The European Union will eliminate customs duties on goods originating in Ukraine starting from April 23, 2014. The move by the EU follows the recent unprecedented events in Ukraine and the security, political and economic challenges faced by the country. This measure will allow for the EU's unilateral reduction or elimination of customs duties on goods originating in Ukraine. The step has been taken to support Ukraine's economy ahead of the official entry into force of the Association Agreement's provisions on a Deep and Comprehensive Free Trade Area (DCFTA), scheduled to be signed later this year.
The liberalization of trade regime between Ukraine and the EU was introduced into the agenda of the EU-Ukraine bilateral relations in 2007, when the parties started negotiations on the Association Agreement between the European Union and its Member States (the "AA"). However, due to political developments in Ukraine only its political part was signed on 21 March 2014.
The Regulation provides for the following trade preferences:
- reduction or elimination of the customs duties on goods originating in Ukraine in accordance with Annex I;
- access of certain goods originating in Ukraine for import into the EU within the limits of tariff quota according to Annexes II and III.
The Regulation sets forth certain requirements in order to benefit from the duties cut off. They include:
- compliance with the EU rules of origin of products;
- Ukraine's participation in administrative cooperation with the EU in order to prevent any risk of fraud;
- compliance with the EU methods of administrative cooperation;
- Ukraine's abstention from introducing new duties or other equivalent measures, increasing existing levels of duties or imposing other trade restriction for the goods originating from the EU.
If the above requirements are not satisfied, the EU retains the right to suspend temporarily the preferential arrangements in part or in whole. In addition, the European Commission may reintroduce normal duties on Ukrainian products in case their import causes serious difficulties for the EU producers of like or directly competing products.
Overall, the Regulation eliminates 94,7 % of existing tariffs for industrial goods and all tariffs for agricultural goods1. Its adoption will foster trade development between the two partners and ease the difficult economic situation in Ukraine. Ukrainian producers will be able to increase volumes of export into the European Union and save 400 – 500 mln EUR on duties eliminated. Experts expect that the agricultural sector will benefit most from the elimination of duties, as volumes of export of agricultural good in Europe may rise in the short-term perspective. Furthermore, the metallurgical industry is ready to export into the EU. However, a number of issues, such as compliance of Ukrainian producers with European health and safety standards, are still to be resolved by Ukrainian producers in order to benefit from the introduced measures.
The Regulation will enter into force on 23 April 2014, the following day after its publication in the Official Journal of the European Union. It will be effective until entering into force of the DCFTA but no later than until 1 November 2014.
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