Legal guidelines Free trade agreements of Ukraine www.sk.ua
Table of contents 3 1. FTAs of Ukraine 2. Trade statistics 3. Trade preferences under the FTAs 4. Exemptions from FTAs 5. Eligibility criteria under the FTAs 5 6 10 10 11 www.sk.ua
4 1. FTAs of Ukraine
5 Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Uzbekistan, Russia States with which relations are regulated by both the effective bilateral FTAs and the Agreement on Free Trade Zone of 18 October 2011. Georgia, Macedonia, Turkmenistan, Iceland, Lichtenstein, Norway, Switzerland, Montenegro. States with which Ukraine has effective bilateral FTAs. The FTA with the Montenegro is going to enter into force at the beginning of 2013. The European Union. In December 2011 as a result of the 15th Ukraine- EU summit it was officially announced that the negotiations between Ukraine and the EU on the Agreement of association, including the FTA, have now ended. Ukraine and the EU initialed the Agreement of association on 30 March 2012. The signature of the said Agreement is pending and is expected at the end of 2013. After ratification, the Agreement will enter into force. Singapore, Turkey, Canada, Serbia, Syria, Israel, Morocco, Mexico. In accordance with official information of the Ministry for Economic Development and Trade of Ukraine, negotiations on the conclusion of FTAs with Singapore, Turkey, Canada, Serbia, Syria, Israel, Morocco, Mexico are pending. www.sk.ua
6 2. Trade statistics Top 20 trade partners of Ukraine In 2010: Import: Russia, China, Germany, Poland, Belarus, USA, Italy, Turkey, Hungary, France, Azerbaijan, Netherlands, United Kingdom, Japan, South Korea, Kazakhstan, Czech Republic, Austria, Romania, India. Export: Russia, Turkey, Italy, Belarus, Poland, India, Germany, Egypt, China, Kazakhstan, Lebanon, Iran, Hungary, USA, Moldova, Romania, Syria, Saudi Arabia, Czech Republic, Azerbaijan.
7 In 2011: Import: Russia, Germany, China, Belarus, Poland, Italy, Kazakhstan, France, Turkey, Hungary, South Korea, Czech Republic, Netherlands, United Kingdom, Romania, Japan, Lithuania, India, Switzerland, Turkmenistan. Export: Russia, Turkey, Italy, Poland, China, Belarus, Kazakhstan, Germany, Lebanon, Hungary, Egypt, Iran, USA, Spain, Romania, Syria, Moldova, Slovakia, Czech Republic, Bulgaria. www.sk.ua
8 Import 2011, % Mineral fuels, oil, bituminous materials, mineral wax Reactor, boilers, machines, equipment Electric machines and equipment, video and audio equipment 28.6 34 Means of surface transport Plastics, polymer materials and their byproducts Pharmaceutical products Ferrous metals 1.5 2 3.4 3.6 9 Paper and carton, and their byproducts Chemical products Others 4.2 6.7 7 Export 2011, % 21.8 27 Ferrous metals Mineral fuels, oil, bituminous materials, mineral wax Ores, slag and cinder Railway and tram rolling stock Grain crops 2 2.6 2.7 4 8.3 Reactor, boilers, machines, equipment Fats and oils, ready food fats, waxes Electric machines and equipment, video and audio equipment Ferrous metals products 4.7 5.8 Fertilizers 5 5.2 5.3 5.6 Organic chemicals Oleaginous seeds and fruits, straw and fodder Others
Import 2012 1H*, % 9 Mineral fuels, oil, bituminous materials, mineral wax Reactor, boilers, machines, equipment 31.7 30 Means of surface transport Electric machines and equipment, video and audio equipment Plastics, polymer materials and their byproducts Pharmaceutical products Ferrous metals Chemical products 2 2 3 3.4 8 4 6.6 9.3 Paper, carton and their byproducts Others Export 2012 1H*, % Ferrous metals Grains 21.5 25 Railway and tram rolling stock Fats and oils, ready food fats, waxes Mineral fuels, oil, bituminous materials, mineral wax 2 2.3 2.5 4.4 4.5 5 5.2 *Jan June, 2012 6 6 6.2 9.4 Reactor, boilers, machines, equipment Ores, slag and cinder Ferrous metals products Electric machines and equipment; video and audio equipment Fertilizers Organic chemicals Oleaginous seeds and fruits, straw and fodder Others www.sk.ua
10 2. 3. Taxation Trade preferences of Foreign Entities under the FTAs The key objective of the FTAs is to facilitate trade between the contracting States by applying additional preferences/privileges as compared to competitors from other States which are not parties to the respective FTA, namely: The FTAs abolish duties and equivalent taxes as well as any quantitative restrictions applied to import and export of products (except for clearly prescribed exemptions from the FTAs (please see part 4) that in practice is the key preference/privilege for the business; The FTAs establish national treatment for imported products (i.e. imported products must not be subject to any direct or indirect taxes or duties at the rate exceeding its level for domestic products. Moreover, any legislative requirements (e.g. different technical regulations) must apply equally to imported products and domestic products and must not create any discriminatory/competitive advantages for the latter); The FTAs provide for a free transit of goods; The