International Trade News (June 2011)

The President of Ukraine signed the Law on export tariffs on grain

The President of Ukraine signed a Law of Ukraine introducing export tariffs in Ukraine on 10 June 2011 as the presidential press service reported. Just a reminder, the said Law of Ukraine provides for the introduction of export tariffs on wheat, mixture of wheat and rye (meslin) and emmer wheat, barley and corn starting from 1 July 2011.

The Ministry of Agrarian Policy and Food of Ukraine suggests to decrease export tariffs

In mid-June 2011 the Ministry of Agrarian Policy and Food of Ukraine informally suggested to decrease grain export tariffs at least by 10 EUR per ton. Furthermore, potential budget losses caused by the said decrease could be covered by export tariffs for soya and colza. However, the Ministry did not clarify suggested rates of export tariffs.

 

Ukraine initiated safeguard investigation against imports of motor cars notwithstanding country of origin and export

On 2 July 2011 the Interdepartmental Committee on International Trade initiated a safeguard investigation related to import into Ukraine of passenger cars notwithstanding the country of origin and export. The investigation was initiated upon application of the Association of the Ukrainian Car Producers “Ukravtoprom” submitted on behalf of a LLC “VO” “KrASZ”, LLC, “ZAZ”, CJSC, “Eurocar”. The following products are subject to the investigation:

(i) new motor cars and other motor transport vehicles for transportation of passengers (except motor transport vehicles under the commodity item 8702), including van automobiles for passengers and commercial use and racing cars with cylinder capacity over 1000 cubic cm but not exceeding 1500 cubic cm.(customs code under the Ukrainian Classification of Goods of Foreign Economic Activity 8703221000);

(ii) new motor cars and other motor transport vehicles for transportation of passengers (except motor transport vehicles under the commodity item 8702), including van automobiles for passengers and commercial use and racing cars with cylinder capacity over 1500 cubic сm, but not exceeding 2200 cubic сm. (customs code under the Ukrainian Classification of Goods of Foreign Economic Activity 8703231910).

The notification on initiation of the safeguard investigation was published in the official governmental newspaper on 2 July 2011. According to the notification all interested parties (e.g. foreign producers, exporters of the products subject to the investigation, as well as the competent state authorities of the exporting countries) may apply for registration at the Ministry of Economic Development and Trade of Ukraine by 1 August 2011.

Russia applied safeguard measures to caramel originating in Ukraine

The Government of the Russian Federation applied safeguard measures to imported caramel by its Resolution No. 445 of 3 June 2011. The measures shall be applied in the form of a safeguard duty amounting to USD 294,1 per ton for the period of 3 years. Safeguards shall cover imported caramel classified under the following codes according to the Foreign Economic Activity Commodity Nomenclature: 1704 90 710 0, 1704 90 750 0, 1806 90 500 1, 1806 90 500 2. The measures shall not be applied to caramel imported from the Customs Union member-countries Belarus and Kazakhstan, as well as from the developing countries falling under the national preferential system of Russia safe for China and Turkey. The safeguard measures will adversely affect Ukrainian producers and exporters of the caramel to Russia.

Certain trade remedies will be applied within the territory of the Customs Union

On 22 June 2011 the Commission of the Customs Union held a meeting where considered a wide range of issues of economic and customs cooperation. Among others, a decision on the unified application of anti-dumping, safeguard and countervailing measures on the whole territory of the Customs Union was made. The said decision may have an adverse effect on the Ukrainian producers and exporters of the goods subject to trade measures in the Customs Union member states. 

 

Ukraine to sign FTA with Serbia

On 1 June 2011 the Prime-minister of Ukraine, Mr. Azarov, had a meeting with the Minister of Foreign Affairs of Serbia. Thereafter the Ministry of Economic Development and Trade of Ukraine started analyzing the issue creating a free trade area between Ukraine and Serbia. Mr. Azarov emphasized that the FTA with Serbia seems to be beneficial since Serbia is a candidate for the EU membership. Thus, it is quite possible that in the next year Ukraine may start the FTA negotiations with Serbia.

