RESTRICTED
WORLD TRADE WT/ACC/UKR/3
10October 1995
ORGANIZATION(95-2973)
Original: English
ACCESSION OFUKRAINE
Additional Questions andReplies
TheGovernmental Commission onUkraine 'sAccession totheWTO hasprovided thereplies
reproduced hereunder tothequestions submitted byAustralia. Theletter "n"afterthenumber denotes
questions submitted aftertheWorking Party meeting heldon27-28 February 1995.
_______________
TABLE OFCONTENTS
Questions
I ECONOMY AND FOREIGN TRADE MAIN DIRECTIONS 1
II ECONOMY WIDE MEASURES
(a) Price Policy 2
(b) Privatization 3
20-23
III.A. IMPORT REGULATIONS
(a) Tariffs 4
(b) Seasonal Customs Taxes 5
(c) Special Duties 6
(d) Safeguards 7
(e) Customs Processing Fee 8-9
(f) Import Licensing 10
(g) TRIMs 11
(h) Import Quotas 12
(i) Standards andCertification 13
III.B. EXPORT REGULATIONS
Export Subsidies 14
IV OTHER POLICIES
(a) Agriculture 15
(b) Industrial Policy 16
(c) Services 17
V BILATERAL AND FREE TRADE AGREEMENTS 18-19WT/ACC/UKR/3
Page2
I. ECONOMY AND FOREIGN TRADE MAIN DIRECTIONS
Question 1n.
Could Ukraine provide greater clarification oftheGovernment 'sintention to"reduce thenegative trade
balance byreducing non-essential imports" (Question 2,WT/L/20). Inaddition, could aprogress report
beprovided onthework oftheGovernment Commission created inSeptember 1994 on"problems
ofimport regulation".
Reply 1n.
TheGovernmental Commission onUkraine 'saccession toGATT made theanalysis ofthe
Agreement onSubsidies andCountervailing Measures itcame totheconclusion thatanumber of
problemssolvedbytheGovernmentalCommissiononImportRegulationneededfurtherdeepanddetailed
work inaccordance withtherules andprinciples oftheAgreement onSubsidies andCountervailing
Measures. Suchanalysis willbetaken intoaccount inelaborating ofUkraine 'sLawonSubsidies and
Domestic Support. Theappropriate changes willbealsomade inthelegislative actswithaviewto
bring theGovernmental Commission 'swork onimport regulation inrespect oftheabove-mentioned
questions toconformity withtherulesandprinciples oftheAgreement onSubsidies andCountervailing
Measures.
Examples ofnon-essential import where theCommission could recommend restrictions:
-tobacco goods;
-alcohol products;
-coal;
-cars;
-luxury goods;
-agricultural products.
Themain criterion fordetermining which goods aretobeincluded onthelistshallbeinjury
caused todomestic producers during theselastyears ofthemarket opening process andimplementation
oftrade freedom.
Similar restrictions shallnotbeapplied togoods which Ukraine canproduce itself ifimport
ofthese goods doesnotcause asubstantial injury tonational producers ofanalogous goods.
Alltheserestrictions shallbeintroduced orchanged onthebasisoftheAgreement onSafeguards
oftheUruguay Round ofmultilateral negotiations, onthebasis iftheAgreement onSubsidies and
Countervailing Measures ofUruguay Round andalsoonthebasisoftheAgreement onInterpretation
ofArticle VIGATT 1994.
II. ECONOMY WIDE MEASURES
(a) Price Policy
Question 2n.
Confirmation that"bedrock pricing" hasnowbeenabolished andreplaced by"indicative pricing" is
required. Alsogiven thatindicative pricing isseenasatemporary phase intheendeavour tocreate
afullymarket-driven price system forexports, could Ukraine outline theprogram ofstepsitisgoingWT/ACC/UKR/3
Page3
totaketoachieve amarket-pricing system overthenextfewyears. Please provide alistofexport items
subject toindicative pricing. Inaddition, further information about domestic price policy, including
Ukraine 'splans forreform overthenextfewyears.
Reply 2n.
InNovember1994UkraineissuedaPresidentialDecreeestablishingaprocedurefordevelopment
ofindicative prices forgoods traded byUkraine. Thepurpose istoincrease currency earnings from
exports, lower expenses onimports, andtoprevent dumping.
Indicative prices, procedure ofwhich application isestablished byappropriate Decree ofthe
President havenorelations toUkrainian commitments before WTO withregard tocustoms valuation
andapplication ofanti-dumping taxthatshallbeintroduced byUkrainian legislation inaccordance
withappropriate Agreements oftheUruguay Round.
Forthelastoneandahalfyeartheconcept oftheforeign trade ofUkraine inthemind of
domestic andinternational business hasbecome inseparable from theconcept of"allocation" and
"licensing". Occasionally theterm"indicative prices" hasappeared inthisrank.
Since thebeginning of1994, theformation ofindicative prices hasbeenperformed bythe
Ministry ofForeign Economic Relations. Indicative prices aredeveloped foramajor group ofgoods
from thelistofgoods subject tolicensing withthepurpose ofmonthly revision andpublication.
Anindicative price istheprice atwhich ourdomestic goods aresoldintheforeign market.
Thisisthepriceforgoods thatbytheirquality meetUkrainian standards, aresupplied intheconditions
ofFOBorDAF (Deliver atFrontier) according totheINCOTERMS-94 Rules, andarepaidforby
a45dayletter ofcredit, delivery ofwhich isrealized within thesame months.
Theindicative price, inreality, istheresult ofanalysis oftheworld-market conjuncture and
prices ofthese goods, thevolume ofsalesofUkrainian goods inthese markets, international traders '
prices forservices, comparative characteristics ofUkrainian goods, theconditions ofpayments for
thegoods sold, andthetrends ofappropriate market dynamics.
Forexample, theindicative price forsteelreinforcements isformed onthebasis
ofinformation concerning current saleprices ofthisproduct intraditional markets (China, Turkey,
Europe andothers) withthededuction fromtheseprices ofthecostsofshipping fromUkrainian Black
Seaportsandofthetraditional international traders 'profit; withthecertification ofquality ofUkrainian
manufacturing reinforcements (intheabsence ofinternational certifications); andwiththecondition
ofletter ofcredit payment.
Results ofsuchcalculations onseparate markets areanalyzed jointly byofficers oftheMinistry
ofForeign Economic Relations ofUkraine, representatives ofmanufacturing enterprises andforeign
organizations, andemployees ofspecialized expert organizations at"conjuncture meetings" afterwhich
specific indicative prices areset.
Thepublished range ofprices takes intoconsideration theiractual dispersal during deliveries
ofgoods intodifferent markets. Averyrepresentative price inthiscaseistheindicative price for
hotforged steelsheet ($225-280 pertoninNovember) thelowest limitofwhich isoptimal insales
inthemarkets ofAsiaandAfrica andthehighest limitreflects thelevelofprices forUkrainian sheet
inNorth America.WT/ACC/UKR/3
Page4
There are,ofcourse, exceptions occurring when goods aretobesoldatprices lower thanthe
indicative price. Ithappens during theexport ofnot-standard orlowquality products, forexample,
during thesaleofcorroded, non-uniform length, andnotpacked according tostandards reinforcements.
Inthiscasetheexporter collects alldemands forprocurement, makes upaninformation tableoutof
them andontheregistration cardtheprice iswritten atwhich itispossible tosellthereinforcement,
evenifitislower thantheindicative price.
There hasnotbeenacasesofarinwhich someone hasbeenrefused alicense orregistration
ofacontract withvalid arguments present. Itisclearthatthepossibility tosellatalower price does
notapply totheattempts tosellquality goods ataprice twice ascheep asitsactual price.
Inconclusion, itisnecessary tonotice thatfrom theverybeginning oftheworking outof
indicativepricesattentionwasfocusedontheirfunctionasbeinginformative,theirstatusasrecommended
forcontracting pricelevels, andtheirimplementation mechanism tobeflexible andbased ondialogue,
thatis,alltheproblems which mayarise, aresolved inadesignated place, bydesignated people and
withthedirect participation oftheexporter.
Indicative prices aresetforgoods ofstable export from Ukraine, thevolume ofwhich have
exchange earnings thatsignificantly affect theeconomic situation ofthestate, asthewhole, andon
external payments balance inparticular. Indicative prices aresetinabsolute figures inUSDforgoods,
produced incompliance withcurrent Ukrainian quality standards, fortheFOBorDAF (delivered at
frontier) delivery basis (according toINCOTERMS 90)andLC(letter ofcredit) payment terms.
Indicative prices aresetbased ontheresults ofanalysis ofdataoftheleveloftraditional prices
withadueallowance forweighted average freight fromUkrainian ports, thelevelofprofits obtained
bytraditional international trading firms andwithallowance foraquality index ofdomestic goods
compared togoods ofother manufacturers present inthemarket.
