Ukraine joined the WTO on 16 May 2008. It is a party to the Marrakesh Agreement establishing the World Trade Organization (the “WTO Agreement”) and all multilateral agreements included in the annexes thereto, including the Trade Facilitation Agreement. In 2016, Ukraine joined the Government Procurement Agreement, a WTO plurilateral agreement.
Since 2020, Ukraine has been participating in a Multi-Party Interim Appeal Arbitration Arrangement under Article 25 of the DSU (MPIA), a dispute settlement procedure agreed upon by WTO members to secure an appeal mechanism among the parties to this arrangement until the WTO Appellate Body becomes operational.
Ukraine is currently a party to 18 free trade agreements (FTAs) covering 47 states, in particular:
In the early 1990s, before the CIS FTA, Ukraine had concluded bilateral FTAs with seven CIS member states (Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Moldova, Tajikistan, and Uzbekistan). These FTAs are still in force and should be terminated.
Most of the FTAs to which Ukraine is a party are bilateral agreements, except for the CIS FTA, which is plurilateral. All existing Ukrainian FTAs can be subdivided into two broad categories: “old generation” FTAs and “new generation” FTAs.
“Old generation” FTAs (namely, bilateral FTAs with the CIS member states and with Georgia, Azerbaijan, Turkmenistan and Macedonia) were concluded before Ukraine acceded to the WTO and have the following distinctive features:
“New generation” FTAs (including the UK–Ukraine FTA, the Ukraine–Israel FTA, the EU–Ukraine FTA, the Canada–Ukraine FTA, the EFTA–Ukraine FTA, the CIS FTA and the Ukraine–Montenegro FTA) have been concluded by Ukraine in the past ten years and were built on the existing framework of WTO commitments and obligations, often going beyond them. The scope of coverage of such agreements is wider and, depending on the agreement, covers areas such as trade in services, intellectual property, investment, government procurement, trade facilitation, e-commerce, competition, movement of capital, labour and dispute settlement mechanisms. Moreover, such agreements contain specific rules and procedures that allow for meaningful operation of the free trade areas (eg, extensive rules of origin, cumulation mechanisms, notification procedures, and detailed dispute settlement mechanisms). “New generation” FTAs also tend to contain detailed schedules of concessions indicating the level of liberalisation to be provided on a code-by-code basis.
In 2018, Ukraine joined the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (the “Pan-Euro-Med Convention”), which established common rules of origin among the countries with which the EU had FTAs and customs unions and allowed for the application of diagonal cumulation between the Pan-Euro-Med members.
In addition, Ukraine currently benefits from the Generalised System of Preferences (GSP) schemes of Japan and Canada.
The Japanese GSP Scheme covers 3,715 products (424 agricultural items and 3,291 industrial items). Agricultural items are subject to various tariff reductions, including duty-free treatment. Most industrial products are given duty-free treatment. The current GSP Scheme is effective until 31 March 2031.
Ukraine is also among the beneficiaries of the Canadian GSP Scheme, under which the applicable rates range from duty-free rates to reductions of the general most-favoured nation (MFN) rates. Certain products are excluded from the Scheme, such as chemicals, textiles and apparel. According to the current version of the Canadian Customs Tariff, sections related to the general preferential tariff (applied under the GSP Scheme) are valid until 31 December 2024. GSP preferences are operating in parallel with the Canada–Ukraine FTA that entered into force in 2017.
Ukraine is also listed as a beneficiary under the US GSP Scheme; however, the US GSP Scheme expired on 31 December 2020. Although the US GSP Scheme has not yet been renewed, such renewal is envisaged by both the Senate’s US Innovation and Competition Act and the House’s America COMPETES Act.