The Parliament of Ukraine ratified Bilateral Investment Treaty between Ukraine and Israel

On 1 June 2011 the Parliament of Ukraine ratified a bilateral investment treaty between the governments of Ukraine and Israel, which provides for the reciprocal promotion and protection of investments. The bilateral investment treaty was signed in Kyiv on 24 November 2010.

New CIS FTA talks

On 7 June 2011 the Prime Minister of Ukraine, Mr. Azarov, stated that a draft agreement on a free trade area has been recently considered at the meeting of the Council of Prime-ministers of CIS member-states and thus, he hopes to sign an agreement on a free trade area (FTA) with the CIS states no later than in October 2011.

Just a reminder: On 19 May 2011 CIS members hold a meeting in Minsk in order to sign the amended FTA, but it was not signed due to the objections of Uzbekistan and Turkmenistan.

17th Round of trade negotiations on EU – Ukraine FTA[1]

The 17th Round of trade negotiations between EU and Ukraine over FTA was held on 20-24 June 2011 in Kyiv. The Round was rather successful, in particular, parties are reported to achieve balanced results especially in the area of agricultural goods. Furthermore, due to the prospective EU accession of Croatia Ukrainian negotiating group asked its colleagues to include special clause protecting interests of Ukraine in the final agreement. The head of the EU negotiating group pointed out that both parties are moving to the final stage of talks.

The next 18th round of negotiations will take place in the end of September. However, a number of interim consultations on specific issues (most probably services, export tariffs, energy issues) will be held on 11-12 July in Brussels.

The President of Ukraine Mr. Yanukovych voiced his position on relations between Ukraine and the Customs Union

On 28 June 2011 the President of Ukraine, Mr. Yanukovych, held an informal meeting with the leading journalists at his residence Mezhygirya, next to Kiev. The said meeting was dedicated to the Ukrainian national holiday of the Constitution’s Day.

The President was addressed with the question related to Ukraine’s relations with the Custom Union. He emphasized, that the countries-members of the Customs Union show a big interest in the Ukraine’s accession thereto. However, according to the President there are sufficient reasons that hold Ukraine back from considering this option and making a decision today. Mr. Yanukovych underlined that Ukraine finds an appropriate form of cooperation with the Customs Union under the so-called “3+1” formula. The President is of the opinion that Ukraine should sign a framework agreement with the Customs Union first and then go ahead with a separate agreements on specific groups of goods.

 

Trade dispute between Ukraine and Moldova concerning environmental charge[2] 

On 17 June 2011 the Dispute Settlement Body at its regular meeting established a Panel in the trade dispute between Ukraine and Moldova concerning environmental charge. According to the WTO Secretariat during the meeting Moldova informed that it was going to change its legislation with respect to the environmental charge. Several WTO Members, in particular Argentina, the EU and China, reserved rights as third-parties in the dispute. Just a reminder: on 12 May 2011 Ukraine requested establishment of a panel to consider its trade dispute with Moldova for the first time and the panel was not established due to Moldova’s objections.

The formation of a panel, i.e. selection of panelists, is the next stage in the WTO dispute settlement procedure, once the Panel is established.

Trade dispute between Moldova and Ukraine concerning taxes on distilled spirits[3]

On 17 June 2011 at the regular meeting of the Dispute Settlement Body Moldova requested for the first time the establishment of a panel with respect to the dispute with Ukraine over taxes on distilled spirits. Ukraine objected and the panel was not established. As the WTO Secretariat informs during the meeting parties had different opinions on to the outcome of the official consultations. Interestingly, the EU voiced concerns about the use of notion “cognac” in the present dispute.

Ukraine will not block Russia’s WTO accession

On 1 June 2011 Ukrainian Minister of Foreign Affairs, Mr. Hryshchenko, stated that Ukraine is not going to block accession of the Russia to the WTO. He added that Ukraine is going to support Russia in its WTO accession and before the Russia’s accession Ukraine will try to find other ways to boost mutual trade and develop cooperation.