FTAs stipulate the obligations of States to harmonize the technical and other special requirements regarding products and customs procedures aimed at simplifying import/export of products as much as possible; The FTAs provide for the additional procedural guarantees in respect of trade defence remedies application and prohibit applying them in some cases (e.g. the FTA with the EFTA States sets forth directly that no anti-dumping measures can apply to import of products originating from the other contracting State). Notably, some FTAs (e.g. the FTA with the EFTA states) stipulate for preferences not only for trade in goods, but also trade in services, investments, state procurement, competition etc. 4. Exemptions from FTAs The FTAs establish general and specific exemptions from the preferential treatment regime (i.e. products and services that must not be subject to the above preferences/privileges). General exemptions Notably, almost all FTAs stipulate similar circumstances allowing the contracting States not to apply privileges/preferences granted under the FTA without obtaining any consents from the other contracting State, to name but a few: in order to protect human health and life, environment, ani- mals and plants; to protect industrial and intellectual property; to regulate trade in weapons, military equipment, ammunition, etc. Specific exemptions In addition to the general exemptions, a vast majority of the FTAs allow contracting States to agree upon specific exemptions from the FTAs. Usually, the specific exemptions are prescribed in the protocols/annexes to the FTAs and exclude particular products (in vast majority of cases the most sensitive products) from the preferential regime.
The FTAs between Ukraine and a number of States such as Armenia, Azerbaijan, Kyrgyzstan, Tajikistan and Turkmenistan do not stipulate any specific exemptions and currently there are no additional annexes/protocols concluded between the States providing for any exemptions from the free-trade regime. There were several protocols to the FTAs with Russia, Uzbekistan, Georgia and Belarus setting forth quite a number of specific exemptions. Those have been gradually cancelled by the protocols that subsequently followed. However, the above initiative to abolish all effective specific exemptions in relations with Russia, Uzbekistan, Georgia and Belarus failed since the Government of Ukraine has established the practice to introduce exemptions from the free trade regime with respect to certain products by its own initiative (even though such exemptions are not directly provided for by the relevant protocols/annexes). For instance, such exemptions were established 5. Eligibility criteria under the FTAs The FTAs provide for certain eligibility criteria: The products must originate from the contracting State. All FTAs stipulate detailed rules for determining and confirming the country of origin (which are usually defined in separate annexes/protocols to the FTAs). The direct purchase rule must be complied with, pursuant to which products must be transported from the territory of one party to the FTA directly to the territory of the other. However, the FTAs may provide for certain exceptions to this rule. For instance, when for sugar originating from Russia; sugar originating from Belarus, seed of sugar beet originating from Moldova; sugar and sugar liquid originating from Russia and Georgia; rawhide originating from Moldova; ferrous scrap originating from Moldova etc. The EFTA Agreement exempts the following products from the free trade regime: casein, caseinates and other casein derivatives; casein glues; stearic acid; oleic acid imported to Norway, Lichtenstein, Switzerland etc; as well as essential oils of citrus fruit; swine; goats or kids; raw furskins; cotton, imported to Ukraine. Ukraine imposed some restrictions on the provision of notary, auditing, medical, educational, insurance services. At the same time Norway, Lichtenstein, Switzerland imposed specific restrictions on the provision of services in their territories, for example, Switzerland imposed a restriction on some legal advisory service and patent attorney services, auditing, engineering services etc. products are transferred through the territory of third countries, being under permanent customs control, documentary verified by the relevant state bodies and staying in the same condition, etc. Some FTAs (for example the CIS FTA) provides for an additional requirement products must be imported/exported on the basis of a contract concluded between the residents of the parties to the FTA, in which case the rules for determining a resident status are provided for in the respective FTAs. 11 www.sk.ua
12 Notes The contents of this publication are for information purposes only. They do NOT constitute legal advice or other professional advice and should NOT be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
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