Indicative prices recommended foruseinconcluding foreign trade deals
(bysummer 1995)
_________________________________________________________________________________
Export Prices
Products Price, $/t HSCode
_________________________________________________________________________________
Ferrous Metals
Castiron 116-120 720100000
Ferrous metal wastes 112-120
Chemical Industry Products
Carbamide (inbulk) 136-140 310210000
Dehydrated ammonium 176-180 281410000
Monoammonium phosphate (inbulk) 173-180 283521000
Ammonium sulphate 45-50 283329900
Methanol 350-380 290511000WT/ACC/UKR/3
Page5
Agricultural Products
Frozen meatwithnobones 1900-2000 0201-0202
Dried fatless milk 950--1000 040210990
Salt(inbulk) 21-25 250100910
Pea(inbulk) 170-175 110319900
Margarine 610-670 151700000
Butter 1150-1200 040500100
Ethyl alcohol, 96% 600-630 220710000
Vegetable oil 610-620 151219910
Wheat 130-135 100190000
Casein 2500-2700
Corn 135-140 100590000
Sugar 325-350 170199100
Import Prices
FuelandLubricants (CIS-production)
Gasoline A-93 175-180 27100000
Gasoline A-76 165-170 27100000
Diesel fuel(S-0.3) 155-160 27100000
Black oil(Sulphur content: 3.5%) 62-65 27100000
(b) Privatization
Question 3n.
Asstated intheWorking Party meeting, Australia agrees thatfurther information ofatransparency
nature isrequired ontheprivatization process. Itwould beveryuseful iftheDeputy Minister of
Economy 'sexplanations totheWorking Party onprivatization could bereproduced inwritten form.
Weattach anindicative listofadditional issues related toprivatization onwhich wewould appreciate
Ukraine 'swritten responses.
Reply 3n.
According totheLawofUkraine "OnPrivatization ofProperty ofStateEnterprises" (Article 1item1)
privatization ofproperty ofstateenterprises means alienation ofnational, republican ormunicipal
property forthebenefit ofnatural andnon-state legalpersons. Thus, privatization isacquisition for
private ownership ofenterprises, ventures, shops, plotsandother subdivisions ofenterprises which
aredetaching intheseparate enterprises atthestateandlocalRadas ofPeople 'sDeputies bycitizens
andjointstock partnerships.WT/ACC/UKR/3
Page6
Privatization isoneofthemaindirections oftheeconomy reforming which includes intensive
privatizationofsmallenterprisesandconsecutiveprivatizationofmediumandlargescalestateenterprises.
Thepurpose ofprivatization istotransfer stateproperty totheprivate persons andeconomic agents
so,thatinstateownership remained property essential forperforming state'sfunctions, thatisderive
from thestateownership enterprises andleave onlybudget organizations andinstitutions.
Privatization ofenterprises iscarried outattheframework ofthestateprivatization program
which isanintegral partoftheprogram ofcreating market economy ofUkraine. Theprogram envisage
achievement ofthefollowing goals:
-change ofownership atthemeans ofproduction withthepurpose oftheirfruitful usage;
-creation ofthenon-state owners division asabaseofdiversified socially oriented economy;
-development ofcompetition andmonopoly restriction;
-attraction offoreign investments.
Programdeterminesprioritiesandconditionsofpropertyprivatization,assignmentonprivatization
atthecurrent yearandforecast onchanges ofownership structure atthefuture.
Main forms ofprivatization according totheconception ofdenationalization andprivatization
ofenterprises, landandhousing fundwhich wasconfirmed bySupreme Rada ofUkraine in1991are:
- purchase andsaleofthestateproperty atcontest orauction;
- purchase andsaleofstocks forthecapital ofenterprise atthecontest, auction, stock
exchange, onsubscription;
- purchase ofproperty which wasleased withtherightofpurchase;
- purchase ofstateproperty which wasleased;
- purchase ofproperty bythestaff;
- liquidation ofenterprise according tothelegislation ofUkraine andsaleofitsproperty
atthecontest, auction, exchange.
Inorder toprovide effective process ofprivatization following modes ofpreparation ofstate
enterprises fortheprivatization areCorporatization ofenterprises;
- liquidation ofenterprises which were declared bankrupt according tothecurrent
legislation;
- sanation ofenterprises;
- commercialization ofthecertain enterprise 'sdivisions.
Corporatization means transformation ofthestateenterprises, industrial associations onthe
stateinitiative intotheopenjoint-stock partnerships. Itmeans thatcorporatization iscompulsory applied
toallmedium andlargescaleenterprises, thatisenterprises which value exceeds certain leveldefinedWT/ACC/UKR/3
Page7
bythestateforthispurpose.Stocksofenterprisesafterconductingtheircorporatizationandtransforming
them intojoint-stock enterprise uptothefinalprivatization areowned bythestate.
Privatized enterprises mean enterprises, which were privatized through oneofthemethods
ofprivatization, andasaresult ofwhich there wasachange inownership.
According toUkrainian legislation onprivatization, privatization isdivided into"small-scale
enterprises" and"large-scale enterprises". Thebasic criteria isthevalue ofthecharter fundofthe
enterprise onMay1,1992. ThelawsofUkraine "OnthePrivatization ofSmall Government Enterprises
(Small-scale Privatization)" or"OnPrivatizing theProperty ofGovernment Enterprises (Law onLarge-
scale Privatization)" thenapply.
Inorder todetermine theprocedures forprivatization, statutory acts(regulations, resolutions,
decrees), developed bytheState Property Fund ofUkraine andtheCabinet ofMinisters ofUkraine,
thenapply. These arethebasic acts:
-Procedures fortheSubmission andExamination ofanApplication forPrivatization;
-Provisions onthePrivatization Commission;
-Provisions onthePrivatization Plan;
-Provisions onApplying Privatization Measures totheProperty ofState Enterprises;
-Provisions onMaking Payments forUnits Acquired through Privatization;
-ProceduresforTransformingStateEnterprisesintoJointStockCompaniesthroughPrivatization.
Theprogram forprivatization provides forthefollowing main aims:
-changing thetypeofownership ofthemeans ofproduction withtheaimofimproving quality
andefficiency;
-establishing agroup ofnon-government property owners asabasisforamulti-layered socially-
oriented economy;
-restructuring oftheeconomy;
-stabilization oftheeconomy;
-developing competition andrestricting monopolies;
-attracting foreign investment.
According tothedataoftheMinistry ofAgricultural Production atthestateforMay1995 more than
400stateagricultural enterprises (20percent) were privatized and18percentofprocessing and
agroservice enterprises. Atthebaseofreformed Soviet farms joint-stock ventures arecreated and
attheprocessing andagroservice enterprises- openjoint-stock ventures. Inthecollective sector (which
isactually alsotheformofstateenterprise) 96percentofthecollective farms arealready transformed
intojoint-stock ventures.WT/ACC/UKR/3
Page8
Theprogram ofmarket transformation ofagriculture which envisages completion ofprocessing
andconsiderable partofagroservice enterprises andalsoSoviet farms isconfirmed for1995.
Thesystem oftheMinistry ofAgriculture andFood includes thefollowing statetrading
organisations:
Ukrtekhagroservis exports -agricultural products
imports -agricultural equipment -70%
-fuelandlubricants -20%
Ukrprodresursyrovyna exports -dairy andmeatproducts
imports -material andtechnical supplies fortheprocessing industry -30%
Ukragrokhim exports -agricultural products
imports -herbicides andpesticides -70%
91industrial complexes wholesaling andretailing fruitandvegetables:
exports -potatoes
-fruit
-vegetables
imports -fruit-5%
-vegetables
In1995, 18of109fruitandvegetable complexes wereprivatized. Therestareplanned tobe
privatized bythe31.12.1996.
Theconcern Ukrtekhagroservis andtheassociation Ukragrokhim areplanned tobeprivatized
through auction bytheyear2000.
Agro-industrial complex ofUkraine now includes: (a)according tothetype of
ownership-collective agricultural enterprises, Soviet farms- stateenterprises; (b)agricultural (farmer)
farms- notstate-owned enterprises. According tothefunctional intention: processing, construction
andother enterprises andorganization which serve producers ofthefoodcommodities. Number of
people working intheagro-industrial complex exceeds 4million. Specific weight ofthestateenterprises
amounts to25percent, non-state- 75percent. Inthenon-state enterprises engaged 71percentof
allagricultural workers, theareaoftheagricultural theirlands amounts to75percent, value ofthe
capital production assets- 72percent,volume ofthegross production- 70percent. During theperiod
from 1991 to1995 number offarmer non-state farms increased from 2,100 to32,000.
Atthestateforthebeginning of1995 approximately 10,000 enterprises areremaining state-
owned, volume ofthegross production ofthisenterprises comes to30percent,butaccording tothe
privatization program allthese enterprises aretobeprivatized untiltheendof1995.
Atpresent, 18fruitandvegetable wholesale andretailindustrial complexes havebeenprivatized
through thecreation ofjointstock companies. They mainly tradeinpotatoes, andfruitandvegetables.
They import 5percentofallgoods.
According tocurrent data, more than400statefarms andother stateagricultural enterprises
(onefifth) have been privatized andaswellas18percentofprocessing andagricultural service
enterprises. Thestatefarms havebeenreformed toagricultural enterprises andjointstock associations,
andprocessing andagricultural services enterprises havebeenchanged topublic corporations.WT/ACC/UKR/3
Page9
Approximately 9,000 collective farms, thatis96percent, havebeenreformed through the
process ofdividing theproperty intoshares. Thecollective farms havebeenreformed intocollective
agricultural enterprises, peasants 'associations, cooperative associations, andstock-holding companies.
State organizations oftheagro-industrial complex donotspecialize inimport offood
commodities. Import ofthefoodcommodities iscarried outbythetradeenterprises which werealmost
allprivatized during theperiod ofsmall privatization.
Ninety-one industrial complexes wholesaling andretailing fruitandvegetables now, tosome
extent, specialized inimport offood, inparticular, theyimporting potatoes, fruitandvegetables. Nine
ofthese 91industrial complexes wholesaling andretailing fruitandvegetables hasbeenprivatized to
date. Theabove-mentioned imports compiled 5percentofthetotalvolume ofagricultural products
turnover. In1995, 18of109industrial complexes wholesaling andretailing fruitandvegetables were
privatized. Therestofthem willbeprivatized till31December 1996.
