Grain and Oilseeds, Food, Dairy, Consumer Electronics, Agrochemicals, Regulatory Affairs

25/ 04/ 2014

We are happy to provide you with information on the Draft Law – On amendments to certain Legislative Acts of Ukraine on reduction of the number of permit documents No2436а dated 27 June 2013 (hereinafter – the Law) that was adopted by the Verhovna Rada of Ukraine on 9 April 2014 and signed by the President today. This Law that will come into force on 26 April is aimed at significantly reducing the need for permit documents and as a result there will be left around 85 permits and permit procedures. 

In particular this Law will exclude almost 60 permit documents from the List of permits contained in the Law No3392-VI dated 19 May 2011 (hereinafter – the List and the Law No3392-VI respectively). Moreover, this Law amends the concept of the permit system in Ukraine and it removes the requirement for entities to receive permit documents not included in the List of permits approved by Law №3392-VI. Currently a lot of areas are excluded from the application of the Law No3392-VI and permits obtained were regulated by special or industrial laws. Please note that amendments to the acts of the Cabinet of Ministers of Ukraine (hereinafter – CMU) and respective ministries will be adopted during the next 3 months from the date the Law will entry enter into force. Below, we provide the list of cancelled permit documents, which was advocated by the EBA over a long period of time.

Grain Industry:

• Quality Certificate for Grain and Products thereof
• Compliance Certificate for Storage and Processing of Grain and Products thereof

Over the last few years, the procedure for certifying grain elevators and grain quality sufficiently deteriorated the business environment in the agricultural sector of Ukraine. Artificial delays in the certification of elevators led to a range of logistical problems, violation of conditions for grain storage and processing, appreciation of all the logistics chain, and the demurrage of grain transport. Problems with the quality certification of grain and products thereof have heavily complicated the economic activity of enterprises in the course of grain transportation. This in turn has led to delays in settlements with agricultural producers, transport and logistics enterprises, increases in logistics expenditure at the detriment of the Ukrainian producer, and as a result, deterioration of the competiveness of Ukrainian grain in international markets. Eventually, all these problems had a negative impact on the business environment and led to economic losses in the country’s agricultural sector. Cancelation of permissive documents, namely the Quality Certificate for Grain and Products thereof and Compliance Certificate for Storage and Processing of Grain and Products thereof, is a sufficient step towards deregulating the grain market, liberalising the business environment and creating a favourable business-climate in the agricultural sector.

Food Industry:

• Amendments to import permits for goods of animal origin; Veterinary Certificate Form No2;
• Veterinary Certificate Form No2; Import permits for goods of animal origin;
• Veterinary Certificate when moving within the area;
• Technical Specifications

One should note that the receipt procedure for permits frequently caused additional time delays and financial expenses for business, led to the impossibility for goods to be imported in a fast and effective way, as well as for efficient activity planning by companies due to the risks of untimely permit receipts, and due to elements of corruption. This permit was already cancelled by CMU Resolution No78 dated 12 March 2014 and the Law just fixed this rule.

Additionally all finished food products should have been accompanied by Veterinary Certificate Form No2. These certificates for finished food products are requested by veterinary doctors in supermarkets and trade chains, despite all food being inspected at the production stage. The existing procedure complicates the operations of food producers, causes corruption among veterinary inspectors, leads to big veterinary expenses for companies and increases the cost of production. Practice has shown that this requirement for a certificate does not keep store shelves free of low-quality or falsified products. Veterinary Certificates are not requested for food of animal origin for human consumption when moving within the local area. The Law «On Veterinary Medicine» No2498-XII dated 25 June 1992 (hereinafter – the Law No2498-XII) no longer covers food products of animal origin for human consumption so this Law No2498-XII will relate only to animals and products of animal origin not for human consumption.

The recent problems food producers encountered with registering technical specifications can be solved with help of this Law since it amends the CMU Decree «On Standardization and Certification» No46-93 dated 10 May 1993. Moreover it envisages the cancelation of state standard obligations, except those indicated in the particular technical regulations.

Consumer Electronics Industry:

• Import Permits for Radio Electronics;
• Accounting Labelling for Radio Electronics;
• The register of allowed radio electronics in the territory of Ukraine was changed for a register of forbidden radio electronics in the territory of Ukraine.

The Law of Ukraine «On Radio Frequency Resource of Ukraine» No1770-ІІІ from dated 1 June 2000 had a number of provisions that provided additional financial and administrative burdens on business society. As a result, this sphere was overregulated and didn’t correspond to EU experiences. Certainly, this situation had a negative impact on the business environment and led to financial losses for importers and as a result, Ukrainian consumers. Thus, representatives of the consumer electronics industry welcome the cancelation of import permits and the cancellation of accounting labelling and change from a register of allowed radio electronics to a register of forbidden radio electronics.

We believe that this is an essential step towards deregulating the radio electronics market in Ukraine and creating a favourable business climate in this sector.

Agrochemical Industry:

• Import permit for each batch of plant protection products.

At the beginning of 2011, the Law of Ukraine «On Plant Protection» No180-XIV dated 14 October 1998 was complemented by articles 16-1 and 16-2 stipulating the necessity to receive a new permissive document – an import permit for each batch of plant protection products (hereinafter – PPP) and consequently, the necessity for preliminary analytical research in the specialised local laboratories of the special authorised governmental authority in the field of plant protection. These amendments were implemented on the grounds of anti-counterfeiting. Nevertheless, the counterfeited PPPs got onto the territory of Ukraine either as illegal traffic or were formulated inside the country from the mixing of separate compounds. Consequently, this substantial complication of procedures for the legal import of original PPPs factually implied the inducing of further manufacture and distribution of counterfeits inside Ukraine. Delays in the issuance of such permissive documents and an excessively long period for consideration of applications for it led to a freeze in legal imports, giving a green light for counterfeiters. Furthermore, such proceedings have put at risk provisions for the Ukrainian agriculture sector, from the original innovative PPPs, without which it is impossible to receive high quality crops.

Consequently, cancelation of this permissive document substantially simplifies doing business for legal importers of pesticides and agrochemicals as well as facilitates access to high quality, innovative and original PPPs for end-users.

Moreover, the recent problem of receiving waste (except hazardous) placement permits and waste limits’ approval will be solved as well since the amendments to the Law “On Environment Protection” No1264-XII dated 25 June 1991 and the Law “On Waste” No187/98-ВР dated 5 March 1998 were taken.

One should note that the following permit documents are excluded from the Water Code of Ukraine No213/95-ВР dated 6 June 1995 and the Law No3392-VI: approval of terms for special water usage when using groundwater, approval request with justification of water users needs to obtain a permit for special use. Such novelties will definitely foster business activity for producing companies.

We are extremely grateful to the state authorities that worked on this draft Law over a long period of time and those who finally advocated this positive decision within Parliament, despite much resistance to this Law taking place. We welcome the government’s next steps to deregulate the business sphere and will strongly support them and provide them with the opinions of experts.

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