Ukraine: International Trade Comparative Guide

1 Trade agreements

1.1 Which bilateral, regional and multilateral trade agreements have effect in your jurisdiction?

Ukraine is a member of free trade agreements (FTAs) with:

• the European Union;
• the European Free Trade Association;
• the Commonwealth of Independent States (except Russia);
• Georgia;
• Canada;
• Israel;
• Montenegro;
• Macedonia;
• the United Kingdom and Northern Ireland;
• Turkey (at the ratification stage); and
• the Pan-Euro Mediterranean Convention.

1.2 Which authorities are responsible for the negotiation of trade agreements? What does this process typically involve and how long does it take?

The government of Ukraine, the Cabinet of Ministers of Ukraine and the Ministry of Economics of Ukraine are responsible for negotiating and signing trade agreements.

1.3 Do interim provisions apply while new trade agreements are under negotiation?

No answer submitted for this question.

2 Customs and imports

2.1 What laws and regulations govern customs in your jurisdiction?

• The Customs Code of Ukraine; and
• the list of orders of the State Customs Service of Ukraine, the Ministry of Finance of Ukraine and the Cabinet of Ministers of Ukraine.

The laws may be found here.

2.2 Which authority is responsible for enforcing the customs regulations? What powers does it have?

The State Customs Service of Ukraine is responsible for enforcing the customs regulations.

The customs authorities are empowered to:

• ensure the implementation of state customs policy – in particular, by:
• • ensuring customs security and the protection of customs interests of Ukraine;
  • creating favourable conditions for the development of foreign economic activity; and
  • maintaining a proper balance between customs control and facilitation of legitimate trade;
• ensure the implementation of state policy by:
• • combating offences in the application of customs law;
  • preventing and combating smuggling; and
  • combating violations of customs regulations; and
• make proposals to guide the formation of state customs policy for consideration by the minister of finance.

2.3 What is the authority's general approach to enforcing the customs regulations? How vigorously are the rules enforced?

The customs regulations in Ukraine are based on EU standards and seek to introduce customs simplifications and eliminate trade barriers. At the same time, the customs authorities often apply a fiscal approach to import transactions in disputes that can be challenged in the courts. Usually, the court decides in favour of companies in cases involving issues such as:

• an increase in customs value;
• a change in tariff classifications; and
• determination of the country of origin.

2.4 What customs import tariffs and duties apply in your jurisdiction? How are they levied?

The level of duty fully depends on:

• the applicable goods code according to the UKT ZED (the Ukrainian analogue of the Harmonised System (HS) Code); and
• the country of origin.

UKT ZED classification is based on the HS 2017 and the Combined Nomenclature of the European Union. UKT ZED codes consist of 10 digits.

2.5 What types of preferential tariffs are available in your jurisdiction? What are the criteria for eligibility?

Preferential customs duty for goods may be applied by providing the certificate of origin according to:

• the EU-Ukraine Association Agreement; and
• the free trade agreements with:
• • the European Free Trade Association;
  • the Commonwealth of Independent States (except Russia);
  • Georgia;
  • Canada;
  • Israel;
  • Montenegro;
  • Macedonia; and
  • the United Kingdom and Northern Ireland.

Also, reduced rates of duties are available for goods that originate from members of the World Trade Organization.

2.6 Are tariffs applied to safeguard national security?

In rare cases, anti-dumping, special and countervailing rates of duty are implemented to protect national producers. A full list of the measures that are currently applied can be found on the website of the Ministry of Economics of Ukraine here. Also, in response to Russian aggression, an embargo on the import and transit of Russian goods, including goods that originated in third countries, has been introduced.

2.7 What import controls and restrictions apply in your jurisdiction? What exemptions are available?

Ukraine implements:

• phytosanitary controls;
• veterinary and sanitary controls; and
• state control over compliance with the legislation on food, feed, animal by-products and animal health and welfare.

Import control measures and restrictions depend on the goods code according to the UKT ZED. While the war is ongoing, these measures are not applied to humanitarian aid or to goods listed in Regulation 236 dated 9 March 2022 of the Cabinet of Ministers of Ukraine.

2.8 How are customs and import decisions challenged in your jurisdiction? What does this process typically involve and how long does it take?

Customs decisions may be challenged before the customs authorities or the court. The process of challenging in court is more complicated and protracted, but also more effective. In both cases , the process involves drafting and sending an appeal to the authorities or the court respectively. A court appeal takes on average six to 12 months; while a challenge before the customs authorities takes between one and two months.

2.9 What penalties are imposed for breach of the customs rules?

The following administrative penalties may be imposed for violation of the customs rules:

• warning;
• fine; and
• confiscation of goods, commercial vehicles and the direct objects of violations of the customs rules.

The penalty will depend on the type of violation and will range from:

• UAH 1,700 for exceeding the number of days allowed for the transit of goods across the territory of Ukraine; to
• 100% of the value of the imported goods and their confiscation for the movement of such goods outside customs control.

If the violation is repeated the penalties will be higher.

