fbpx
Size of letters 1x
Site color
Image
Additionally
Line height
Letter spacing
Font
Embedded items (videos, maps, etc.)
 

The introduction of quotas for the sunflower oil export will negatively impact the oil industry of Ukraine

19/ 04/ 2021
  The European Business Association is concerned about the possible introduction of restrictions on the export of sunflower oil and urges not to repeat the mistakes that have been made in the past. It is worth recalling that grain exports were restricted with the introduction of quotas by Ukraine several times during the six years from 2006 to 2011. These restrictive measures had extremely negative consequences both for the agricultural sector and for the countrys image in the international arena. Ukraines rating as a favorable environment for doing business and a reliable supplier of grain to world markets has deteriorated significantly due to the introduction of appropriate restrictive measures. Besides, export restrictions have caused significant losses to the agricultural sector itself. According to the business community, the loss of income of agricultural producers from the introduction of export quotas in the 2010/11 marketing year ranges from 1.9 to 2.6 billion US dollars. Previous practices of imposing quotas in the agricultural sector have been linked to corruption. It will be recalled that the preliminary draft Procedure, unfortunately, involves the application of mechanisms that have been used in the past and have been proven ineffective in the agricultural sector. Accordingly, Ukraine risks giving a negative signal to the international community and investors in this area. In the current situation, the introduction of any quotas on sunflower oil does not comply with the national legislation and international obligations of Ukraine within the WTO. In particular, Article 5 of the Law of Ukraine On Foreign Economic Activity provides that interference of state bodies in the foreign economic activity of its subjects in cases not provided by this Law, including by issuing bylaws that create conditions for its implementation, worse than those established in this Law, are a restriction of the right to carry out foreign economic activity and as such is prohibited. At the same time, the cases in which export licensing (quotas) may be introduced are stipulated in paragraph 7 of Article 16 of the Law on Foreign Economic Activity. Currently, the situation on the market of sunflower oil does not fall under any of the criteria specified in the Law on Foreign Economic Activity. As the domestic consumption of sunflower oil amounts to less than 10% of the total production, accordingly, there is no risk for industrial safety or imbalance of this product in the domestic market. Ukraine is a world leader in sunflower oil exports. Therefore, it is extremely important to give a clear signal to producers and consumers in world markets that Ukraine is a reliable partner and source of exports. Destabilization in the oil industry through the introduction of unjustified measures of non-tariff regulation is contrary to the declared direction of the state policy dedicated to supporting the investment flow to the industry and creating value-added products. The state policy in this sector and its implications should be carefully analyzed and aimed at the development of the sector in the long run. Therefore, businesses call on the Government to prevent the introduction of any restrictive measures on sunflower oil exports.   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.  

The European Business Association is concerned about the possible introduction of restrictions on the export of sunflower oil and urges not to repeat the mistakes that have been made in the past.

It is worth recalling that grain exports were restricted with the introduction of quotas by Ukraine several times during the six years from 2006 to 2011. These restrictive measures had extremely negative consequences both for the agricultural sector and for the country’s image in the international arena.

Ukraine’s rating as a favorable environment for doing business and a reliable supplier of grain to world markets has deteriorated significantly due to the introduction of appropriate restrictive measures. Besides, export restrictions have caused significant losses to the agricultural sector itself. According to the business community, the loss of income of agricultural producers from the introduction of export quotas in the 2010/11 marketing year ranges from 1.9 to 2.6 billion US dollars.

Previous practices of imposing quotas in the agricultural sector have been linked to corruption.

It will be recalled that the preliminary draft Procedure, unfortunately, involves the application of mechanisms that have been used in the past and have been proven ineffective in the agricultural sector. Accordingly, Ukraine risks giving a negative signal to the international community and investors in this area.

In the current situation, the introduction of any quotas on sunflower oil does not comply with the national legislation and international obligations of Ukraine within the WTO. In particular, Article 5 of the Law of Ukraine “On Foreign Economic Activity” provides that “interference of state bodies in the foreign economic activity of its subjects in cases not provided by this Law, including by issuing bylaws that create conditions for its implementation, worse than those established in this Law, are a restriction of the right to carry out foreign economic activity and as such is prohibited.” At the same time, the cases in which export licensing (quotas) may be introduced are stipulated in paragraph 7 of Article 16 of the Law on Foreign Economic Activity. Currently, the situation on the market of sunflower oil does not fall under any of the criteria specified in the Law on Foreign Economic Activity.

As the domestic consumption of sunflower oil amounts to less than 10% of the total production, accordingly, there is no risk for industrial safety or imbalance of this product in the domestic market.

Ukraine is a world leader in sunflower oil exports. Therefore, it is extremely important to give a clear signal to producers and consumers in world markets that Ukraine is a reliable partner and source of exports. Destabilization in the oil industry through the introduction of unjustified measures of non-tariff regulation is contrary to the declared direction of the state policy dedicated to supporting the investment flow to the industry and creating value-added products.

The state policy in this sector and its implications should be carefully analyzed and aimed at the development of the sector in the long run. Therefore, businesses call on the Government to prevent the introduction of any restrictive measures on sunflower oil exports.

 

Be the first to learn about the latest EBA news with our Telegram-channel EBAUkraine.

 

If you have found a spelling error, please, notify us by selecting that text and pressing Ctrl+Enter.

Start
in the Telegram bot
Read articles. Share in social networks
0 Shares

Spelling error report

The following text will be sent to our editors: