Trade and commerce systems of Ukraine

1. Membership situation in WTO and other conventions related

The General Council paved the way for Ukraine's membership in the WTO Tuesday, February 5, 2008 by approving its accession terms. Ukraine has ratified the deal by July 4 2008 and would become a WTO member 30 days after the ratification.

Ukraine's President Victor Yushchenko declared "Ukraine's membership to the WTO is truly an historic moment and is a decisive milestone in the development of our economy. We are convinced that our efforts will yield results and allow us to build closer economic ties worldwide."

"Ukraine's WTO membership will strengthen the multilateral trading system and provide this country with a stable and predictable trade environment that will boost its growth and prosperity. I am particularly pleased to welcome to the WTO President Victor Yushchenko, whose personal commitment to his country's accession was a major factor in the successful outcome to these negotiations." declared Director-General Pascal Lamy.

Ukraine applied for WTO membership in 1993, and the Working Party concluded the negotiations on 25 January 2008 under the chairmanship of Chile's Ambassador Mario Matus. The General Council approved the Working Party report, the market access schedules on goods and services, the General Council Decision and the Protocol of Accession.

Ukraine would have to ratify the deal by 4 July 2008. An extension of this deadline would be possible if necessary. Ukraine will become a WTO member 30 days after the ratification.

Amongst the commitments undertaken by Ukraine are the following:

Market access for goods

As outlined in Ukraine's market access schedules, Ukraine will have its customs duties capped at rates ranging between zero and 50% (bound rates). Some bindings involve reductions phased in over a period of up to 2013.

Ukraine's average tariff bindings are 10.66% for agricultural products and 4.95% for industrial goods.
The highest tariffs Ukraine may apply are on items such as sugar (50%) and sunflower seed oil (30%). Other products with tariff ceilings of 25% include certain radio-broadcast receivers, catgut, and certain conveyor/transmission belts.

Product categories with lower tariffs that will initially or eventually be eliminated include civil aircraft, construction equipment, distilled spirits, certain types of fish, pharmaceuticals, certain chemicals and petroleum oils, medical equipment, wood, pulp & paper, certain yarn and fabric, certain base metals, steel, information technology products (ITA), furniture, and toys.

Ukraine has agreed not to apply any "other duties and charges" - beyond its ordinary customs duties.

In agriculture, Ukraine has agreed not to subsidize exports. Ukraine will limit its trade-distorting domestic support provided to farmers to UAH3,04 billion (approximately USD 613 million) as well as an allowance of 5% of the value of domestic agricultural production. As with all WTO members, Ukraine will have no spending limits on domestic support programmes that have no or minimal impact on trade, provided these programmes meet the criteria laid down in the Agreement on Agriculture.

Ukraine will open a tariff quota on raw cane sugar (260 000 tones annually, and increasing to 267 000 tones by 2010). This quota will be administered on a first-come first-served basis within 3 years of accession.

Market access for services

Ukraine has made specific commitments in all 11 "core" service sectors - including business services, communication services, construction and related engineering services, distribution, education and environmental services, financial services (insurance and banking), health and social services, tourism and travel, recreational, cultural and sporting services, and transport services - as well as in other areas including beauty, hairdressing, spa and massage services.

Ukraine's accession documents

Ukraine's commitments on goods - a 890-page list (or "schedule") of tariffs, quotas and ceilings on agricultural subsidies, and in some cases the timetable for phasing in the tariff cuts.
Ukraine's commitments on services - a 40-page document (also a "schedule") outlining the services in which Ukraine is giving access to foreign service providers on a non-discriminatory basis and any additional conditions, including limits on foreign ownership.
The Working Party report - a 240 page document describing Ukraine's legal and institutional set up for trade, along with commitments it has made in many of the areas covered by the report.

2. Trade control systems

Merchandise exports/imports (2006)
Merchandise exports: USD38.368 billion
Merchandise imports: USD45.035 billion

Services exports/imports (2006)
Commercial services exports: USD10.671 billion
Commercial services imports: USD8.484 billion

Main exports
Ukraine's main exports are ferrous and nonferrous metals, fuel and petroleum products, chemicals, machinery and transport equipment, food products. Agricultural products account for 13.4% of Ukraine's exports while manufactured products account for almost 72% and fuels and mining for 13.6% (figures for 2006).