In response to the war, some Ukrainian trading partners have granted additional tariff preferences for Ukrainian exports, namely:
(1) commencing 4 June 2022, for a period of twelve months, the EU has unilaterally suspended import tariffs, entry price system, tariff quotas, anti-dumping and safeguard duties (Regulation (EU) 2022/870 of the European Parliament and of the Council of 30 May 2022 on temporary trade-liberalisation measures supplementing trade concessions applicable to Ukrainian products);
(2) commencing 9 June 2022, for a period of twelve months, Canada has unilaterally suspended customs duties, anti-dumping, safeguard, and countervailing measures (Customs Notice 22-12: Ukraine Goods Remission Order);
(3) commencing 8 July 2022, for a period of twelve months, the UK has suspended import tariffs (Agreement No 1 in the form of an exchange of letters between Ukraine and the United Kingdom of Great Britain and Northern Ireland on amendments to the Agreement on Political Co-operation, Free Trade and Strategic Partnership between Ukraine and the United Kingdom of Great Britain and Northern Ireland);
(4) commencing 4 July 2022, for a period of twelve months, Australia has suspended import tariffs (Australian Customs Notice No 2022/32);
(5) from 1 June 2022 until 1 June 2023, the US has suspended an additional 25% ad valorem duty applied to steel products (Proclamation: Adjusting Imports of Steel into the United States No 10403).
On 3 February 2022, Ukraine signed the FTA with Turkey. Now the ratification of the FTA by both parties is expected.
Ukraine is currently negotiating amendments to the effective FTAs with some trading partners. In particular, Ukraine has agreed with Moldova to replace current rules of origin with those set by the Pan-Euro-Med Convention. Moreover, Ukraine has agreed with Macedonia to replace the current rules of origin with the rules applicable under the Pan-Euro-Med Convention and to set out some additional tariff preferences for Ukraine. Both arrangements are pending ratification. Moreover, the Government of Ukraine has announced that other negotiations are currently being conducted, eg, on the inclusion of trade in services chapter into the FTA with Canada, the FTA with the United Arab Emirates and the Digital Trade Agreement with the UK.
Given the losses caused by the war, Ukraine is trying to reach arrangements (at least temporarily) for the fullest trade liberalisation possible. This is important to ensure the vitality of Ukrainian exports, which are especially crucial for the Ukrainian economy in the current circumstances. Since the Ukrainian market has considerably decreased, exports could be the only viable option for ensuring work for Ukrainian enterprises.
In June 2022, Ukraine was granted EU candidate status. After fulfilling the required conditions by the end of this year, Ukraine will start negotiations on its membership with the EU. This process will result in considerable amendments to the current legal environment in Ukraine, including in the trade-related field.
The primary legal act regulating customs matters in Ukraine is the Customs Code of Ukraine No 4495-VI dated 13 March 2012.
The State Customs Service of Ukraine administers and enforces customs laws and regulations in Ukraine. It is responsible for the following in particular:
Under Article 29 of the Law “On Foreign Economic Activity” No 959-XII dated 16 April 1991 (the “Foreign Economic Activity Law”), Ukraine may introduce trade restrictions in response to discriminative or unfriendly actions by a state that is not a WTO member (anti-discriminative measures).
Ukrainian legislation does not provide for an exhaustive list of discriminative or unfriendly actions that may lead to the imposition of anti-discriminative measures. The Foreign Economic Activity Law states only that actions limiting legal rights and interests and deteriorating the position of Ukrainian entities engaged in foreign economic activities compared to foreign entities are considered discriminative.
Anti-discriminative measures are imposed by the Interdepartmental Commission on International Trade (the “Commission”) following an investigation conducted by the Ministry of Economy of Ukraine (the “Ministry”). The Commission is responsible for the key decisions during proceedings, while the Ministry is responsible for procedural issues. The procedure governing the anti-discriminative investigation is established by the Resolution of the Cabinet of Ministers of Ukraine No 2120 dated 22 November 1999.
An anti-discriminative investigation is initiated following the submission of an application by an entity engaged in foreign economic activities or an executive agency. Within 60 days of receiving the application, the Ministry must conduct an anti-discriminative investigation to determine the existence of discriminative or unfriendly actions that are causing injury or a threat thereof to the state and/or Ukrainian entities engaged in foreign economic activities.
