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8 August 2022

Trade liberalisation for Ukrainian export as a response to the russian-Ukrainian war

Source: Ukrainian law firms

The full-scale russian invasion of Ukraine triggered the widespread reaction of countries worldwide. In the economic realm, states focused their efforts in two main directions. Firstly, they imposed numerous economic sanctions on russia restricting commodities and cash flows from and into the country. Secondly, states introduced several measures to support Ukraine in the economic field. The most prominent example of such measures is the temporary liberalisation of trade with Ukraine.

The United Kingdom, the United States, Canada, the EU Member States, and Australia are among those states which were the first to make steps in the trade liberalising direction. The scope of the liberalisation, the period and the form of the legal act varies from state to state.

In general, all the states which introduced certain acts of liberalisation may be divided into three categories:

  • states that temporally suspended application of anti-dumping, safeguard, countervailing or other additional duties on certain goods of Ukrainian origin;
  • states that temporally eliminated basic customs duties for goods of Ukrainian origin;
  • states that introduce both types of liberalisation.

Elimination of both basic customs duties and additional duties

The European Union introduced a diverse system of trade-liberalising measures by adopting the Regulation (EU) 2022/870 of the European Parliament and of the Council of 30 May 2022 on temporary trade-liberalisation measures supplementing trade concessions applicable to Ukrainian products (the “Regulation (EU) 2022/870”).

The Regulation (EU) 2022/870 provides for a wide range of trade liberalisation measures for one year, including (1) elimination of import duties on industrial products covered by Annex І-А; (2) suspension of entry price system application for fruits and vegetables; (3) elimination of all the tariff-rate quotas for agricultural products; (4) suspension of anti-dumping duties on products of Ukrainian origin; and (5) suspension of global safeguard measures introduced under the Regulation (EU) 2015/478[1].

It is necessary to point out that Regulation (EU) 2022/870 not only introduces liberalisation measures but also establishes the conditions for such measures to be available. To be entitled to the above preferences, Ukraine has to (1) comply with the rules of origin, (2) respect democratic principles, human rights, fundamental freedoms and the rule of law and, (3) most importantly, refrain from introducing new or increasing existing duties, charges, quantitative restrictions and equivalent measures.[2]

The preferential arrangements are introduced for one year starting from 4 June 2022.[3]

Similarly to the EU, Canada temporarily, for one year, eliminated both customs duties and anti-dumping, safeguard, and countervailing measures by virtue of Customs Notice 22-12: Ukraine Goods Remission Order (the “Customs Notice”).[4] The measures came into effect on the date of registration of the Customs Notice, that is 9 June 2022.

The provision on eliminating trade-remedies measures is not redundant since Canada has been applying anti-dumping measures on imports of oil country tubular goods originating from Ukraine since 2014[5] and of certain steel plates originating from Ukraine since 2009[6].

The United Kingdom is another Ukrainian partner that provided the vast liberalisation scheme for Ukrainian goods under Agreement No. 1 in the form of an exchange of letters between Ukraine and the United Kingdom of Great Britain and Northern Ireland on amendments to the Agreement on Political Cooperation, Free Trade and Strategic Partnership between Ukraine and the United Kingdom of Great Britain and Northern Ireland (“Agreement No. 1”).

Agreement No. 1 envisages the elimination of the customs duties for one year. However, Article 3 provides for the possibility of introducing temporary safeguard measures for cases where goods are being exported in such increased quantities and under such conditions as to cause serious injury or the threat of serious injury.[7]

There are some other peculiarities which distinguish the UK measures from other countries’ ones. Firstly, in contrast to the EU and Canadian measures which were enforced by unilateral acts, the UK liberalisation is introduced by bilateral agreement. Consequently, Ukraine, as another party to that agreement, undertook to provide the same preferences to goods originating in the UK.

Secondly, the agreement itself did not suspend the application of any anti-dumping, countervailing, or safeguard measures. Nevertheless, such acts of trade liberalisation can take place on a separate basis. For example, the UK suspended the application of the safeguard measures on steel originating from Ukraine for two years starting from 1 July 2022.[8]

Elimination of basic customs duties

Speaking of Australia, the state unilaterally introduced a duty-free regime for goods of Ukrainian origin. The Australian Customs Notice No. 2022/32 introduces trade liberalisation for 12 months which retrospectively starts on 4 July 2022.[9]

What distinguishes Australian measures from others is that the liberalisation is not extended to anti-dumping, countervailing, or safeguard measures. Moreover, excise-equivalent customs duties also continue to apply to Ukrainian goods. It is important to point out, however, that Australia is currently applying no anti-dumping or countervailing measures to Ukrainian imports.[10]