Main imports
Ukraine's main imports are energy, machinery, equipment and chemicals. Agricultural products account for almost 8% of Ukraine's imports while manufactured products account for 59.6% and fuels and mining for 31.5% (figures for 2006).

Trading partners
Ukraine's main trading partners are the EC, Russia, Turkey, Belarus and the US.

Commitments contained in the Working Party report
Privatization: Ukraine will provide regular reports to WTO Members on the developments of its privatization program and on other issues related to its economic reforms.

State owned enterprises: Upon accession, Ukraine's laws governing trading activities of state-owned enterprises will fully conform to the WTO provisions. All state-owned enterprises will operate on a commercial basis. Within one year of accession, Ukraine will notify and provide information on the activities of these companies to the WTO.

Pricing policies: Price controls will be applied in accordance with WTO principles and will take into account the interest of exporting WTO members.

Upon accession, Ukraine will not apply mandatory minimum prices on imported products.

All rail transportation fees will be applied on a non-discriminatory basis.

Ukraine will continue to publish a list of goods and services for which prices are determined by the government.

Policy-making and enforcement framework: Ukraine will uniformly implement WTO provisions and the protocol of accession on its whole territory. Upon accession, Ukraine will provide for the right to appeal administrative rulings on WTO matters to an independent tribunal.

Trading rights (the right to import and export): Registration fees for medicines, pesticides and agricultural chemicals, as well as licensing fees for the import and export of alcohol beverages and tobacco products, will be in compliance with WTO requirements and will be brought to the level of the cost of services provided.

Individuals and companies wishing to import/export will not be required to have physical presence or investments in Ukraine and will only need to register with the relevant authorities.

Fees and charges for services rendered: Ukraine will apply fees according to WTO principles and information regarding these fees will be provided to WTO members upon request.

Internal taxes (VAT and excise tax): Domestic taxes will be applied in a non-discriminatory manner to imports from WTO members and to domestically produced goods.

Quantitative import restrictions, import licensing: Upon accession, Ukraine will eliminate and not introduce, re-introduce or apply quantitative restrictions on imports or other non-tariff measures that could not be justified under the WTO Agreement.
Ukraine will not introduce a ban on ground beef that could not be justified under WTO rules and will maintain transparent and science based standards for trade in this product.

Ukraine will eliminate the import ban on buses, trucks and cars older than eight years.
Ukraine will implement its import licensing procedures in conformity with the WTO Agreement.

Customs valuation: Full implementation of the Custom Valuation Agreement upon accession.

Rules of origin: Full implementation of the Rules of Origin Agreement upon accession.

Other custom formalities: An expert opinion of the Chamber of Commerce regarding the classification of goods will no longer be required to obtain import or export licenses.

Pre-shipment inspections: If introduced, pre-shipment inspections will be temporary and will comply with the WTO rules.

Anti-dumping, countervailing duties and safeguard regimes: Upon accession, Ukraine will amend its trade remedies legislation so that such measures will only be applied in conformity with WTO rules.

Export duties: Ukraine will reduce its export duties on oilseeds, live cattle, animal skins, ferrous and non ferrous particles. From the date of accession Ukraine will not apply any obligatory minimum export prices.

Export restrictions: Such measures, including export licensing requirements, will only be applied in conformity with WTO rules.
Upon accession, export bans on nonferrous scrap metal will be eliminated and Ukraine will remove export restrictions on grains, as well as those on precious metals and stones other than gold, silver, and diamonds.

Industrial policy, subsidies: Upon accession, Ukraine will eliminate all export and import-substitution subsidies.

Technical Barriers to Trade (TBT): Ukraine will comply with the TBT agreement upon accession.

Ukraine will give priority to international standards over regional and other national ones.

All national and regional standards will be voluntary, except those referred to in technical regulations intended to protect national security interests, prevent deceptive practices, protect the life and health of people, animals or plants, as well as protect the environment. By 30 December 2011, all of Ukraine's technical regulations will be based on the relevant international standards.