Based on the results of an anti-discriminative investigation, the Ministry drafts a report with the relevant recommendations and submits it to the Commission on the decision to be adopted.
According to Article 29 of the Foreign Economic Activity Law, anti-discriminative measures can be introduced in the following forms:
Ukraine has recently applied several anti-discriminative measures against Belarus.
See 5. Anti-dumping and Countervailing (AD/CVD) for the discussion related to safeguard measures.
On 31 August 2022, Ukraine adopted the Law of Ukraine “On Joining the Convention on the Common Transit Procedure”, allowing the movement of goods between 35 countries: EU member states, European Free Trade Association (EFTA) countries, Turkey, Northern Macedonia and Serbia. The said Convention has entered into force for Ukraine since 1 October 2022.
As a result of the war, Ukraine has adopted many different regulations, including in the field of customs. For instance, from April until the end of June 2022, Ukraine suspended the application of import tariffs for nearly all products, except for ethyl alcohol and other alcoholic distillate, alcoholic beverages, beer (except kvass “live fermentation”), tobacco, tobacco products, industrial tobacco substitutes and liquids used in electronic cigarettes. The said elimination of duties has not applied to goods originating in or imported from a country recognised as the occupying power and/or the aggressor state in respect of Ukraine. However, since 1 July 2022, all import duties have been returned, except for products imported for humanitarian purposes.
Moreover, at the beginning of the war, Ukraine simplified many non-tariff requirements, eg, in part of tariff barriers, sanitary and phytosanitary measures. However, starting from the beginning of September 2022, Ukraine has returned certain non-tariff requirements. Therefore, it is crucial to constantly monitor relevant amendments.
Taking into account that in June 2022 Ukraine was granted EU candidate status, the completion of the harmonisation of Ukrainian customs regulation with the EU legislation, primarily the EU Customs Code, will be the key development in the customs field.
Sanctions are applied in Ukraine based on the Law “On Sanctions” No 1644-VII dated 14 August 2014 (the “Sanctions Law”).
According to the Sanctions Law, sanctions can be imposed on the following matters:
The list of sanctions that can be imposed under the Sanctions Law includes:
As a result of the war, in addition to sanctions, Ukraine has introduced many other restrictions applicable to Russia and Belarus. For instance, the Law of Ukraine “On Major Principles of Confiscation in Ukraine of Objects of Property Rights of the Russian Federation and its Residents” No 2116-IX dated 3 March 2022 enables confiscation of property belonging to the Russian Federation and its residents in favour of the Ukrainian state. One more example is the Law of Ukraine “On amending the Law of Ukraine ‘On Medicines’ regarding limiting the circulation of medicines whose production is located on the territory of the Russian Federation or the Republic of Belarus” of 22 May 2022 No 2271-IX. Law No 2271-IX permits refusal of the registration of medicines or termination of the issued registration certificates of medicines if any stage of production of such medicines is performed on territory within the Russian Federation or Belarus.
As the primary legal act governing sanctions in Ukraine, the Sanctions Law sets out the general conditions under which sanctions may be imposed and the types of sanctions, designates the persons against whom sanctions may be imposed, and so on.
Decisions to introduce, abolish and/or amend sanctions are enacted by decrees of the President of Ukraine.
The National Security and Defence Council of Ukraine (NSDCU) is responsible for administering and enforcing sanctions in Ukraine.
The initiative to impose sanctions under the Sanctions Law can be taken by the Parliament of Ukraine, the President of Ukraine, the Government of Ukraine, the National Bank of Ukraine, and the Security Service of Ukraine. Notably, to ensure the sanctions’ efficiency in the course of the war, the Interdepartmental working group for the performance of state sanction policy has been created by the Resolution of the Cabinet of Ministers of Ukraine No 967 of 30 August 2022. The major role of the working group is to monitor the efficiency of the sanctions applied and suggest sanctions to be applied. Based on these proposals, the NSDCU adopts decisions to introduce, abolish and/or amend sanctions; these decisions are enacted by decrees of the President of Ukraine.