Transition ofenterprises fromstatetotheprivate sector connected withthecertain difficulties.
Thatiswhytaking intoconsideration toosmall capital markets andalsoinsufficiency oftheforeign
investments theGovernment decided thatprivatization ofmedium andlarge scale enterprise should
bepreceded bytheircorporatization. Process ofcorporatization isdefined bytheDecree ofthePresident
ofUkraine ofJune15,1993 "OnCorporatization ofEnterprises". Decree define thatcorporatization
means transformation ofthestateenterprises, closed joint-stock ventures inwhich 75percentofthe
authorized fundarethestateownership, intotheopenjoint-stock ventures. Thepurpose ofthisDecree
istoachieve suchstateofeconomy when corporation isinstateownership butunder theprivate
supervision.
Nextstepaftercorporatization istheselling ofthecompany totheprivate persons butforthis
purpose developed capital market which includes bankandexchange middlemen isnecessary.
According totheDecree founder oftheopenjoint-stock venture istheFund ofStateProperty
anditsregional departments. Duties oftheHead ofthejoint-stock venture 'sboard areplaced onthe
headofthecorporized enterprise.
According totheprogram forprivatization ofmedium andlargescaleenterprises in1995based
ondataoftheFund ofStateProperty, which isthestatebodyresponsible fortheprocess ofprivatization
inUkraine, in1995should beprivatized 8thousand medium andlarge scaleenterprises. Atthestate
forMay1995totheFundcameinformation fromitsregional departments ontheprocess ofprivatization
in5,334 enterprises. Along withthis1,863 areatthestage ofcorporatization, 779-rental enterprises
which aretransformed intoopenjoint-stock ventures, 1,303- enterprises oftheagro-industrial complex.
In1,389 enterprises work atthepreparation totheprivatization wasnotstarted. Besides thisFund
ofState Property waitfortheproposals onprivatization procedure atthe2,700 enterprises more.
Atthebeginning ofMay 1995 inthenon-state sector ofindustry were working 4,400
(49percent)enterprises which specific weight inthetotalvolume ofproduction came to38percent
including1,800joint-stockventureswhichspecificweightinthenon-statesectoramountedto41percent,
volume ofproduction- 60percent.
Through thefirstquarter of1995 amount ofagricultural (farmer) farms increased at1,057
andtothefirstofApril came to3,000. They areusing 729,000 haoftheagricultural areas or
1,8percentoftheirtotalarea.
Through thefirstquarter of19951,250 unitswereprivatized inthisamount: retail trade- 401,
service- 201,industry- 312,construction- 74.WT/ACC/UKR/3
Page10
Thedefinition oftheterms "large, medium andsmall enterprises" isgiven in...documents.
Theprivatization program provides thatthereshould be2butnot3categories, i.e.,2categories: large-
medium+small enterprises.
III.(A) IMPORT REGULATION
(a) Tariffs
Question 4n.
Wewould appreciate greater clarification oftheprocedures whereby changes toUkraine 'sratesof
customs duties mustbeapproved bytheParliament. Alsoplease provide clarification ontheapplication
of"full" tariff ratesforpersonal consumption and/or designated product groups andexport sources.
Reply 4n.
Tariff regulation inUkraine in1994 isbeing carried outonthebasis oftheLawofUkraine
"OnUnified Customs Tariff" andtheResolutions oftheCabinet ofMinisters ofUkraine #285 dated
3May1994 and#577 dated 22August 1994 and#622 dated 10August 1995.
TheratesoftheUnified Customs Tariff ofUkraine andtheabove-mentioned Resolutions are
unified forallagents offoreign economic activity irrespective ofthetypeofownership, organization
ofeconomic activities andlocation, other thanincases stipulated intheLaws ofUkraine.
TheUnified Customs Tariff ofUkraine isbased ontheinternationally agreed norms andis
being developed inorder toconform toallgenerally agreed intheinternational practice norms and
principles andcustoms rules. Thegoods classification scheme oftheUnified Customs Tariff ofUkraine
(nomenclature ofgoods) isbased ontheHarmonised Commodity Description andCoding System.
Theimports aresubject todutywhen theyaredelivered tothecustoms territory ofUkraine.
Customs duties should bepaidwhen thegoods orother articles cross thecustoms border of
Ukraine.
AllthearticlesthataresubjecttocustomscontrolareclassifiedaccordingtotheUnifiedCustoms
Tariff in21Chapters 21,97groups, 1241 commodity items and5019 commodity subitems. Their
names andnumber codes areunified withtheHarmonised System.
TheUnified Customs Tariff specifies three levels oftheimport dutyrates:
1. Preferential rates, including theexemption from duties, shallbeapplied tosuchgoods:
thatarrive from thecountries which together withUkraine areincustoms unions or
establish withitspecial customs zones:
thatarrive from thecountries withwhich there isanestablished special system of
preferences based ontheinternational agreements towhich Ukraine isamember:
thatarrive from developing countries andwhich belong tocommodity groups 1-24
oftheHarmonised System (HS).WT/ACC/UKR/3
Page11
2. Reduced customs duties shallapply togoods thatarrive fromthecountries oreconomic unions
which enjoy MFN treatment onthepartofUkraine, andalsotogoods thatarrive from developing
countries andfallwithin thecommodity groups 25-97 HS.
3. Thefull(general) ratesshallapply toallother goods.
Thefullcustoms rateequals 11.9percentofthecustoms value oftheimported goods.
Thereduced customs rateequals 6.3percentofthecustoms value oftheimported goods.
Forgoods originating inCroatia, Slovenia, Taiwan, Israel andtheRepublic ofSouth Africa,
fullimport dutyratesshallapply.
Thereduced ratesoftheUnified Customs Tariff ofUkraine shallapply tothecommodities
originating inthecountries towhich Ukraine applies MFN treatment (Annex #2oftheDecree ofthe
Cabinet ofMinisters ofUkraine "OntheUnified Customs Tariff" #4-93of11January 1993.)
Concerning thecurrent status ofthecustoms tariffregulations, inaccordance withtheArticle
oftheLawofUkraine "OntheUnified Customs Tariff" theCustoms Tariff Rada ofUkraine hasbeen
established andisnowoperating. TheResolution oftheCabinet ofMinisters #62of7February 1994
adopted theProvision "OntheCustoms Tariff Rada" anditsstaff. ThemainroleoftheCustoms Tariff
Rada istoconsider thepropositions regarding amendments tothecurrent ratesoftheUnified Customs
Tariff ofUkraine.
TheCustoms Tariff Rada isworking onthepropositions onthemain directions andmeans
ofimplementation ofthecustoms tariff policy ofUkraine, ontheamendments tothenomenclature
oftheUnified Customs Tariff ofUkraine, ontheestablishment, abolition oramendments totheimport
dutytariffs, onthegranting oftariffprivileges andpreferences, application ofthespecial, anti-dumping
andcountervailing tariffs, arrangement andtheapplication ofthenecessary procedures thatareprior
totheapplication ofthementioned types ofduties andalsotoother measures aimed attheprotection
ofthedomestic market ofUkraine.
TheSecretariat oftheCustoms Tariff Rada gives ageneral analysis ofthepropositions from
theministries, departments andeconomic agents concerning theperfection ofthecustoms tariffpolicy
ofUkraine andrefers ittotheRada'ssession.
However, thepropositions ontheabolition, establishment andchanging theimport andexport
tariffs, application ofthespecial seasonal anti-dumping andcountervailing duties, Ukraine 'saccession
totheeconomic customs unions, establishment orabolition ofthepreferential andconcessional taxation
treatment inrespect ofthecommodities thatarrive fromcertain countries ortheirunions, shallbetaken
intoconsideration onlyincasewhen economic grounding oftheaforesaid propositions isavailable.
Themembers oftheCustoms andTariff Radaareauthorised tomake comments onthequestions
withregardtothecustomstariffregulationsincasewhentheeconomicgroundinganalysisonthechanges
inthecustoms regulations isavailable.
Thedecisions oftheCustoms Tariff Rada areissued intheform ofaprotocol which should
besigned bytheChairman oftheCustoms Tariff Rada.
Thedecisions oftheCustoms Tariff Rada shallbesubmitted toconsideration bytheCabinet
ofMinisters ofUkraine.WT/ACC/UKR/3
Page12
(b) Seasonal Customs Taxes
Question 5n.
Asstated intheWorking Party meeting, specifically ontheseasonal taxes, while Ukraine isnotapplying
them atthemoment, what plans doesUkraine havetointroduce them inthefuture, iewhat would
betheirpurpose, towhatproducts might theyneedtobeapplied andinwhatseasons would theybe
applied? Please provide information onprogress withthedevelopment ofthespecific administrative
mechanism forcollection ofseasonal customs duties.
Reply 5n.
Current legislation ofUkraine isconsistent withtheWTO provisions onanti-dumping duty,
which isbased onadetermined amount ofpenalty equal tothedumping margin. Inaccordance with
theLawofUkraine "OnUnified Customs Tariff" (article 13)theanti-dumping dutyratemaynotexceed
thedifference between thecompetitive wholesale price ofthegood inquestion inthecountry from
which itisexported atthetimeofexport, andthedeclared priceatthetimeofimport intothecustoms
territory ofthecountry, orthedifference inpricebetween thedumped goods inUkraine andtheaverage
price oftheUkrainian export ofsimilar ordirectly competing goods atthetimeinquestion.