WTO dispute settlement news

Dispute Settlement Body adopted the Panel Report in the case United States – Anti-Dumping Administrative Reviews and Other Measures Related to Imports of Certain Orange Juice

On 17 June 2011 the Dispute Settlement Body adopted the Panel Report in the case United States – Anti-Dumping Administrative Reviews and Other Measures Related to Imports of Certain Orange Juice, that was distributed among WTO Members on 25 March 2011 . The practice of zeroing in the anti-dumping investigations was the main issue in the said dispute. It is worth noting that according to the WTO Secretariat Brazil showed concern in a continuous application by the US of zeroing, despite its WTO in-consistency confirmed by 14 disputes related to zeroing that have been already . brought against the US by nine different WTO Members. On the other hand, the US pointed out that the interpretation of the WTO rules by the Appellate Body is beyond agreed rules during the Uruguay Round negotiations.

Appellate Body, issued its Report in Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines

On 17 June 2011 the Appellate Body, issued its report in the case Thailand – Customs and Fiscal Measures on Cigarettes from the Philippines[5]. Thailand's appeal was limited to certain Panel's findings under Article III:2, Article III:4, and Article X:3(b) of the GATT 1994. The Appellate Body agreed with the Panel on the main findings that were challenged by Thailand, in particular: 

(i) “Thailand violated first sentence of the Article III:2 of the GATT 1994 by taxing imported cigarettes excessively as compared with like domestic products;

(ii) Thailand violated Article III:4 of the GATT 1994 by according less favourable treatment to imported cigarettes than to like domestic cigarettes (Thailand exempted resellers of domestic cigarettes from certain tax-related administrative requirements, while imposing them on resellers of imported cigarettes.

(iii) Thailand violated Article X:3(b) of the GATT 1994 by not maintaining or instituting independent tribunals or procedures for the prompt review of customs guarantee decisions”.

 

The General Prosecutor’s Office of Ukraine conducted an inspection over compliance of customs authorities with laws during the customs clearance

The General Prosecutor of Ukraine in cooperation with local prosecutors conducted an inspection over compliance of customs authorities with requirements of the Customs Code of Ukraine and the Law of Ukraine On Foreign Economic Activities, while conducting customs clearance procedures. The inspection revealed numerous violations, in particular, inappropriate customs classification, manipulations with the customs value, smuggling, illegal VAT refunds, submission of forged documents on origin and quality of the products, etc[6].

Notably, the Draft Law On Amendments to the Customs Code of Ukraine and Certain Other Legislative Acts of Ukraine, which was adopted by the Parliament of Ukraine in the first reading, inter alia, sets the imperative 4-hour time limit of customs clearance, establishes personal liability of customs officers for delay of customs formalities without due cause and reimbursement of expenses of businesses, provides for the improvement of customs valuation procedures, decriminalization of smuggling of imported goods and many other changes, which may positively improve customs clearance procedures.

 

New Draft law related to the use of INCOTERMS

On 1 June 2011 the Draft Law On Amendments to Certain Legislative Acts of Ukraine Regarding Determination of Conditions of Supplies was placed at the official website of the Ministry of Economic Development and Trade of Ukraine for public consideration. According to the said Draft Law the parties to the contracts for the supply of goods may (but are not obliged) refer to the INCOTERMS as well as upon their mutual consent amend respective INCOTERMS.

 

Ukraine may accede to the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships

On 3 June 2011 the Cabinet of Ministers of Ukraine submitted to the Parliament of Ukraine the Draft Law on the Accession of Ukraine to the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships of 1952. Presently, the Draft Law is considered by the relevant Committee of the Parliament of Ukraine. The said Draft Law aims at the adaptation of the Ukrainian legislation with the EU legislation.

 

New non-food product safety legislation will soon come into force

On 2 December 2010 the Parliament of Ukraine adopted the following new laws in the field of product safety, in particular, theLaw of Ukraine On General Safety of Non-Food Products No. 2736-17 and the Law of Ukraine On State Market Surveillance and Control of Non-Food Products No. 2735-VI. The said laws will become effective on 5 July 2011.

The new product safety regulations substantially amend the effective regulation in the relevant sphere, in particular, they create new obligations for producers and distributors as well as establish a system of market surveillance and control authorities. A brief description of major changes may be found here.