The Sanctions Law distinguishes between Personal Sanctions and Sectoral Sanctions. Personal Sanctions may be introduced, inter alia, against a foreign country, foreign citizens, foreign legal entities and entities engaged in terrorist activities. Sectoral Sanctions may be imposed on an unlimited number of persons who conduct certain types of activities. No Sectoral Sanctions have yet been introduced in Ukraine.
From October 2021, the information on sanctions imposed in Ukraine is consolidated in the “List of Individuals and Legal Entities to whom Sanctions (Restrictive Measures) are Applied”, which is available at sanctions-t.rnbo.gov.ua. The NSDCU administers this database based on the decrees of the President of Ukraine.
In response to the full-scale Russian invasion of the territory of Ukraine, a new database of sanctions has been introduced – sanctions.nazk.gov.ua. This database is a unified resource, providing information on (i) the natural persons and legal persons upon whom sanctions have already been imposed by either the EU, the United Kingdom, the United States, Canada, Switzerland, Australia, Japan, New Zealand or Ukraine; and (ii) the natural persons and legal persons upon whom sanctions have not yet been imposed, but there are strong grounds for applying such sanctions. This database is a joint project of the National Agency on Corruption Prevention and the Ministry of Foreign Affairs of Ukraine. It is worth emphasising that there are currently (December 2022) many guidelines posted on the aforementioned website, explaining which individuals and legal entities the sanctions shall apply to.
Ukraine does not maintain any comprehensive country-based or region-based sanctions. It has introduced personal sanctions against many persons and entities related to the Russian Federation (residing/registered in various countries) but not against the country as such. In addition, certain comprehensive trade-restrictive measures have been imposed against products originating in the Russian Federation (see 3.7 Other Types of Sanctions).
In addition to sanctions imposed under the Sanctions Law, trade restrictions may be introduced based on Article 29 of the Foreign Economic Activity Law. In particular, in response to discriminative or unfriendly actions by a state recognised by the Parliament of Ukraine as an aggressor and/or an occupier, the government of Ukraine is entitled to impose trade restrictions (retaliatory measures) against such state.
The respective restrictions can be introduced in the following forms:
Since 2016, and based on Article 29 of the Foreign Economic Activity Law, the Cabinet of Ministers of Ukraine (CMU) has been introducing the following trade restrictions against the Russian Federation.
Since the commencement of the war, Ukraine has applied many different trade-related restrictions, namely:
Ukraine does not impose secondary sanctions.
Ukrainian laws and regulations do not provide for penalties for violating the Ukrainian Sanctions Law. At the same time, compliance with sanctions is strictly monitored by the state authorities and other agencies (including the Security Service of Ukraine, the State Customs Service of Ukraine, the National Bank of Ukraine, notaries and the state registrar).
In this regard, first, it is hardly possible to avoid compliance with the sanction regime within the jurisdiction of Ukraine. Second, in the case of any co-operation with sanctioned persons (eg, entering into business operations), the sanctions will most probably be applied against such co-operating persons.
Sanctions licences are not available in Ukraine.
Although there are no specific legal acts regulating compliance standards with the Sanctions Law, compliance with sanctions is strictly monitored by the state authorities (including the Security Service of Ukraine and the State Customs Service of Ukraine).
In the course of enforcement of the Sanctions Law, Ukrainian banks are requested, inter alia, to submit the following information to the National Bank of Ukraine:
Ukrainian law does not prohibit adherence to other jurisdictions’ sanctions. Moreover, Ukraine is currently taking steps to synchronise its sanctions with similar measures applied by the EU, the United Kingdom, the United States, Canada, Switzerland, Australia, Japan, and New Zealand. For these purposes, Ukraine has created a special site: sanctions.nazk.gov.ua.