Theapplication ofanti-dumping, countervailing, special andseasonal duties, rulesgoverning
special/free economic zones isnotregulated bynational legislation.
(c) Special Duties
Question 6n.
Asexpressed attheWorking Party, Australia hasstrong concerns about Ukraine 'sintentions onthis
issue, inparticular asUkraine 'sresponses intheWorking Party meeting andinreply 133ofWT/L/20
would seem toindicate thatUkraine sees"special duties" asaretaliatory measure fordomestically
perceived unfair treatment ofUkraine ontrade andpossibly other matters. There isnobasis inthe
WTO fortariff(orother trademeasure action) tobetaken onthisbasis. Westrongly encourage Ukraine
toreconsider introducing suchduties andtoamend thispartofitslegislation accordingly.
Reply 6n.
SeeReply 5n.
(d) Safeguards
Question 7n.
Asnoted intheWorking Party meeting, itwould seem thatUkraine seesArticle XIXsafeguards as
providing verywidescope toprotect domestic industry fromimports, including through thedraftlaw
which would allow non-tariff import regulation through invocation ofGATT Article XIX. Wewould
liketheopportunity toreview thisdraftlawintheWorking Party.
Reply 7n.
Please seeadraft oftheDecree ofthePresident ofUkraine thatisannexed inthesetof
documents.WT/ACC/UKR/3
Page13
(e) Customs Processing Fee
Question 8n.
Ukraine hasacknowledged thatthisfeeascurrently constituted contravenes GATT provisions andthat
itwould intend tomodify ittoachieve conformity atthetimeofaccession. Wewould encourage Ukraine
tobegin thenecessary steps toachieve GATT consistency prior toaccession including providing the
Working Party withatimetable fordoing this.
Reply 8n.
Timetable willbeprovided shortly.
Question 9n.
Regarding theexcise taxstructure, please provide afulllistofexcisable items andconfirm thatthe
excise taxisnowapplied inanon-discriminatory manner. Please provide details ofanyrecent legislative
changes.
Reply 9n.
According tothecurrent legislation thereisnocurrent domestic 10percentexcise taxongoods
ofUkrainian origin.
Thegoods being imported toUkraine arelevied withexcise dutyatrates approved bythe
Resolution oftheSupreme RadaofUkraine No.3951/12 of4February 1994, "OntheListoftheGoods
toWhichApplyExciseDutiesandTheirRates".Thislistincludesthesubsequentamendmentsintroduced
thereto bytheResolution oftheCabinet ofMinisters No.526of5August 1994.
Thegoods subject toexcise duties include:
alcoholic drinks (HSnumbers: 2207, 2208, 2204, 2205, 2203, 2206);
foodessences (2101, 2209);
chocolate (1806);
coffee (0901)
delicaciesofthemeatandseaproducts(16010091,16042010,16042030,16051000,16052000);
sugar (1701);
tobacco products (24022000, 24009000, 24031000);
video hardware andtelevision sets(85281011, 85281019, 85281030, 85281090, 85282010,
85282071, 85282073, 85282079, 852820900;
car,buses andtrucks (8703);
tires(401110000);WT/ACC/UKR/3
Page14
jewellery (7113);
porcelain (69131000);
cutglass products (70139910, 70133991);
furproducts (4302, 4303, 6506, 9200);
natural leather andtheproducts thereof (41004-4109, 4203);
carpets (5701, 5702, apart from 57021000);
microwave electrical furnaces (851420910);
kitchenware made from metals coated withsilver andgold(8215, 8603 21000).
According totheabove-mentioned normative actsthere isanexcise dutyrate,which differs
from other ratesforeachofthementioned goods. Taking thisstatement intoaccount thedefinition
of10percentrateasacurrent domestic rateisnotright. Asarule,theexcise dutyrateforgoods
ofUkrainian origin ishigher than10percent.
Theexcise onimported anddomestic products iscalculated differently inconformity withthe
current legislation ofUkraine. When calculating theamount ofexcise, thetaxed turnover onimported
products isdetermined according tothecustoms value ofproducts, calculated inUkrainian currency
according totheexchange ratesetbytheNational Bank ofUkraine, taking intoaccount thetotalof
taxandcustoms duties. Thetaxed turnover ondomestic products iscalculated onthewhole-sale price
ofproducts, taking intoconsideration theexcise.
Takingtheabove-mentionedintoaccounttheamountsoftaxonanalogousdomesticandimported
products areapproximately equal, when current ratesofexcise areapplied.
ThenewUkrainian Law"OntheUnification ofExcise DutyRates forImported andDomestic
Products" willbeadopted shortly.
(f) Import Licensing
Question 10n.
Weappreciate Ukraine 'sexplanations about theessentially health andsafety purpose of
import licensing andthecorrespondingly limited nature oftheproduct listprovided. Wewillwish
toexamineUkraine'sresponsetotheWTOimportlicensingquestionnaireandifnecessaryitslegislation,
toensure itisfullyconsistent withWTO rules.
Reply 10n.
Incompliance withArticle 18oftheLaw"OnForeign Economic Activities", theimport of
onlythose goods thathavesuchtechnical, pharmaceutical, phytosanitary andecological parameters
which meettherequirements ofUkrainian standards ispermitted. Also, theimport inandtransit through
theUkrainian territory ofsecondary rawmaterials issubject tolicenses. Pursuant totheResolution
oftheCabinet ofMinisters No.117ofFebruary, 1994, thegranting oftheimport ortransit permit
isentrusted totheMinistry ofNature andEnvironmental Protection.WT/ACC/UKR/3
Page15
Thequestionnaire willbeanswered shortly.
(g) TRIMS
Question 11n.
Alargenumber ofUkraine 'staxexemption programs anddomestic subsidy policies require examination
toensure thattheyareconsistent withtheTRIMS agreement. Forexample, Ukraine willneedtoprovide
theWorking Party withinformation about export performance criteria where theseexistinanysectoral
program oftheeconomy, including aspartofthetaxexemption policy. Initsresponse toQuestion
66inWT/L/20, Ukraine indicated thatitwould commit itself totheTRIMS agreements provisions
"assoonaseconomic circumstances permit". What ismeant bythisstatement? Does Ukraine consider
thatitneeds anexemption forTRIMS overandabove theimplementation period oftheagreement
itself?
Reply 11n.
Weconsider thattherearenocontradictions withtheAgreement onTrade Related Investment
Measures.
Thecurrent lawoninvestment policy inUkraine, inparticular theDecree "OnForeign
Investment Policy" stipulates thatforeign investments, likeanyother economic activity, aregoverned
bytheprovisions oftheNational Investment Policy withsome exceptions specifically provided for
intheDecree"OnForeignInvestmentPolicy"and"otherlawsandinternationalagreements"ofUkraine.
ThelawofUkraine allows thedesignation ofareaswhere noforeign investors orenterprises areallowed
or,ifallowed, their activities arelimited forreasons ofnational security (Decree "OnForeign
Investment Policy," Clause 7).Nosuchdesignations havebeenmade todate.
Contributions offoreign investments intotheownership fundofanenterprise which hasforeign
investment willbeexempted fromcustoms andimport taxes. (Decree "OnForeign Investment Policy.)
Thecreation ofenterprises which include foreign investors willbegoverned bythesame
regulations thatcover theestablishment ofdomestic enterprises. (Clauses 19through 26).
Astothetradeintheinternal Ukrainian market, itshould beemphasized thatparticular measures
ofstateregulation ofprices forparticular goods willapply onequal terms tobothresidents andnon-
residents. There arenominimum required investment levels inorder toobtain national treatment.
Ukraine hasnotrade-related investment measures thatareinconsistent either withtheobligation
ofnational treatment ortheobligation ofgeneral elimination ofquantitative restrictions. Weregret
thewording inReply 66,which wasmisleading.
(h) Import Quotas
Question 12n.
Ukraine 'snon-reliance onGATT inconsistent import quotas atpresent isawelcome positive feature
ofitsevolving trade regime. However thedraftlawwhich would allow non-tariff (ie.import quota)
regulation inanArticle XIXcontext isofconcern. Wewould strongly discourage Ukraine from
institutionalizing recourse toimport quotas under Article XIXandwould appreciate further elaboration
ofUkraine 'sintentions inthisregard.WT/ACC/UKR/3
Page16
Reply 12n.
ThePresidential Decree "OntheMeasures toImplement anIntegrated StatePolicy ofImport
Regulation" ofSeptember 21,1994, established aspecial Governmental Commission toregulate import
matters. Itisentrusted withthedevelopment andimplementation ofthemechanism ofapplication of
import restrictions inconformity totheGATT/WTO principles andrules. Atpresent, theCommission
isdrawing upadraftlawwhich provides foramechanism allowing fornon-tariff import regulation
tobeeffected incompliance withArticle XIXofGATT.
Atpresent there arenoimport quotas.
(i) Standards andCertification
Question 13n.
IfUkraine could provide information ofatransparency nature onpublication ofSPS/Quarantine
regulations, enquiry points, control andinspection procedures, riskassessment procedures, participation
inother SPSorganizations oragreements, etc,following theframework provided byAnnex Bofthe
WTO agreement onSPSregulations. OnTBTwewould appreciate detailed written explanation from
Ukraine onmeasures inexistence ortobetaken which willensure itscapacity toimplement and
administer theTBTagreement. Wealsobelieve thatUkraine should consider thenecessary steps to
becoming amember oftheCodex Alimentarius assoonaspossible andcertainly prior toaccession
totheWTO.