Legislative developments in the sphere of safety and quality of food products

On 16 June 2011 the Draft Law On Amendments to the Law of Ukraine On Safety and Quality of Food Products was published at the official web site of the of the Ministry of Healthcare of Ukraine for public discussion.

The Draft Law introduces amendments to the Law of Ukraine On Safety and Quality of Food Products aimed at its harmonization with the European law, i.e. amendments regarding certain definitions, optimization of state policies in the sphere of food products quality and safety, requirements to Hazard Analysis and Critical Control Points system, laboratory tests for the purposes of state control and surveillance etc. The Draft Law cancels state sanitary and epidemiological and veterinary and sanitary examinations, amends the requirements to registration and use of aromatizers and circulation of new food products, as well as requirements to labeling. The Draft Law also eliminates contradictions in the effective legislation regarding the competences of the State Veterinary and Phytosanitary Service of Ukraine and the State Sanitary and Epidemiological Service of Ukraine.

All the interested persons are welcome to submit their comments on the Draft Law within a month after its official publication. The comments may be sent in written form of via e-mail to the address mentioned on the official web site of the Ministry of Healthcare of Ukraine.

National Long-Term Plan for Control over Food Products has been made public

On 16 June 2011 the Draft Resolution of the Government of Ukraine On Developing the National Long-Term Plan on Control over Food Products was published on the official web site of the of the Ministry of Healthcare of Ukraine for public discussion.

The Draft Resolution sets forth requirements for development of the National Plan on Control over Food Products to be drafted and submitted for approval of the Government of Ukraine before 1 April 2012. The said Plan shall comply with the provisions of the Regulation (EC) No 882/2004 of the European Parliament and of the Council of 29 April 2004 on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules and Commission Decision of 21 May 2007 on guidelines to assist Member States in preparing the single integrated multi-annual national control plan provided for in Regulation (EC) No 882/2004 of the European Parliament and of the Council.

All the interested persons are welcome to submit their comments on the Draft Law within a month after its official publication. The comments may be sent in written form of via e-mail to the address mentioned on the official web site of the Ministry of Healthcare of Ukraine.

 

Personal data protection legislation amended

On 2 June 2011 the Parliament of Ukraine adopted the Draft Law On Amendments to the Certain Legislative Acts of Ukraine Regarding Violations of Legislation on the Personal Data Protection No. 7355. On 21 June 2011 the Draft Law was returned to the Parliament of Ukraine with the signature of the President of Ukraine. The said Draft Law sets forth liability for the violation of legislation in the area of personal data protection, in particular, it stipulates substantial fines in case of violation of rules in the area of personal data protection, e.g. failure to register the database may be fined up to 500 nontaxable minimum individual incomes, i.e. approximately 740 EUR.

 

New anti-corruption legislation enters into force

The Law of Ukraine On Principles of Corruption Prevention and Counteraction No. 3206-VI of 7 April 2011 initiated by the President of Ukraine was officially published on 15 June 2011. The Law was published simultaneously with the Law On Amending Certain Legislative Acts of Ukraine regarding Liability for Corruption Violations of 7 April 2011 No. 3207-VI that introduces relevant amendments into the effective legislation aimed at implementation of the Law, i.e. amendments into the Criminal Procedural Code of Ukraine, the Code of Ukraine on Administrative Offences, the Criminal Code of Ukraine and the Law On State Service. The said Laws introduce new legislative framework for fighting corruption in Ukraine. A legal alert with an overview of the new Ukrainian anticorruption legislation may be found here.

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[1] Source: http://wto.in.ua/index.php?lang=ua&&page=1&get=3&id=2153

[2]Source: http://www.wto.org/english/news_e/news11_e/dsb_17jun11_e.htm

[3] Source: http://www.wto.org/english/news_e/news11_e/dsb_17jun11_e.htm

[4] Source: http://www.wto.org/english/news_e/news11_e/dsb_17jun11_e.htm

[5] Source: http://www.wto.org/english/news_e/news11_e/371abr_e.htm

[6] http://www.gp.gov.ua/ua/news.html?_m=publications&_c=view&_t=rec&id=94047