3 Exports

3.1 What export controls and restrictions apply in your jurisdiction? What exemptions are available?

Export control requirements are applied to military and dual use goods. However, no exemptions are prescribed.

Currently, the process for obtaining export control documents has been simplified for goods that constitute humanitarian aid due to martial law in Ukraine.

3.2 Which authority is responsible for enforcing the export controls? What powers does it have?

The State Service of Export Control of Ukraine is responsible for enforcing export controls. As part of their activities, the customs authorities:

• register companies as participants in international transfers of goods;
• authorise organisations to provide preliminary identification of goods as subject to export controls;
• issue permits for the export or import of goods that are subject to export controls; and
• inspect goods to ensure that:
• • the relevant documents comply with the law on the basis of which an international transfer of goods or the delivery of goods to end consumers is carried out; and
  • the end use of the goods conforms with the stated purposes.

3.3 What is the authority's general approach to enforcing the export controls? How vigorously are the rules enforced?

The rules are quite strict. Export control measures apply to dual-use and military goods, regardless of the customs regimes they are placed in. Their application depends on the characteristics and purpose for which the goods will be used based on an analysis of the Lists of Dual-Use and Military Goods.

3.4 How are export decisions challenged in your jurisdiction? What does this process typically involve and how long does it take?

On rare occasions, export decisions can be challenged. In general, export decisions are challenged in court.

3.5 What penalties are imposed for breach of export controls?

The penalties imposed on legal entities will depend on the type of violation and range from:

• 100% to 150% of the value of the goods; to
• 100, 500 or 1,000 times the non-taxable minimum income in Ukraine.

Also, permits relating to export controls may be annulled.

In addition, according to the Criminal Code, responsible employees in offending legal entities can be punished by:

• a fine of between 2,000 and 5000 non-taxable minimum incomes;
• restriction of liberty for up to three years or imprisonment for the same term; and
• deprivation of the right to hold certain positions or engage in certain activities for up to three years.

The same act committed repeatedly or by an organised group may be punished by:

• restriction of liberty for up to five years or imprisonment for the same term; and
• deprivation of the right to hold certain positions or engage in certain activities for up to three years.

4 Trade remedies

4.1 What laws and regulations govern trade remedies in your jurisdiction?

• The Law of Ukraine on the Protection of Domestic Producers from Dumped Imports;
• The Law of Ukraine on the Application of Special Measures for Imports into Ukraine; and
• The Law of Ukraine on the Protection of Domestic Producers from Subsidised Imports.

4.2 Which authority is responsible for enforcing the trade remedy regulations? What powers does it have?

The Ministry of Economy of Ukraine.

Within the framework relating to enforcement of the trade remedy regulations, the Ministry of Economy of Ukraine has the following powers:

• to identify the application or threat of application by foreign authorities, customs unions or economic groups of anti-dumping, countervailing and special protective measures to goods originating in Ukraine, and take measures to protect the interests of Ukrainian economic entities in anti-dumping, anti-subsidy and special protective investigations hold by foreign countries against Ukrainian products;
• to decide, within its powers, on taking measures in response to discriminatory and /or unfriendly actions of other states, customs unions or economic groups; and
• to conduct anti-dumping, anti-subsidy and special investigations in the prescribed manner.

4.3 What is the authority's general approach to enforcing the trade remedy regulations? How vigorously are the rules enforced?

The trade remedy regulations are usually enforced as a result of an investigation held at the request of national producers. The rules on investigation are not strict and are established in accordance with:

• the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) Article VI Agreement;
• the GATT/WTO Agreement on Subsidies and Countervailing Measures; and
• the GATT/WTO Safeguards Agreement.

4.4 How is a trade remedy action initiated in your jurisdiction and on what grounds? Can the authority initiate an action ex officio?

Trade remedy actions are initiated by national producers of goods or groups of producers. We are not aware of cases in which the customs authorities have initiated an action ex officio.

4.5 What does the action typically involve and how long does it take?

A national producer should submit an application and the results of its own investigation to the Ministry of Economics to confirm that trade remedy actions should be taken. The authorities will then commence an official investigation that can last up to 18 months.

4.6 How can interested parties defend against a trade remedy action in your jurisdiction?

Interested parties may submit arguments to the Ministry of Economy against a trade remedy specified in the notice of the commencement of an investigation.

Usually, within 30 days of the notice date, the Ministry of Economy will register the interested parties in the investigation and consider the requirements for holding a hearing. In the registration request, the interested parties to the investigation must include the following information:

• the name, legal address, telephone number and email address of the organisation;
• the type of activity (eg, manufacturer, importer, exporter); and
• the name and surname of the relevant contact person.

Within 60 days of publication of the notice, the Ministry of Economy will usually review the written comments and information regarding the commencement of an investigation. The relevant information must be provided in Ukrainian or in the original language accompanied by a translation into Ukrainian.

4.7 How are trade remedy decisions challenged in your jurisdiction? What does this process typically involve and how long does it take?