Reply 13n.
Incompliance withtheLaws ofUkraine, products tobeimported andcertified inUkraine
iftheymeetUkrainian standards, shallbeprovided withanobligatory certificate showing compliance
withtherequirements ofthestandards ofUkraine astosafety relating tolife,health, property ofcitizens
andenvironmental protection. Thiscertificate shallbeapproved byanauthorized certification body
ofUkraine designated bytheState Standards Committee foreachbranch ofindustry. "The listof
products required tobecertified inUkraine hasbeensenttotrade representatives andembassies of
Ukraine" Thelistisnotyetcomplete, butcovers metal working machinery, synthetic fibers, toys.
Allstandards arepublished andarepublicly available. Plans fordeveloping standards arecirculated
torelevant ministries andareavailable upon request.
TheLaws ofUkraine establish thatthecertification isamust forproducts forwhich the
standards existapplying requirements regarding safety oflife,people 'shealth andtheirproperty as
wellasenvironmental protection.
Thelistsofproducts subject tocertification inUkraine aretobeapproved bytheState
Standardization Body acting asaNational Certification Body and,then, registered bytheMinistry
ofJustice. Thecertification ofproducts included inthelistsapplies tosimilar import products. The
main certification regulations areasfollows:
1.ToeffectthecertificationoftheproductintheUkrCEPRO(StateCertificationSystem)system,
anapplicant (aforeign oneincluded) must submit anapplication indueform toanaccredited body
(ifforeign organizations havenorequisites oftheabove certification bodyitmayaddress theNational
Certification Agency).
2.Thecertification body will,nolatter thanonemonth afterthereceipt oftheapplication,
lettheapplicant know about itsdecision thatmust specify thefollowing certification conditions:WT/ACC/UKR/3
Page17
2.1.Thename andsignofastandard therequirements ofwhich mustbemetbytheapplicant 's
products;
2.2.Selection, together withtheapplicant, ofaparticular manner (model) ofcertification.
2.3.Selection ofthetestlabtotestproducts; samples.
2.4.Selection ofanorganization tosupervise theproduction ofcertified goods (ifrequired
to,andif"yes",technicalsupervisionwillbecarriedoutincompliancewiththeselectedmanner(model).
3.Solely thecertification body hastherighttogrant theconformance certificate.
4.Theconformance certificates issued byforeign organizations canberecognized validsolely
anddirectly bycertification bodies accredited intheUkrCEPRO system.
These foreign conformance certificates canberecognized valid proceeding from theresults oftests
carried outintestlabsaccredited intheabove system.
TheMEC,ICOstandardsand18900GOSTs(CISInterstatesStandards)areeffectiveinUkraine
now. Approximately 40percent ofthem areharmonized withtheinternational standards. Some 60
percent ofthestandards drawn upandadopted inUkraine areharmonized withinternational standards.
Products tobecertified intheUkrCEPRO system
1.Household andsimilar electrical hardware, assembly units andparts.
2.Lighting appliances, assembly units andparts.
3.Manual electromechanical tools andportable worktables
4.Video-, television anddisplay sets.
5.Household radio electronics.
6.Electrically-driven construction-and-assembly tools.
7.Food processing equipment.
8.Medical equipment.
9.Toys.
10.Synthetic detergents.
11.Miniature tractors andpowered equipment.
12.Engines oftractors andagricultural machinery.
13.Metal-and-wood machining equipment.
14.Electrical welding equipment.WT/ACC/UKR/3
Page18
15.Electrical machines.
16.Bicycles, prams.
17.Security andfirealarm systems.
18.Telephone sets.
19.Cinema andphoto equipment.
20Kitchenware made from ferrous andnon-ferrous metals, faience andporcelain.
21.Units ofautomation andmechanization ofaccounting operations.
22.Household mechanisms operating onsolid, gaseous andliquid fuel.
23.Road vehicles.
24.Agricultural machinery
25.Inflammable electrical, equipment intended foritsoperation andrepair.
26.Light sources.
27.Textiles forchildren
28.Food industry products
29.Photography chemicals
30.Petroleum products.
Thenational system ofstandards andcertification ofUkraine doesnotprovide forabanor
limitation ontheuseofanyproducts iftheymeetcurrent requirements ofstandards astosafety for
life,health andenvironmental protection. There arecurrently nohighly restricted orbanned agricultural
products.
Requirements astostandards andcertification ofimports donotdiffer fromtherequirements
fordomestic products.
AUkrainian Information Centre ofStandards, Certification andTechnical Barriers toTrade
shallbecreated onthebaseoftheNational Fund ofStandards.
Foreign organizations may, ifagreed upon with theState Committee ofUkraine for
Standardization, Metrology andCertification, takepartinthedevelopment ofthestandards ofUkraine
iftheyaremembers oftechnical committees onstandards. Anyforeign organization maybecome a
memberoftheUkrainianTechnicalCommitteeonStandardization.Todosoitmustsubmitanapplication
totheTechnical Committee forconsideration which will,then, present ittotheState Committee for
Standardization, Metrology andCertification forapproval.
Yes, asamember oftheInternational Electrotechnical Commission, Ukraine joined the
International system ofassessment oftheresults ofelectrical equipment testing anditsconformity withWT/ACC/UKR/3
Page19
standards forsafety. Ukraine acknowledges theresults oftestsmade bytesting laboratories accredited
inthissystem andacknowledges certificates issued bytheauthorized bodies ofthemember-countries
ofthissystem (Germany, Hungary, Italyandothers). FortheFederal Republic ofGermany the
certification body DINGOST TUV Berlin-Brandenburg hasbeenaccredited within theUkrainian
certification system UkrCEPRO. Thedrafts oftreaties oncooperation between Ukraine andGermany
('TUV-Reilands" and"TUV-Nord"), Ukraine andFrance (Bureau VERITAS group), areunder
consideration nowbytheState Standards Committee.
Onthebasis ofmutual bilateral agreements Ukraine acknowledges thenational certification
systems ofallCIScountries, theircertification bodies andtesting laboratories accredited inthesesystems
andtheircertificates.
TheStateCommittee ofUkraine forStandardization, Metrology andCertification asanational
bodyforstandardization accomplishes measures todevelop international cooperation instandardization
andcertification. Thus, there hasbeendeveloped:
- theagreements oncooperation withtheAmerican National Standards Institute (ANSI), National
Institute ofStandardization NIST), German Institute forStandardization (DIN);
- inNovember 1994 "The Project onCanada 'stechnical assistance inthedevelopment ofthe
nationalstandardizationandcertificationsystemofUkraineandtheharmonizationofthenational
standards ofUkraine with Canadian standards" andtheproject of"The Agreement on
Cooperation withStandardization Council ofCanada" havebeensenttotheMinistry ofForeign
Affairs andInternational Trade andMinistry ofIndustry ofCanada. These documents provide
forthedevelopment ofthejoint rules, inparticular, regarding theharmonization ofthe
requirements oftheCanadian andUkrainian certification systems;
- thedraftAgreement onCooperation inthefieldofquality certification conformity assessments
were senttothenational certification bodies ofIsrael, Poland andCuba;
- theproposals fromBulgaria, Czech Republic andSlovakia astomutual recognition ofnational
certification systems areunder consideration now.
Theinter-state standards oftheCIScountries (GOST) andthenational Ukrainian standards
(DSTU) arevalid inUkraine. About 40percentofinter-state standards (GOST) areharmonized
withinternational standards. 60percentoftheNational Standards ofUkraine (DSTU) which have
beenapproved bytheUkrainian State Committee forStandardization, Metrology andCertification
(Derzhstandart ofUkraine) areharmonized withinternational standards.
Theimplementation ofInternational Organizations 'standards isbeing carried outinUkraine
bydevelopingnationalstandardsonthebasisoftheinternationalstandards.ThedevelopmentofNational
Standards ofUkraine which aretobeharmonized withISOstandards isbeing encouraged through
budgeting forthiswork.
However theharmonization ofNational Standards ofUkraine withinternational standards is
being performed along withthespecific conditions ofsocial, economic andtechnical development of
Ukraine. Thatiswhysome requirements ofinternational standards, testing procedures andseparate
technological processes failed tobeimplemented todate.Toimplement themUkraine needs technical
andmethodological help.WT/ACC/UKR/3
Page20
III.(B) EXPORT REGULATION
Export Subsidies
Question 14n.
Australia would appreciate greater details onthevarious exemptions fromtaxation, other duties and
thevalue added taxwhich Ukraine provides toexporters. Weneedaclear picture oftheeffect and
operation ofthisassistance inorder toassess itagainst WTO export subsidy rules. Amore detailed
explanation oftheoperation andeffect ofthe"special regime forexports" isalsorequired. On
agriculture, weexpect toseeUkraine 'sclaim thatithasnoagricultural export subsidies reflected in
itsdraftschedule ofconcessions andcommitments attheappropriate time.
Reply 14n.
Thestatebudget ofUkraine approved for1994envisaged subsidies granted totheproduction
ofcoalandgas. Inconnection withtheimplementation oftheProgram ofthePresident, measures
arebeing taken tocutsubsidies toenterprises andtothepopulation (liberalization ofretailandwholesale
prices), thereleased funds being directed tosocial protection ofpeople ofnomeans.