The current sanctions regime was introduced in Ukraine in 2014 to respond to the annexation of Crimea and armed aggression in the Eastern part of Ukraine. Thus, during the first several years of the current sanction regime, sanctions were introduced in Ukraine mostly against Russian individuals or persons related to the events in Crimea and the Eastern part of Ukraine.
Since 2015, and until 24 February 2022, Ukraine has applied sanctions more actively than before. Particularly, sanctioned persons (legal entities and private individuals) were not only from the Russian Federation (as it was before) but also from Ukraine and many foreign countries (the British Virgin Islands, Estonia, Georgia, the UK, Cyprus, Finland, France, Hungary, Hong Kong, the Kyrgyz Republic, Lithuania, Luxembourg, Moldova, the Netherlands, Panama, Poland, Portugal, Russia, Singapore, Syria, Switzerland, the UAE and the USA). Several years ago, new sanctions were introduced two or three times per year. In contrast, about 20 decisions with sanction lists were enacted in 2021. Different enforcement authorities have started applying sanctions in practice more efficiently and more actively: eg, customs authorities refuse customs clearance declared by persons subject to sanctions, and notaries refuse to notarise translations involving persons covered by sanctions.
Since the beginning of the war, Ukraine has considerably revised its sanction policy. The sanctions have been defined by the President of Ukraine as one of the most important vectors of Ukraine’s external policy during the Russian aggression.
First of all, Ukraine has revised its sanction legislation to make it as practically efficient as possible.
Different Ukrainian authorities have started to apply sanctions more actively and efficiently. In particular, at the beginning of October 2022, Ukraine applied sanctions to about 3,800 persons and legal entities.
To apply sanctions more efficiently, Ukraine has even created a special Interdepartmental working group for the performance of the state sanction policy. This working group has already elaborated the concept of the state sanction policy soon to be approved by the NSDCU.
Moreover, a special site has been created –sanctions.nazk.gov.ua – to compile information on all sanctions applied in Ukraine and around the world, as well as on individuals and legal entities that could be subject to sanctions.
Another important trend is the application of such type of sanctions as confiscation of the property belonging to the Russian Federation, the residents of the Russian Federation and to the individuals and legal entities subject to sanctions. At the beginning of October 2022, Ukraine announced that about 900 different objects would be confiscated shortly.
Ukraine will apply more and more sanctions as well as other restrictions against individuals and legal entities somehow related to Russia and Belarus, and against individuals and legal entities facilitating the war, including those who have been directly financing the war to those who have been justifying the war. Moreover, more property of such individuals/legal entities will be confiscated in favour of Ukraine to further compensate for the damage caused by the war and to rebuild Ukraine.
Ukraine is a member of the following international export control regimes:
To protect national security interests and ensure compliance with its international obligations, Ukraine maintains state control over international transfers of military and dual-use goods.
The Law of Ukraine “On State Control over International Transfers of Military and Dual-Use Goods” No 549, dated 20 February 2003 (the “State Export Control Law”) is the primary legal act governing export control in Ukraine.
The State Export Control Service is the authority responsible for state export control of military and dual-use goods.
Persons exporting or importing products for military purposes and dual-use goods are subject to export controls.
Ukraine does not maintain a list of restricted persons.
Ukrainian export controls regulate:
The above lists are compiled by the State Export Control Service and adopted by the government of Ukraine.
Depending on the nature of transactions and types of goods exported, special export procedures may apply, such as issuing export permits and conducting state inspections. Apart from military and dual-use goods, the respective export control procedures apply to goods of cultural value, drugs, psychotropic substances and their precursors etc.
In addition, the Law “On Currency and Operations Connected with Currency”, dated 21 June 2018, regulates foreign currency payments involving Ukrainian companies.
