INTERNATIONAL TRADE
UKRAINE SIGNED A FREE TRADE AGREEMENT WITH CANADA
On 11 July 2016, the First Vice Prime Minister of Ukraine Stepan Kubiv and the Minister of International Trade of Canada Chrystia Freeland signed the Canada-Ukraine Free Trade Agreement (the "CUFTA").
The CUFTA shall open up 98 per cent of the Canadian market for the Ukrainian goods. In particular, the import duties will be eliminated with regard to the following goods: (1) all agricultural goods, excluding 108 tariff lines, and (2) all industrial goods, except for passenger cars.
The groups of products not benefiting from the amended import duties are subject to tariff reductions over the transition period of seven years. Besides that, the agricultural goods falling within the mentioned above 108 tariff lines can be exported within the amount of a duty-free tariff quota.
Ukraine, in its turn, shall revoke customs tariffs on 80 per cent of Canadian goods with subsequent tariff elimination for the remaining portion of the products on a three-stages basis – over the periods of 3, 5 and 7 years. In addition, some Canadian products will also benefit from the duty-free tariff quotas and some of them are phased out of the CUFTA.
According to the Ministry of Agrarian Policy and Food of Ukraine, the state has already increased the import of Canadian beef and pork. The export of Canadian grains has increased by 19,4% in four months 2016.1
RESTRICTIONS ON TRANSIT OF THE UKRAINIAN GOODS THROUGH THE TERRITORY OF THE RUSSIAN FEDERATION TO THE REPUBLIC OF KASAHSTAN, KYRGYZ REPUBLIC AND OTHER COUNTRIES
The Presidential Decree No.319 dated 1 July 2016 introduced additional restrictions on transit of the Ukrainian goods through the territory of the Russian Federation. 2 The restrictions will remain in force from 1 July 2016 to 31 December 2017.
The Decree provides for:
- the restrictions on the transit of the goods originating in Ukraine to the Kyrgyz Republic through the territory of the Russian Federation;
- temporary ban on road and railway transportation of goods, (1) which are subject to the import duties in the Russian Federation other than "zero rate", and (2) which fall under the so called "food embargo"3; in other words, the restrictions apply to all the Ukrainian goods.
These changes can cause temporary suspension of transit of the Ukrainian goods through the territory of the Russian Federation, not only to the Republic of Kazakhstan, Kyrgyz Republic, but also to the third countries.4 Already on 13 July the 73 railway wagons, travelling to Kazakhstan and Kyrgyz Republic were stopped at the border of Ukraine and the Russian Federation.5
THE USE OF TARIFF QUOTAS ON GRAIN EXPORTS TO THE EU
At the end of July 2016 the Ukrainian exporters used 79,3% of the tariff quota for duty-free export of barley. At the same time, as of the beginning of July, only one third of the quota was used. The total amount of the tariff quota for barley constitutes 250 thousand tons.
Moreover, as of the end of May the quota for wheat (in the total amount of 950 thousand tons), barley oat and flour (total 6,3 thousand tons), malt and wheat gluten (in the total amount 7 thousand tons) was used in full.
The tariff quotas for cuts, waste and residues (in the total amount of 17 thousand tons) and grains processed products (total 2 thousand tons) have not been used in full.6
LEGISLATION IN THE AGRICULTIRAL SECTOR
PROJECT "UKRAINE AGRI-FOOD APPEX LOAN"
In July, the Parliament of Ukraine registered a Draft Law on ratification of the agreement with the European Investment Bank (the "EIB") on the credit line in the amount of EUR 400 million: the Draft Law No.0106 on ratification of the Financial Agreement (Project "Ukraine Agri-Food Appex Loan") between Ukraine and the European Investment Bank.7
The Financial Agreement between Ukraine and the EIB was executed on 28 December 2015. According to the Financial Agreement, Ukraine, represented by the Ministry of Finance of Ukraine, is a borrower of the funds. The Ministry of Finance of Ukraine will jointly with the Ministry of Agrarian Policy and Food of Ukraine and the PJSC "Ukreximbank" select the projects and monitor their practical implementation. The term of the loan shall be 12 years with the 4-year preferential period.8 The funds received from the EIB loan will be used for the development of the infrastructure projects, logistics, and improvement of the conditions of the dehydration and processing of the products of the agricultural households. The funds will be also used for the development of the small and middle business in Ukraine.9
PARLIAMENT OF UKRAINE IS TO CONSIDER A NUMBER OF THE DRAFT LAWS ON THE IMPROVEMENT OF LAND LEGISLATION
The Parliament of Ukraine will consider a number of draft laws devoted to the improvement of the land legislation and harmonisation of the Ukrainian laws with the EU rules.
The first reading:
- Draft Law No.3190 "On Amendments to Certain Legislative Acts regarding Lifting of the Artificial Limitations on the Right to Privatisation and Receipt for Use of the Land Plots";10
- Draft Law No. 2842 "On Amendments to Certain Legislative Acts of Ukraine regarding Elimination of the Inconsistencies in the Field of Licensing";11
- Draft Law No. 3866 "On Amendments to Certain Legislative Acts of Ukraine on Fair Division of Lands in the Course of the Privatisation Process of the State Entities, Enterprises and Organisations";12
- Draft Law No. 3157 "On Amendments to Certain Legislative Acts of Ukraine on Clarification of the Procedure for Transfer of the Water Objects in the Complex with the Land Plots for Lease ";13
- Draft Law No. 4573 "On Amendments to Certain Legislation Acts of Ukraine on the Use of the Improved Lands and Land-Improvement Systems".14
Second reading:
- Draft Law No.2150а "On Amendments to the Law of Ukraine "On Animal By-products" (on harmonization of its provisions in the field of treatment of the products of animal origin, which belong to the category II, with the requirements of the EU legislation)";15
- Draft Law No.3006 "On Amendments to the Land Code of Ukraine and Other Legislative Acts regarding the Legal Fate of Land Lots, Whose Owners Have Deceased";16
- Draft Law No.2920 "On Amendments to Certain Legislative Acts of Ukraine on Fixing of the Minimal Term of Lease of Land Plots of Agricultural Designation, at which the Hydraulic Melioration is Being Conducted".17
The Committee on the Matters of Agrarian Policy and Land Relations recommends all the aforementioned projects for consideration of the Parliament. All of them were included into the agenda of the Parliament in July, but have not been considered yet.