Theprogram ofstatesupports forstrategic areasofthenational economy andofencouragement
fortheexport ofdomestic products isimplemented byusing statemeasures forsupporting production
andexport rather thanthrough thegranting ofsubsidies. These statemeasures willinclude elimination
ofcustoms tariffs andvalue-added taxonUkrainian exports; creating aunified currency exchange
rate.Also, setting lower income taxes fortheexport ofhigh-technology andhigh- quality finished
products thanthetaxes ontheexport ofrawmaterials andintermediate goods willbeeffected. At
thesame time, limited statefunding isintended forbasic scientific research anddevelopment ofhigh
leveltechnological products. And,inaddition, implementing marketing studies toencourage theaccess
ofUkrainian products inforeign markets.
Ukraine willdepend, first,uponthepricecompetitiveness ofUkrainian manufacturers. Ukraine
willsupport theoperation ofenterprises abletocompete intheworld market. Ukraine willencourage
anyactivity ofanyenterprise bymaking useofeconomic methods thatconstitute andprotect market
economy fundamentals, e.g.,economic freedom, private property andtheprinciple ofcompetition,
andprotection against misuse ofpower, monopolies andunfair competition. Priorities inindustrial
policy oftheStatewillbesubject tothestrategy ofstructurally allocated investments, yet,atdifferent
stages ofeconomic reform, thesolution oftactical problems maynecessitate thesupport ofparticular
industrial sectors, branches orenterprises.
Inimplementing thetasksoftheindustrial development ofUkraine, thedistribution ofmaterial
andfinancial resources willberelated, firstandforemost, toprovide forthenational independence
ofUkraine. Here, because oftheinternationalization anddecentralization ofanumber ofbranches
ofeconomic activity andthereduction inthefraction ofstatedemand onthegross domestic product,
theemphasis willbeplaced onenterprises thathavetheopportunity toparticipate andbecompetitive
intheworld market.
Thedevelopment andinternational competitiveness ofUkrainian industries willbepromoted
bycreation ofanexport financial andinsurance system. Theabsence oflow-rate, easily-available
credit creates amajor problem forsupporting exports. Measures aimed atestablishing animproved
system ofstate-granted export andinvestment guarantees willbeworked outbytheGovernment. It
isnecessary tocreate theconditions toovercome thebarriers inforeign countries byincreasing theWT/ACC/UKR/3
Page21
quality ofUkrainian goods. Tothisend,asystem ofquality certification andcontrol willbeformed
andcertificates issued forUkrainian products thatmeetworld standards.
TheGovernment plans tocreate anefficient andeasily accessible foreign trade datasystem.
Thegovernment willsupport thedevelopment ofhigh- technology branches ofthemachine
building industry (electronic andelectrotechnical industries, control instrument industry, aircraft and
spacecraft industries, automobile industry, bearing industry, machine toolindustry, electric welding
hardware industry), which isspecified inReply 1.When Ukrainian production inthemachine tool,
electrotechnical andother branches ofindustry reach world standards ofquality, itwillbeeasier for
Ukraine toestablish itsposition intheworld market. Theforeign tradepolicy willbeaimed atincreasing
thepercentageofmachinebuildingproductionwhichgoesintoexport;20percentatpresent,50percent
asagoal.
Established industries inthenational economy, asopposed tonewindustries, should stand
themarket test. There willbeonlyminor stateinterference, ifany, intheoperation ofthemarkets
forbothtraditional andnascent industries.
Industrial enterprises cannot count onstatesubsidies inthedevelopment ofmodern technologies
andmodernization ofproduction. TheGovernment aimstoensure thecompetitiveness ofprices for
theproducts ofthemetallurgical, chemical andwood processing industries andplans toattract foreign
investments andtechnologies inthose industrial branches thatarenotabletocompete intheworld
market.
TheGovernment makes every effort torender every industrial branch acompetitive oneby
implementingintegratedR&Dconversionprogramscomprising22directionsapprovedbytheResolution
No.229 ofMarch 25,1994, "OntheUseoftheR&D andProduction Potential ofMilitary-Industrial
Complex forDevelopment oftheNational Economy". TheR&D work issupported attheexpense
ofthestatebudget andthatoftheenterprises oftheMilitary-Industrial Complex. Commercial bank
credits areusedtosupport thereorientation oftheproduction oftheex-defense enterprises. Further
on,fundamental research willbesupported byusing therevenues ofenterprises toformaspecial R&D
support fund.
Under theUkrainian Law"Onthe1995 State Budget ofUkraine" thecoalandgasindustry
shallreceive direct subsidies only, direct at:
-capital investments
-restructuring ofthecoalandgasindustry
-maintenance ofmine rescue services
-geological survey work
Theissueofestablishing acoalindustry stabilization fundisunder consideration aswellastheproblem
ofsources offinancing forthisfund.
Memorandum onEconomic Reforms in1995approved bytheSupreme Rada ofUkraine and
supported bytheInternational Monetary Fund andtheWorld Bank andalsoLaw"OntheStateBudget
ofUkraine for1995" donotprovide otherstimulation measures ofeconomy development through direct
subsidies andpreferential taxation.
Within theframework oftheEconomic Reform Program there wasachieved asubstantial
liberalization ofexport through cancellation ofquotas andlicenses. Non-tariff restrictions arestill
valid onlyforgrain andwastes ofprecious metals (until July1,1995). Aliberalized regime ofWT/ACC/UKR/3
Page22
equipment imports where domestic production doesnotsatisfy Ukraine 'sdemand issupported. The
initiation ofother keymechanisms fortheincrease ofexports ofmachine-building products andsome
other sectors ofhightechnology inmachine-building isnotprovided for.
Theprocess ofUkraine 'saccession totheGeneral Agreement onTariffs andTrade andentry
intotheWorld Trade Organization istobecome animportant factor intheprocess ofagricultural reform.
Itisthisprocess ofUkraine 'saccession toGATT/WTO together withfinancial assistance frommajor
international financing organizations, which should become thedecisive factor andthemethodological
basis fortherestructuring oftheagricultural sector. Bythistheeconomic policy oftheGovernment
ofUkraine willreceive auniversally recognized andproven guide todevelop itsagriculture.
Themethods ofdeveloping andimproving theforeign trade aspects ofagricultural policy
according totheprinciples oftheGATT/WTO system arereflected intheGATT Agreement on
Agriculture. Infact,thisAgreement isoneofthefundamental agreements (125Member countries
areparty tothisAgreement) isessentially ofaneconomic nature. Itrepresents theinterest ofallnet
exporters ofagricultural products andtakesintoconsideration many yearsofexperience thedevelopment
oftheagricultural sector of125countries, providing forthedomestic production ofagricultural products
andsupport andprotection forproducers, aswellasagricultural production forexport, ensuring their
access tointernational markets.
Proceeding from theexperience oftheagricultural sectors ofleading Members oftheWTO
andthegenerally accepted principles anddisciplines ofthisorganization, themain conditions for
providing thedevelopment oftheagricultural sector ofUkraine andoccupying anappropriate position
inmarkets are:
- agovernment system ofsupport foragricultural production;
- implementing aneconomically-justified system ofdomestic market protection together with
providing aminimum levelofguaranteed access tothedomestic market forproducts originating
inother countries;
- afunctioning system ofgovernment support andthedevelopment ofagricultural exports
according totheprinciples anddisciplines oftheGATT/WTO system;
- applying aharmonized system ofsanitary andphytosanitary norms.
These aremajor elements oftheGATT/WTO system requirements, without which itcannot
beexpected thatUkraine willobtain theguarantee ofaright toanappropriate market share and
predictable salesofagricultural products intheworld market.
Itisaccepted thattheseconditions arenecessary andobligatory forthefunctioning oftheWTO,
andnaturally, foraccession toGATT andtheAgreement onAgriculture. Yettaking intoaccount the
factthatUkraine hasbarely begun theprocess offundamental economic reform intheagricultural
sector andthatthereisanongoing process ofmarket reforms intheeconomy asawhole, theGovernment
ofUkraine should provide forcertain allowances during theprocess ofaccession andreach the
appropriate understanding withpotential trading partners within theGATT/WTO. Tobemorespecific -
themajority ofmethodologies usedintheUruguay Round andtheireconomic criteria areinconsistent
withthose usedinUkraine andtherefore Ukrainian indicators arenotsuitable forcomparative purposes
todetermine agricultural economic potential. During theyears, known asthebaseperiod interms
oftheUruguay Round, Ukraine wasnotanindependent exporter orimporter andforeign policy was
based onprinciples different tothose usedtoday.WT/ACC/UKR/3
Page23
Taking thisintoaccount, Ukraine 'saccession toGATT/WTO anditsparticipation intheWTO
canbepossible onlywiththedevelopment ofaspecial accession program. Thisisnotarequest for
special exceptions (although thesearealsoneeded) butanindication oftheneedtoconsider realistically
thespecific nature ofUkrainian economic development.
Inthecurrent situation, information onmuch oftheeconomic data,which isusedtodescribe
theagricultural sector invarious countries andtheirexport potential, andisusedtoregulate themarket,
canonlybeobtained inUkraine from conducting further economic analysis. Appropriate datacan
onlybeobtained fromcomparing economic forecasts andtheresults ofthereform process, andusing
adatafor1997-98 asaminimum timeframe foreconomic forecasts. Thus, intensive economic analysis
ofagriculture andrelated government programs, which takestheabove intoaccount andwhich isbased
ontherules andprovisions oftheAgreement, ismost important forUkraine. Thiswillallow the
establishment oftheappropriate framework (legislative andeconomic) needed todevelop astrategy
fornegotiations onUkraine 'saccession totheAgreement onAgriculture oftheUruguay Round of
GATT andtodevelop strategies toobtain economically-justified concessions andspecial exceptions
fortheperiod ofaccession, fortheperiod required foreconomic stabilization andsuccessful
implementation ofagricultural reform. Also, Ukraine isready toparticipate innegotiations onthe
following aspects oftheAgreement attheinitial stage ofnegotiations andhasnoreservations about
doing so,itisalsoimportant thatthere beallocated acertain timeperiod forthedevelopment of
regulatory documentation, which areharmonized withinternational standards, certifying agricultural
products, andensuring adherence tosanitary andphytosanitary rules andregulations.