Suspension of anti-dumping, safeguard, countervailing or other additional duties

Although the United States of America was nearly the first country to enforce liberalising measures for Ukrainian goods, it did not introduce general elimination of customs duties for goods of Ukrainian origin. Instead, Ukrainian steel products were exempted from an additional 25% ad valorem duty for one year by the Proclamation: Adjusting Imports of Steel Into the United States (Ukraine) (“Proclamation 10403”). Proclamation 10403 was published on 27 May 2022 and suspends the application of the additional duties on steel products of Ukrainian origin for the period from 1 June 2022 until 1 June 2023.[11]

The additional 25% import duties were introduced to imports of steel and derivative steel article on 8 March 2018 by Proclamation 9705 (Adjusting Imports of Steel Into the United States) under section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862).[12]

It is worth emphasising that in addition to general liberalisation, the UK and Canada have granted additional liberalisation for trade defence remedies applicable against products of Ukrainian origin, namely:

  • Since 1 July 2022, the UK has suspended safeguard tariff quotas currently applied to steel products with origin in Ukraine for two years (from 1 July 2022 until 30 June 2024)[13].
  • On 13 May 2022, Canada terminated anti-dumping duties applied to imports into Canada of flat hot-rolled carbon and alloy steel sheets and strips with origin in Ukraine. The said measures have been applied since 2001 at the rate of 77%[14].

Ukrainian response

In response to such acts from its partners, on 21 June 2022, Ukraine amended the Law of Ukraine “On Foreign Economic Activity” (the “Foreign Economic Activity Law”) by introducing the notion of “friendly acts”. According to Article 291 of the Foreign Economic Activity Law, “friendly acts” are “tariff benefits (tariff preferences) in the form of exemption from import duties, reduction of import duty rates or establishment of tariff quotas, and other measures provided for by laws and international treaties of Ukraine”.[15]

The Cabinet of Ministers of Ukraine has the right to adopt similar measures in response to the “friendly acts” of other states with which Ukraine has FTAs in place. Such measures of the Ukrainian government should be considered as national security measures adopted under Article XXI of the General Agreement on Tariffs and Trade of 1994.

[1] Article 1 of Regulation (EU) 2022/870, available via the link: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2022.152.01.0103.01.ENG&toc=OJ%3AL%3A2022%3A152%3ATOC#ntr5-L_2022152EN.01010301-E0005

[2] Article 2 of Regulation (EU) 2022/870, available via the link: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2022.152.01.0103.01.ENG&toc=OJ%3AL%3A2022%3A152%3ATOC#ntr5-L_2022152EN.01010301-E0005

[3] Article 8 of Regulation (EU) 2022/870, available via the link: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2022.152.01.0103.01.ENG&toc=OJ%3AL%3A2022%3A152%3ATOC#ntr5-L_2022152EN.01010301-E0005

[4] Customs Notice, available via the link: https://www.cbsa-asfc.gc.ca/publications/cn-ad/cn22-12-eng.html

[5] https://www.cbsa-asfc.gc.ca/sima-lmsi/mif-mev/octg2-eng.html

[6] https://www.cbsa-asfc.gc.ca/sima-lmsi/mif-mev/pla6-eng.html

[7] Article 3 of Agreement No. 1, available via the link: https://zakon.rada.gov.ua/laws/show/826_001-22#n2

[8] https://www.gov.uk/government/publications/trade-remedies-notices-tariff-rate-quotas-on-steel-goods/trade-remedies-notice-202202-safeguard-measure-tariff-rate-quota-on-steel-goods#summary-of-the-investigation-conducted-in-relation-to-the-matters-under-reconsideration

[9] Australian Customs Notice No. 2022/32, available via the link: https://www.abf.gov.au/help-and-support-subsite/CustomsNotices/2022-32.pdf

[10] https://www.industry.gov.au/regulations-and-standards/anti-dumping-and-countervailing-system/anti-dumping-commission-current-caseshttps://www.industry.gov.au/regulations-and-standards/anti-dumping-and-countervailing-system/anti-dumping-commission-notices

[11] Proclamation 10403, available via the link: https://www.whitehouse.gov/briefing-room/presidential-actions/2022/05/27/a-proclamation-adjusting-imports-of-steel-into-the-united-states-ukraine/

[12] Proclamation 9705 (Adjusting Imports of Steel Into the United States), available via the link:  https://www.whitehouse.gov/briefing-room/presidential-actions/2022/05/27/a-proclamation-adjusting-imports-of-steel-into-the-united-states-ukraine/

[13] https://www.gov.uk/government/publications/trade-remedies-notices-tariff-rate-quotas-on-steel-goods/trade-remedies-notice-202202-safeguard-measure-tariff-rate-quota-on-steel-goods

[14] Tribunal Continues Order, With Amendment—Flat Hot-rolled Carbon and Alloy Steel Sheet and Strip from Brazil, China, Ukraine and India – Canada.ca

[15] Article 291 of the Foreign Economic Activity Law, available via the link: https://zakon.rada.gov.ua/laws/show/959-12#n624

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