Importers may challenge trade remedy decisions in court in a general way. To this end, the company must apply for an appeal, submitting the arguments on which the appeal is based to the Ukrainian court. Usually, it can take up to a few years to obtain a final judgment, depending on the number of instances through which the case proceeds.

4.8 What strategies should be considered to ensure compliance with a trade remedy decision? What penalties are imposed for non-compliance?

Importers should check whether the tariff classification code of the goods falls under the trade remedy decision. Attention should be paid to the country of origin, which should be confirmed by certificate of origin.

No penalties are prescribed for non-compliance, because typically it is impossible to avoid paying anti-dumping, countervailing or special duties if these measures apply to the goods. The inclusion of incorrect information in the documents will be penalised by a fine of 100% of the value of the goods and confiscation of the goods.

5 Trade barriers

5.1 What laws and regulations govern trade barriers in your jurisdiction?

Trade barriers are governed by the Customs Code.

5.2 Which authority is responsible for enforcing the trade barrier regulations? What powers does it have?

Trade barrier regulations are usually introduced by the Ukrainian Parliament. However, compliance control functions are assigned to different authorities, such as:

• the Customs Service of Ukraine ( customs duties);
• the State Service of Ukraine on Food Safety and Consumer Protection (phytosanitary, veterinary and sanitary, animal health and welfare controls);
• the State Service of Ukraine on Medicine and Drug Control; and
• the Ministry of Ecology.

5.3 What is the authority's general approach to enforcing the trade barrier regulations? How vigorously are the rules enforced?

Trade barriers are established for internal market protection. However, the approach is to simplify international trade as much as possible, according to World Trade Organization principles. The extent of the trade barriers will depend on the trading country. For example, Ukraine is more open to EU products; while there is currently an embargo on Russian goods.

5.4 How is a trade barrier action initiated in your jurisdiction and on what grounds?

The trade barriers rarely change.

5.5 What does the action typically involve and how long does it take?

No answer submitted for this question.

5.6 What measures can the authority take against a foreign trade barrier?

No answer submitted for this question.

5.7 What non-tariff trade barriers are imposed in your jurisdiction?

These include a variety of measures depending on the type of product, such as:

• phytosanitary certificates;
• declarations of conformity with technical regulations;
• documents on compliance with export control regulations; and
• notifications of the transboundary movement of hazardous waste.

6 Sanctions

6.1 What laws and regulations govern sanctions in your jurisdiction?

The Law of Ukraine on Sanctions and bylaws.

6.2 Which authority is responsible for enforcing the sanctions regulations? What powers does it have?

Decisions on the application, lifting and amendment of sanctions are made by the National Security and Defence Council of Ukraine, and are put into effect by the relevant decrees of the president of Ukraine.

6.3 What is the authority's general approach to enforcing the sanctions regulations? How vigorously are the rules enforced?

Sanctions are implemented in order to protect the national interests, national security and territorial integrity of Ukraine for individuals and legal entities. Usually, the rules are not vigorously enforced and are established in response to the prevailing situation – as, for example, in response to the current Russian aggression.

6.4 What countries are currently subject to sanctions in your jurisdiction?

Sanctions in Ukraine are applied to individuals and legal entities, and not countries.

6.5 Are individuals or companies subject to sanctions in your jurisdiction?

Yes.

6.6 How are sanction decisions challenged in your jurisdiction? What does this process typically involve and how long does it take?

We are not aware of such a practice.

6.7 What strategies should be considered to ensure compliance with a sanction decision? What penalties are imposed for non-compliance?

No answer submitted for this question.

7 Trends and predictions

7.1 How would you describe the current legal landscape and prevailing trends affecting international trade in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms or the negotiation of new trade agreements?

Currently, international trade in Ukraine is suffering due to the ongoing war. Difficulties include:

• the absence of security;
• logistics challenges;
• limited availability of petrol;
• new occupied territories; and
• lack of access to seaports.

At the same time, Ukraine is continuing its process of close integration with the European Union, including the customs system. Recently, an authorised economic operator programme based on EU standards was launched in Ukraine. Also, common transit systems are being tested by Ukrainian companies and customs authorities.

On 15 August 2022, the Law of Ukraine Amending the Customs Code of Ukraine, implementing certain provisions of Section IV, Chapter 5 of the Association Agreement between Ukraine, the European Union, the European Atomic Energy Community and their member states, took effect. The long-awaited new law has aligned the Ukrainian customs legislation with the EU approach. From October, 2022 Ukraine became a member of the Convention on a Common Transit Procedure (NCTS) and to the Convention on the Simplification of Formalities in Trade in Goods.

We are also aware of work that is underway on the development of customs reforms in Ukraine in accordance with international best practice. Thus, after the war, we expect that increase in business and investment in Ukraine will increase, due to trade liberalisation and facilitation and effectiveness in the international trade arena.

8 Tips and traps

8.1 What are your top tips for ensuring compliance with the regulatory framework for international trade and what potential sticking points would you highlight?

No answer submitted for this question.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.