukraine No 1147 dated 30 December 2015). The list of restricted products is specified in the Annex to the CMU resolution.

What is the authority responsible for imposing trade restrictions?

The following governmental authorities can take the initiative to impose sanctions under the Sanctions Law:

• Parliament of Ukraine;
• President of Ukraine;
• Government of Ukraine;
• NBU;
• Security Service of Ukraine.

Decisions to introduce, abolish and/or amend personal sanctions are made by the National Security and Defence Council of Ukraine and enacted by a decree of the President of Ukraine.

Special sanctions under Article 37 of the Foreign Economic Activity Law (in force until 7 February 2019) are applied by the MEDT on request of the:

• SFS;
• Security Service of Ukraine;
• AMCU;
• National Commission for State Regulation of Financial Services Markets;
• NBU;

The CMU can also impose retaliatory measures under Article 29 of the Foreign Economic Activity Law.

What are the consequences of non-compliance with trade restrictions?

As compliance with trade sanctions is strictly monitored by the state authorities (including the Security Service of Ukraine and SFS), it is not generally possible in practice to circumvent trade restrictions.

Infringement of export regulations can lead to administrative or criminal liability, depending on the nature of the violation, type of exported product, intention of the infringer and other factors (see Question 17).

Are businesses subject to specific compliance requirements? What practical steps should a business take to ensure compliance with trade restrictions?

There are no mandatory compliance programmes for companies in relation to sanctions applied under the Sanctions Law, special sanctions and retaliatory measures. However, due to the practical consequences of sanctions (such as the impossibility of making payments through banks, the customs clearance of products and so on), in practice, many businesses usually take all reasonable measures to ensure compliance with applicable legislation before conclusion of any contracts and check whether counterparties are included on any sanctions lists.

However, there are mandatory compliance requirements for:

• Certain public/municipal companies, and legal entities engaged in certain public procurement processes, which are obliged to implement anti-corruption programmes and measures, and to designate a person in charge of their anti-corruption programmes (Chapter X, Law On Prevention of Corruption No 1700-VII dated 14 October 2014);
• Legal entities in relation to personal data processing requirements (Law On Protection of Personal Data No 2297-VI dated 1 June 2010).

Foreign trade barriers

What is the procedure for local exporters to complain against foreign trade barriers contrary to the WTO or other trade agreements?

The interaction between the government and businesses on the introduction of trade barriers against Ukraine is governed by the Regulation on Protection of Ukraine’s Rights and Interests in Trade and Economic Field within the Framework of the WTO approved by CMU Resolution No 346 dated 1 June 2016 (Regulation).

The Regulation defines, among other things, the rules and procedures on protection of the rights and interests of Ukrainian companies through all the stages of the WTO dispute settlement process, from the consultation stage to the implementation of recommendations or rulings of the WTO Dispute Settlement Body. The Regulation expressly provides for the right of Ukrainian companies to apply to the MEDT if any WTO member violates the WTO agreements, as well as sets out further procedures (such as for the initiation of a dispute).

In addition, the state bodies and foreign diplomatic missions of Ukraine monitor trade barriers applied by WTO members with respect to Ukraine. When relevant violations are detected, the MEDT must be notified within five business days to initiate the relevant procedures and address the violations.

Although Ukrainian law is silent on how local exporters can refer issues to the Government of Ukraine under bilateral treaties, in practice it is likely that the same procedure can be applied as for violations under FTAs.

Developments and reform

Are there impending developments or proposals for reform affecting international trade in goods and services?

On 27 December 2017, the CMU approved the Export Strategy of Ukraine: Roadmap for Strategic Development of Trade for the Period 2017-2021 (Export Strategy), envisaging an action plan for key vectors of export development in Ukraine. As specified in the Export Strategy, the most promising sectors for Ukraine’s exports are:

• Information and communications technology;
• Creative industries;
• Tourism;
• Maintenance and repair of aircraft;
• Machinery;
• Food industry;
• Production of spare parts for the aerospace and aviation industry.

The document also provides a list of new markets that would replace traditional export markets where access was restricted due to the political situation. These include the EU, Egypt, India, Belarus, Georgia, Moldova, Japan, China, Bangladesh, and so on. Under the Export Strategy, Ukraine will create institutional and other capacities to facilitate exports.

On 7 February 2018, the CMU adopted a decision to establish an Export Credit Agency that will provide insurance for export credits, external economic agreements and direct investments from Ukraine. The ultimate goals of the Export Credit Agency are to protect Ukrainian exporters from commercial and non-commercial risks and to provide guarantees for the fulfilment of obligations under foreign commercial agreements by foreign buyers.

Ukraine is also revising its legislation in the field of trade defence instruments to fully align it with established WTO jurisprudence. In 2017, the MEDT presented draft laws elaborated together with the legal and business community. These draft laws were submitted for the consideration of the Ukrainian Parliament at the end of February 2018 and are expected to be adopted in the near future.