Customs

07/ 11/ 2012

The Law of Ukraine On Amendments to the Law of Ukraine On Customs Tariff of Ukraine(on bringing the import duties in line with criteria of the WTO) No 9241-d pending for the second parliamentary reading is amended in line with the majority of EBAs proposals. The wording of the Law No 9241-d prepared for the second reading did not contain the list of goods subject to import duties increase stated by the lawmakers earlier. Background: On 30 March 2012 the Draft Law “On Amendments to the Law of Ukraine “On Customs Tariff of Ukraine” (on bringing the import duties in line with criteria of the WTO) (hereinafter - the Draft Law) was registered in the Verkhovna Rada of Ukraine. The Draft Law was intended to bring the rates of import duties in line with the tariffs prescribed by the boundary obligations of Ukraine to the WTO. The proposed way was to increase such rates to a maximum possible level. The Draft Law did not contain any feasibility argumentation or financial calculations of the necessity of such import duties rate increase, as well as any estimation of its possible effect on the Ukraine’s business environment. Instead, the authors of the Draft Law explained the increase of the customs tariff “for a certain groups of goods” by “the possibility to satisfy demand of such groups of goods with own national production facilities”. The EBA stressed that, at the moment, Ukraine did not have enough “own production facilities” that could “greatly” meet a demand, for example, in plant protection products or specific inks for liquid foods packaging. As a result such increase of customs duties could lead to the significant rise of goods’ prices, have a negative impact on the consumer demand, increase inflation etc. Growing prices on the goods, produced in Ukraine on the basis of imported raw materials, would adversely affect the volume of Ukrainian export. Moreover, in case of sharp increase of import duty rates, the representatives of business would have to review their sights on Ukraine and investment strategies for the next few years because of the unpredictability of economic policy and impossibility of business planning even in the short term. The Association has sent a series of letters and requests to the Ukrainian and European authorities calling for the need to exclude the provisions on raising customs duties for a number of goods from the Draft Law in order to to harmonise Ukrainian legislation with WTO rules in a most deliberate and rational way. In addition, in this regard the representatives of the Association participated in the preparation of the Law No 9241-d within the Working Group under the auspices of the Committee of the Verkhovna Rada of Ukraine on Finance, Banking Activity, Tax and Customs Policy. The problem was also raised by the Association in the EU Commission in Brussels, European Crop Protection Association (ECPA), and - with the help of the latter - in the WTO. We would like to express our gratitude to all EBA Committees’ members that were involved in this process, namely: to Consumer Electronics Committee, Food Committee, Agrichemical Committee, Customs Committee members etc. Finally, we are happy to inform you that on 6 October 2012 the Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to the Law of Ukraine “On Customs Tariff of Ukraine” (on bringing the import duties in line with criteria of the WTO) No 9241-d from 30 March 2012. The following commodity groups were excluded: 1-24 - food commodities, goods of animal and vegetable origin; 38-39 – chemical products of plastic, polymer materials; and 84-85 – equipment and mechanicals. It means that all goods not mentioned in the Law will be subject to the previous tariff rates. But some negative changes have been adopted; in particular import duties on paints based on acrylic or vinyl polymers were increased from 0 up to 6.5%; on hoses of vulcanized rubber without fittings - from 0 up to 10%, and on glass wool isolation - from 3% up to 10% and some others. The EBA will continue working in order to resolve these concerns for the protection of the legitimate interests of its members. This Law comes into force on 1 January 2013.

The Law of Ukraine “On Amendments to the Law of Ukraine “On Customs Tariff of Ukraine”(on bringing the import duties in line with criteria of the WTO) No 9241-d pending for the second parliamentary reading is amended in line with the majority of EBA’s proposals. The wording of the Law No 9241-d prepared for the second reading did not contain the list of goods subject to import duties increase stated by the lawmakers earlier.

Background: On 30 March 2012 the Draft Law “On Amendments to the Law of Ukraine “On Customs Tariff of Ukraine” (on bringing the import duties in line with criteria of the WTO) (hereinafter – the Draft Law) was registered in the Verkhovna Rada of Ukraine. The Draft Law was intended to bring the rates of import duties in line with the tariffs prescribed by the boundary obligations of Ukraine to the WTO. The proposed way was to increase such rates to a maximum possible level. The Draft Law did not contain any feasibility argumentation or financial calculations of the necessity of such import duties rate increase, as well as any estimation of its possible effect on the Ukraine’s business environment.

Instead, the authors of the Draft Law explained the increase of the customs tariff “for a certain groups of goods” by “the possibility to satisfy demand of such groups of goods with own national production facilities”. The EBA stressed that, at the moment, Ukraine did not have enough “own production facilities” that could “greatly” meet a demand, for example, in plant protection products or specific inks for liquid foods packaging. As a result such increase of customs duties could lead to the significant rise of goods’ prices, have a negative impact on the consumer demand, increase inflation etc. Growing prices on the goods, produced in Ukraine on the basis of imported raw materials, would adversely affect the volume of Ukrainian export. Moreover, in case of sharp increase of import duty rates, the representatives of business would have to review their sights on Ukraine and investment strategies for the next few years because of the unpredictability of economic policy and impossibility of business planning even in the short term.

The Association has sent a series of letters and requests to the Ukrainian and European authorities calling for the need to exclude the provisions on raising customs duties for a number of goods from the Draft Law in order to to harmonise Ukrainian legislation with WTO rules in a most deliberate and rational way.

In addition, in this regard the representatives of the Association participated in the preparation of the Law No 9241-d within the Working Group under the auspices of the Committee of the Verkhovna Rada of Ukraine on Finance, Banking Activity, Tax and Customs Policy. The problem was also raised by the Association in the EU Commission in Brussels, European Crop Protection Association (ECPA), and – with the help of the latter – in the WTO.

We would like to express our gratitude to all EBA Committees’ members that were involved in this process, namely: to Consumer Electronics Committee, Food Committee, Agrichemical Committee, Customs Committee members etc.

Finally, we are happy to inform you that on 6 October 2012 the Verkhovna Rada of Ukraine adopted the Law of Ukraine “On Amendments to the Law of Ukraine “On Customs Tariff of Ukraine” (on bringing the import duties in line with criteria of the WTO) No 9241-d from 30 March 2012. The following commodity groups were excluded: 1-24 – food commodities, goods of animal and vegetable origin; 38-39 – chemical products of plastic, polymer materials; and 84-85 – equipment and mechanicals. It means that all goods not mentioned in the Law will be subject to the previous tariff rates. But some negative changes have been adopted; in particular import duties on paints based on acrylic or vinyl polymers were increased from 0 up to 6.5%; on hoses of vulcanized rubber without fittings – from 0 up to 10%, and on glass wool isolation – from 3% up to 10% and some others.

The EBA will continue working in order to resolve these concerns for the protection of the legitimate interests of its members. This Law comes into force on 1 January 2013.

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