PROPOSAL ON GMO BAN IN UKRAINE UNTIL 2023
In July 2016, the Draft Law No.4968 regarding the introduction of moratorium on cultivation of genetically modified agricultural plants, production, processing, circulation, transit and import of GMO, capable of self-reproduction or transmission of hereditary factors, has been registered by the Parliament of Ukraine.18
The Draft Law provides for ban on industrial production, introduction into circulation of GMO and of products, produced with use of GMO, prior to their state registration, as well as ban on import into the customs territory of Ukraine of GMO and products produced with use of GMO, prior to their state registration.
The Draft Law also provides for administrative liability for violation of the respective requirements. It is proposed to set the duration term of the moratorium for at least 5 years from the date of the Law's entry into force (until 1 January 2023). The Draft Law also provides for the transition period of 1 year for entry into force of the moratorium.
OTHER NEWS
NEW RECORD ON GRAIN EXPORT SET
Ukraine has exceeded the previous year's grain export rate by almost 5 million tons.
According to the Ministry of Agrarian Policy and Food of Ukraine, the volumes of grain crops export within 2015/2016 marketing period amounted to 39415 thousand tons. In particular, the export was as follows:
- wheat – 17354 thousand tons;
- corn – 17396 thousand tons;
- barley – 4409 thousand tons;
- other grain crops – 256 thousand tons.19
GRAIN STORAGE FACILITIES ARE NOT SUBJECT TO REAL ESTATE TAX
Buildings of agricultural purpose such as grain storage facilities are not subject to real estate tax. Such clarification was provided in the Letter No.17901/6/99-9912-02-03-15 issued by the State Fiscal Service of Ukraine as of 17 August 2016 upon request from the American Chamber of Commerce in Ukraine.20
By eliminating an ambiguity on the matter, it allows companies operating in the agricultural sector to reduce their expenses on building maintenance and therefore leads to further improvement on business environment in Ukraine.
PROCEDURE OF MAINTAINING THE REGISTER OF ORGANIC PRODUCTS PRODUCERS APPROVED
The Cabinet of Ministers of Ukraine approved the procedure of maintaining the register of organic products producers. 21 The information database would make it possible to obtain information on: (1) all organic products producers; (2) conformity assessment of production process and availability of a certificate on these products. The register will be placed on the website of the State Food Safety and Consumer Protection Service. Access to the register will be free.22
REGISTER OF COMMERCIAL FISHING OBJECTS LAUNCHED
On 7 June 2016, the State Fishery Agency of Ukraine presented the newly established Register of commercial fishing objects and parts thereof. The Register constitutes the unified electronic database, which contains the information on all Ukraine's basins, which are suitable for commercial fishing activity or fish farming. In particular, the Register contains indications of title and location of a water object, its registration number, designated use, title of the user (lessee) of water object; the principal objects of commercial fishing activity (species of fish), water object or land lot lease agreement term.23
EXTENSION OF "AGRARIAN RECEIPTS" PROJECT
According to arrangements between the Ministry of Agrarian Policy and Food of Ukraine and the International Finance Corporation (IFC), the "Agrarian Receipts" project will be extended to four more regions of Ukraine – Ternopil region, Sumy region, Mykolaiv region and Khmelnytskyi region.24
GOVERNMENT HAS DEVELOPED THE CONCEPT OF THE NUT INDUSTRY DEVELOPMENT
The Ministry of Agrarian Policy and Food of Ukraine jointly with the Ukrainian Nut Association developed the concept of nut industry development in Ukraine. According to the document, in 2025 Ukraine plans to increase the area of industrial nut orchards to 25 thousand hectares and to plant shelterbelts of the nut plants on the total area of 10 thousand hectares. It is also noted that the special fund of the industry to be formed by means of 2 per cent levy of the value of the nuts exports, derived products and the wood may be an important source of investment. 25
Footnotes
1 http://minagro.gov.ua/uk/node/21766
2 Указ Президента Российской Федерации от 01.07.2016 № 319 "О внесении изменений в Указ Президента Российской Федерации от 1 января 2016 г. № 1 "О мерах по обеспечению экономической безопасности и национальных интересов Российской Федерации при осуществлении международных транзитных перевозок грузов с территории Украины на территорию Республики Казахстан через территорию Российской Федерации" http://publication.pravo.gov.ru/Document/View/0001201607030001
3 Указ Президента Российской Федерации от 06.08.2014 № 560 "О применении отдельных специальных экономических мер в целях обеспечения безопасности Российской Федерации". http://publication.pravo.gov.ru/Document/View/0001201408060033
7 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=59853
9 http://minagro.gov.ua/uk/node/21907
10 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56640
11 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=55117
12 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=58018
13 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56566
14 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=58958
15 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=55696
16 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=56342
17 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=55263
18 http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=59703
19 http://minagro.gov.ua/uk/node/21709
20 http://old.chamber.ua/files/documents/updoc/15/SFS_Response.pdf
21 http://minagro.gov.ua/node/18855
22 http://minagro.gov.ua/uk/node/22006
23 http://minagro.gov.ua/uk/node/21544
24 http://minagro.gov.ua/uk/node/21696
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