TheGovernment hasgreatinterest inpreparation andimplementation ofgovernment domestic
support programs toagricultural producers according totheprinciples andprovisions oftheAgreement
onAgriculture, inparticular:
- developing, inthefuture, aprogram ofsupport foragricultural producers;
- defining thereallevelofgovernment subsidies toagriculture, andanalysing economic data
onagricultural support for1992-1994, defining thelevelofdomestic support, which istobe
regarded asthebasic levelbytheWTO forpurpose ofaccession andasabaselevelforfurther
reductions;
- thepreparation ofproposal forthedevelopment ofexport subsidy programs, conducting an
analysis ofthecurrent system ofexport support anditscompatibility withtherequirements
oftheAgreement;
- developing parameters forsupport andexport subsidy inorder tobegin negotiations forthe
transitional period before reductions areimplemented.
IV. OTHER POLICIES
(a) Agriculture
Question 15n.
Asstated intheWorking Party, Australia believes thatmuch more information isrequired about the
Government 'spolicy reorientation andbothregulation andderegulation intheagriculture sector. This
willneedtoencompass privatization ofbothlandandofproduction andprocessing capacity, remaining
statetrading organizations andthewayinwhich theyareoperating inindividual product areas, the
extent towhich production andexport plans continue toexist, thegovernment 'sexisting programsWT/ACC/UKR/3
Page24
andfuture intentions toproviding assistance tofarmers (large andsmall scale) andtofarmprocessing
industries,particularlyinthecontextoftheGovernment'sexportambitionsandimportreductionprogram
asitrelates toagriculture. Wewould alsoliketoknow more about theso-called "agro-industrial
complex"; anditsrelationship withtheMinistry ofAgriculture.
Reply 15n.
SeeReply 3n.
(b) Industrial policy
Question 16n.
Document WT/L/20 makes several references tothetransformation ofthemilitary industrial complex
without providing needed clarification ofthisprocess. Could Ukraine elaborate onthereorientation
ofindustrial policy, including therolestoberetained bytheGovernment. Further details ofindustrial
assistance programs bysector arealsorequired.
Reply 16n.
Anintegralpartofeconomyreformingiscancellationofsystemofstateordersandstatecontracts
(including those concluded forforeign andtrade ends). Exclusion isstrictly outlining ownneeds of
theGovernment which shallbesatisfied through tenders. TheResolution oftheCabinet ofMinisters
ofUkraine No312ofApril 28,1995, "OnProcedure ofProducts Purchases Organization forState
Needs" established thatnotlessthan50percentofproducts purchases (fulfilment ofworks, services)
including agricultural products purchase thatisconcluded bystatecustomers through budget funds
arecarried outoncompetitive base.
ItisproposedforReformProgramfulfilmenttokeepfundstransferstoenterprisesofagricultural
products processing, within theframework ofbudget assignments; torevise issue oncredit emission
provided bythePresidential Decree ofMay22,1995, related todebtbetween enterprises; tokeep
fromgranting funds fordebtinteroffset between enterprises andtopermit enterprises directly toconsider
thisissue including theclose ofthose, which arebankrupt.
(c) Services
Question 17n.
AspartofthesupplementarydocumentonServicesandTRIPSwhichUkrainehasundertakentoprovide,
Australia would begrateful ifthefollowing areas could becovered indetail onservices. Firstly,
regarding theactivities which canonlybecarried outbyentities licensed bytheCabinet ofMinisters,
areforeigners entitled toparticipate inthese sectors andunder whatrelevant regulatory frameworks?
Secondly, whether inthelightoftheresponse toQuestion 249itwould becorrect toassume thatUkraine
would intend tosubmit adraftschedule ofcommitments inservices containing nolimitation onmarket
access andnational treatment formost ofitsservices sectors. Thirdly, werequire anoutline ofthe
regulationscoveringimportsoffinancial,telecommunications,health,educationandprofessionalservices.
Reply 248onlytouched uponsomeprofessional services sothedocument should cover theotherservices
sectors wehaverequested. Forprofessional services, accountancy, engineering andlegalservices in
particular should becovered. Wewould alsowanttoknow theregulatory conditions governing the
participation offoreign firms inallofthese sectors. Fourthly, supplementary information covering
thetemporary entry andstayofexecutives andsenior managers asinfra-corporate transferees,
independent executives, service sellers andspecialists isrequired.WT/ACC/UKR/3
Page25
Reply 17n.
TheMinistry ofStatistics ofUkraine processes thedatafromstatestatistics reports onforeign
trade.
According tothereports submitted byUkrainian enterprises, agencies andorganisations, the
totalvolume ofgoods exported,including rawmaterials fortheproduction ofexports andtheproducts
obtained fromthem, in1994, was19,304 mln.US dollars, (inFOBterms) thevolume ofimports was
10,746.2 mln.US dollars (inCIFterms).
Thetotalvolume ofservices exported in1994was1334.3 mln.USdollars andimports were
309.4 mln.US dollars Theabove figures include exports ofconstruction services (15.2 mln.US dollars),
whereas imports were 33.6mln.US dollars.
Thetotalincrease inthevolume ofdirect foreign investment intoUkraine during 1994 was
147.5mln.USdollarsAnalogously,theincreaseinUkrainianinvestmentsdirectlyintoforeigneconomies
during thatperiod was$5.4million.
TheMinistry ofStatistics mayprovide theabove information quarterly. Dataforthefirstquarter
of1995 shallbecompiled inMay1995.
Dataonthepurchases made in1994 onthenational, regional, andlocallevels, which were
financed fromthestatebudget, aswellasonthebudgetary planning forthesepurchases in1995, should
berequested from theMinistry ofEconomy andtheMinistry ofFinance ofUkraine.
Thepercentageofcommunicationservicesinthegrossdomesticproduct(GDP)was0.78percent
in1993, 1.43percentin1994, andnodatayetforthefirstquarter of1995.
Thepercentage ofpersons employed inthecommunications sector from thetotalnumber of
persons employed was0.61percentin1993, and0.65percentin1994.
Revenues from telecommunications services:
Revenues inbillion
karbovantsi: 1994 Firstquarter of1995
Long-distance calls 3,467 322.7
International calls 2,236 160.2
Thebalance ofpayments:
_________________________________________________________________________________
Balance ofpayments 1994 1995
(inmillions of$) payments revenues +/- payments revenues +/-
communications services 111.48 145.03 +33.55 173.82 174.83 +1.01
_________________________________________________________________________________
Thevolumes andtypes offoreign investment inthetelecommunications sector:
- During 1993-1995 almost 100million USdollars were invested inthedevelopment ofthe
communications sector. (Fortheconstruction ofinternational communications stations, longWT/ACC/UKR/3
Page26
distancedigitalrelaystationsfor14oblastsinUkraine,cellularcommunicationsfor11Ukrainian
oblasts).
- A$53.125 million USloanwasreceived from theEuropean Bank forReconstruction and
Development (ITUR Project).
AccordingtothedirectivesoftheComplexProgramfortheEstablishmentofaCommonNational
Communications System, theprivate sector inthecommunications industry should increase; licences
willbeissued fornewtypes ofcommunications services; foreign investment willbeencouraged; and
thestatesector willbereduced accordingly.
1. TheUkrainian Automobile Corporation renders thefollowing services:
- maintenance andrepair ofCIS-made automobiles aswellasToyota, Mercedes Benz, andNissan
automobiles;
- ensuring thesafety ofvehicles inparking lots;
- valuation ofvehicles withrespect tonatural depreciation andtechnical condition, including
collision damage;
- rendering assistance inthedelivery ofvehicles needing repairs toservice stations.
2.Thevolume ofservices rendered in1994 was78,297million krb.in1993 -5,944.7 million
krb.(VAT notincluded).
Addition to1):
(f)airport passenger service, cargo processing service, mail,andbaggage service; (g)involving aviation
inother branches ofeconomic activity.
Addition to2).Revenues from main operations in1994 were 4,618 billion krb.In1993, revenues
were-455billion krb.. Nottaking price indexation andtariffs intoaccount, revenues for1994 have
increased tenfold incomparison torevenues for1993.
Addition to3).TheInternational Convention onCivil Aviation (Chicago, 1994); Aviation Code of
Ukraine, Aviation Rules andStandards.
Addition to4).Notexpected inthenearfuture.
Inouropinion, itwould beimportant toinclude arepresentative oftheStateAirTransportation
Department ofUkraine totheWorking Party ofWTO.
Theenterprises which arepartoftheCorporation provide services, basically, tosupply the
needs ofconsumers.
There areover100stores selling construction materials inthisbranch ministry andmany of
them organize deliveries forpurchased materials andalsotheirassembly andinstallation.