Ukraine's technical regulation on shelf-life for fish will be brought into conformity with the CODEX alimentarius guidelines.
Ukraine will reduce further the number of products subject to mandatory third party certification and will notify the revised list to the WTO by 31 January 2012.

Sanitary and Phytosanitary (SPS): Ukraine will comply with the SPS agreement upon accession and will streamline the responsibilities of its supervisory and control bodies in the SPS area.

Ukraine will not block imports of meat and meat products treated with hormones.

TRIMs: Ukraine will not maintain any measures inconsistent with the TRIMs agreement from the date of accession.

Free zones: Such zones will be administered in compliance with WTO provisions;

Government procurement: Upon accession, Ukraine will become an observer to the plurilateral Government Procurement Agreement (GPA) and will start negotiations to become a Party to this Agreement.

Civil Aircraft: Ukraine will become a signatory to the plurilateral Civil Aircraft Agreement in 2010.

TRIPS: Full implementation of the TRIPS Agreement upon accession.

Regional trade agreements: Ukraine will, upon accession, submit notifications and copies of its Free Trade Areas and Custom Union Agreements to the WTO.


3.  Duty and tariff systems

Under the Law of Ukraine, "On the Customs Tariff of Ukraine" the import tariff system of Ukraine has 21 sections, encompasses 97 groups of goods, and lists over 11,000 import duty rates.

There are two rates of import duty under the Customs Tariff, reduced rates and full rates:

Reduced rates of duty apply to most goods originating from countries that have granted Ukraine "Most Favored Nation" trade status.

Full rates of duty apply to goods originating from other countries, or where the country of origin cannot be determined.

Rates of duty may be ad valorem, specific (in monetary units per unit of goods), or a combination. There are seasonal, special, anti-dumping and countervailing duties.
 

4.  Exchange regulation systems

The main legal act regulating issues of currency regulation and control is the Decree of the Cabinet of Ministers of Ukraine on the System of Currency Regulation and Currency Control. The decree stipulates the regime for currency transactions in Ukraine denominated in both UAH and hard currencies (i.e., some payment documents, securities nominated both in UAH and foreign currency, as well as banking metals).

Main currency control tool in Ukraine is special licensing by the National Bank of Ukraine, which is the principal state body responsible for currency control and regulations. The NBU issues licenses to Ukrainian legal entities and entrepreneurs and requires them to declare foreign currency values kept abroad.

Two types of licenses (permits) are established by the decree for currency transactions:

general (is issued to banks and other financial institutions for performance of all currency transactions) and

individual (generally is issued for remittance of foreign cash abroad by Ukrainian companies; foreign investments; deposit of funds with foreign banks; settlements made in a foreign currency in Ukraine; etc.).

License-free transactions include: foreign currency settlements for export/import of goods (work, services); return of foreign investments previously brought to Ukraine; payment of interest and dividends; etc.


5. Import and export arrangements

Import licenses are required for the importation of a number of products, including plant protection chemicals, optical polycarbonate for manufacturing disks of laser reading systems, copper sulphate, ozone damaging substances, printer's ink, paper with water marks, many meat products, livestock and sugar.

There is a compulsory certification procedure to ensure that imported goods comply with national standards. The certification is provided by the Ukrainian certification authorities (UkrSEPRO) in respect to a wide range of imported goods by issuing a Ukrainian Compliance Certificate. If this document is absent, goods cannot be imported into Ukraine.

A limited number of exports are subject to licensing and/or quotas. The Ministry of Economics of Ukraine has established mandatory indicative export prices for certain categories of goods, such as metal products, livestock and raw hides, and sunflower seeds. The Customs authority will not clear the export of goods if the sales price is below these indicative prices.

Any legal entity that is engaged in export operations is required to register with the customs office that serves the area in which the company is located. Customs clearance of goods through another customs office requires specific permission from the customs office where the entity is registered.

General Information about Ukraine | Trade and commerce systems of Ukraine | Investment systems in Ukraine