Withtheaimofsatisfying consumer needs, theproportion ofmassconsumer goods produced
wasincreased, suchasroofing tiles, thermal andsound insulating linoleum, vaised printwallpaper,
glassforvarious makes ofautomobiles including imported automobiles, setsofbathroom fixtures and
plumbing supplies.WT/ACC/UKR/3
Page27
Establishing limits onemissions anddumping ofpolluting substances andonthedisposal of
wastes according totheCabinet ofMinisters ofUkraine Decree No.18oftheJanuary 13,1992 "On
ApprovingProceduresforDeterminingandLevyingPaymentsforEnvironmentalPollutionandProvisions
ontheRepublican Non-Budgetary Fund forEnvironmental Protection" andthetemporary instruction
"OnProcedures forDeveloping, Establishing andReviewing andalsoReporting oftheLimits on
Emission andDumping ofPolluting andtheDisposal ofWastes".
Carrying outanenvironmental assessment according totheLawofUkraine "OnEnvironmental
Assessment", which regulates theimplementation ofthestateenvironmental assessment ofallprojects
irrespective ofwhether theyaredeveloped andimplemented bydomestic orforeign firms.
V. BILATERAL AND FREE-TRADE AGREEMENTS
Question 18n.
Asstated intheWorking Party, Australia considers thatUkraine willhavedifficulty justifying some
ofitspreferential trade under either Article IorArticle XXIV oftheGATT. Given thatUkraine has
several suchpreferential trade agreements withneighbouring countries which arealsonotmembers
oftheWTO andtherefore these agreements havenotbeenreviewed bytheWTO, Australia considers
thatthefreetrade agreements towhich Ukraine isparty should benotified totheAccession Working
Party. IfUkraine wastocontinue granting selective orasymmetrical tariff preferences under the
framework ofbilateral agreements which fallshort ofbeing fullfreetrade agreements intheGATT
Article XXIV sense, itwould beinbreach ofArticle IoftheGATT. Itistherefore necessary that
wehavetheopportunity toexamine theextent towhich thismaybethecase.
Reply 18n.
TheFreeTrade Agreement between Ukraine andRussia came intoeffect on21February 1994.
According tothisAgreement theParties donotapply duties oranyequivalent charges ortaxes,
withtheexception ofgoods, towhich thenational legislation onquotas andlicensing aswellasexport
tariff regulations apply.
During theperiod thathaspassed since theAgreement came intoforce, Ukraine andRussia
havesubstantially liberalized theirlegislation asfarastheforeign trade isconcerned.
Russia hasabolished non-tariff export regulations andinUkraine there areonlythree groups
ofgoods subject toquotas andlicensing.
RussiahasnotyetabolisheddutyonexporttoUkrainebuttheAgreementontheImplementation
ofFreeTrade signed onFebruary 8,1995 between theGovernment ofUkraine andtheGovernment
ofRussian Federation, provides fortheabolition ofexceptions which existatthepresent time, instages
(quotas andlicensing onthepartofUkraine andtariff export regulation onthepartofRussia).
Neither party applies import duties togoods produced ororiginating fromtheterritory ofthe
other Party.
Ingeneral,theFreeTradeZone,establishedwithinthecustomsterritoriesofUkraineandRussia,
isincompliance withtheprovisions ofArticle XXIV ofGATT.WT/ACC/UKR/3
Page28
AsfarastheAgreement onFreeTrade between Ukraine andBelarus isconcerned ithasnot
come intoeffect since ithasnotbeenratified bythelegislative organs ofbothParties.
TheAgreement onEstablishing theRussia-Belarus-Kazakhstan Customs Union hasnotbeen
ratified byanyMember tothisAgreement.
UponthisAgreementcomingintoeffectandbeingimplemented,thenegotiationprocessbetween
Ukraine, ontheonehand, andtheCustoms Union, ontheother hand, ontheAgreement onFreeTrade
willcommence andtheAgreement withRussia willbeannulled.
Uzbekistan, Kirgizstan andKazakhstan havesigned anAgreement onEstablishing anEconomic
Union, which foresees theestablishment instages ofaFreeTrade Zone, Customs Union etc.Sofar
ithasdealtonlywiththeimplementation ofthefirststageoffreetrade. Therefore therearenoobstacles
forfreetrade between Ukraine andUzbekistan atthepresent time.
Intergovernmental agreements onfreetrade between theGovernment ofUkraine andthe
governments oftheRepublics ofUzbekistan, Kazakhstan were signed onDecember 29,1994, in
Tashkent andon17September 1994 inAlma-Ata respectively.
These agreements constitute along-term strategic course inthepromotion oftradeandeconomic
relations between Ukraine andtheRepublics ofUzbekistan andKazakhstan. Their foundation waslaid
bytheMultilateral Agreement onEstablishing FreeTrade Zone, which wassigned bytheHeads of
theState ofCIScountries.
Inaccordance withUkrainian legislative procedures theabove-mentioned agreements aresubject
toratification bytheSupreme Rada ofUkraine.
TheDepartment ofTerritorial Economic Relations withCentral Asian countries andthe
Transcaucasus hasprepared andsubmitted thedocuments (explanatory notes andtheletters of
concordance withrelevant Ukrainian ministries anddepartments) concerning further ratification of
theAgreement onFreeTrade between theGovernment ofUkraine andtheGovernment oftheRepublic
ofUzbekistanandtheAgreementonFreeTradebetweentheGovernmentofUkraineandtheGovernment
oftheRepublic ofKazakhstan, on18January 1995.
Inouropinion thesigning oftheTrilateral Agreement ontheJoint Customs Union between
theRussian Federation, theRepublic ofKazakhstan andtheRepublic ofBelarus, maycause the
introduction ofsupplementary material andchanges totheAgreement onFreeTrade between the
Government ofUkraine andtheGovernment oftheRepublic ofKazakhstan.
Note: TextoftheAgreements onFreeTrade between theGovernment ofUkraine andthe
Governments oftheRepublics ofKazakhstan andUzbekistan areenclosed.
Question 19n.
Alsoasstated intheWorking Party, Ukraine would beexpected toabide unconditionally byArticle
IoftheGATT inrespect ofWTO members withwhich itdoesnothavefullfreetrade agreements
covered byArticle XXIV. Inthatcontext, whatsteps willUkraine taketoensure thatitextends its
"MFN (beneficial)" tariffrate(column 2)toIsrael andSouth Africa astoother WTO members, before
acceding totheWTO?WT/ACC/UKR/3
Page29
Reply 19n.
Atthepresent timetheAgreements onTrade andEconomic Cooperation withIsrael andthe
Republic ofSouth Africa havebeensigned butnotratified bytheSupreme Rada ofUkraine. The
establishment oftheMFN willfollow theirsigning.
Question 20n.
Please provide anoverview paper thatsetsoutprogress onprivatization toMarch 1995, including
relevant figures citedbyMme Pavlikovska on28/2/95 withreference to:
-small enterprises
-medium enterprises
-large-scale enterprises
Additional information isalsorequested onhowprivatization isproceeding, withregard to:
-Agricultural-Industrial enterprises
-Industrial conglomerates andenterprises
-Farming
-Retail andwholesale merchandise enterprises
-Services sector enterprises
Reply 20n.
SeeReply 3n.
Question 21n.
Please provide details onthefollowing elements oftheprivatization program:
- theshare voucher system or'certification drive';
- taxprovisions/exemptions applied toprivatized enterprises;
- loanassistance forprivatized enterprises;
- existing bankruptcy legislation;
- liabilities andacquired debt/assets ofnewly privatized enterprises;
- management ofprivatized enterprises and,inparticular, stateparticipation inthe
'management entities 'ofenterprises intheprocess ofprivatization;
- productionplansandtargetsfornon-privatized,privatizedandmixedcapitalenterprises.
Reply 21n.
SeeReply 3n.
Question 22n.
Please summarize themainfeatures ofthefourresolutions anddraftlawscitedonpage7ofWT/L/20
which areintended toimplement theResolution oftheSupreme Rada of29July1994, "OnPerfection
oftheMechanism ofPrivatization andStrengthening ofControl overitsImplementation".WT/ACC/UKR/3
Page30
Reply 22n.
SeeReply 3n.
Question 23n.
Please provide acomprehensive listofAgriculture enterprises (private, stateandcollective) involved
inforeign trade, including details onboththetypes andvolume ofproducts exported.
Reply 23n.
About3,757state-ownedtradeandpubliccateringenterpriseshavebeenprivatizedasofOctober
1,1994.Duringthesameperiod179state-ownedagriculturalenterpriseswereprivatizedwhichaccounted
for13percent oftheirtotalnumber. Ahigher rateofprivatization wasobserved inthefoodindustry.
Thus, inthemilkcanning industry, cigarette, vegetable oilandbeerproduction, approximately half
oftheenterprises havebeenprivatized.
Thesystem oftheMinistry ofAgriculture andFood includes thefollowing statetrading
organisations:
Ukrtekhagroservis exports -agricultural products
imports -agricultural equipment -70%
-fuelandlubricants -20%
Ukrprodresursyrovyna exports -dairy andmeatproducts
imports -material andtechnical supplies fortheprocessing industry -30%
Ukragrokhim exports -agricultural products
imports -herbicides andpesticides -70%
91industrial complexes wholesaling andretailing fruitandvegetables:
exports -potatoes
-fruit
-vegetables
imports -fruit-5%
-vegetables
In1995, 18of109fruitandvegetable complexes wereprivatized. Therestareplanned tobe
privatized bythe31.12.1996.
Theconcern Ukrtekhagroservis andtheassociation Ukragrokhim areplanned tobeprivatized
through auction bytheyear2000.
AlsoseeReply 3n.