Depending on the nature of the violation, type of exported product, intention of the infringer and other factors, a violation of the export control regulations may lead to criminal, administrative and civil liability, including the imposition of fines and revocation/suspension of a permit for international transfers of military and dual-use goods, etc.
For example, the international transfer of goods without a permit from the State Export Control Service amounts to 150% of the value of the transaction (Article 25(1) of the State Export Control Law). Smuggling – that is, the movement of certain goods across the customs border of Ukraine, bypassing customs control (including explosive substances, weapons and ammunition) – is punishable by imprisonment for a term of three to seven years. The same actions committed by a group of persons with prior collusion, by a person previously convicted of this criminal offence, or by a public officer are punishable by imprisonment for a term of 5–12 years and by confiscation of the goods (Article 201 of the Criminal Code).
A permit from the State Export Control Service is required for international transfers of military and dual-use goods, including import and export. For this purpose, an entity transferring military and dual-use goods must be registered at the State Export Control Service. In addition, an entity transferring military goods or goods containing a state secret must obtain such authorisation from Ukraine’s government.
According to the State Export Control Law, based on the recommendations of the State Export Control Service, entities involved in international transfers of goods should establish a system of internal export control. The respective system of internal export control is mandatory for entities transferring military goods or goods containing a state secret. The State Export Control Service assesses the systems of internal export control established by the respective entities, based on which an assessment certificate is issued.
Entities providing international transfers of military and dual-use goods and end-users of such products in Ukraine have strict reporting obligations before the State Export Control Service.
Such obligations include reporting on the end-use of military and dual-use goods subject to international transfers. Such reporting must be supported by documentary evidence confirming the end-use of the respective goods. The State Export Control Service is entitled to conduct inspections to ensure that the end-use of the respective products complies with the declared purposes.
In 2022, as a response to the full-scale invasion by the Russian Federation, the Cabinet of Ministers of Ukraine was authorised to establish a list of goods, the international transfers of which are not covered by the State Export Control Law during the period of martial law on the territory of Ukraine.
In 2021, the Ministry commenced public consultations regarding the amendments to the State Export Control Law. The respective draft law has been elaborated on by the State Export Control Service to, inter alia:
It is expected that the export control regulation in Ukraine may be amended based on the draft law elaborated on by the State Export Control Service (see 4.12 Key Developments Regarding Exports).
In addition to the relevant WTO agreements, trade defence remedies are regulated in Ukraine by the following laws:
The Intergovernmental Commission on International Trade (the “Commission”) is responsible for the adoption of key decisions during AD/CVD and safeguard investigations, including on:
The Ministry of Economy of Ukraine is responsible for all the procedural aspects of an investigation/review, namely:
The application of AD/CVD and safeguards is administered by the Ukrainian customs authorities.
Depending on the type of investigation/review, the following companies are entitled to initiate a review.
Ukrainian law does not stipulate reviews on a regular basis. The relevant companies can petition to initiate a review on an ad hoc basis upon the occurrence of the relevant grounds.
Ukrainian law defines a list of interested parties that may participate in the investigation/review widely, namely:
Any person that has the relevant status – domestic or non-domestic – could be treated as an interested party of the investigation and could participate therein.
In Ukraine, AD/CVD and safeguard investigations have the following stages.
Ukrainian law does not oblige the Ministry to publish its reports. In AD/CVD cases, the Ministry sends reports to all interested parties of an investigation and must consider their commentaries while finalising the reports. In safeguard cases, there is no well-established practice of the Ministry. In some cases, the Ministry sends the report to interested parties; in others, it does not. In any case, a brief overview of the key findings made during a safeguard investigation is published in notices on the investigation termination in Uryadovyy Kuryer.
The relevant Ukrainian laws set out the following general rules for the non-imposition of AD/CVD duties and safeguards as in the WTO.
The AD investigation shall not be initiated in respect of countries with negligible import volumes: ie, if the volume of dumped imports from a particular country is found to account for less than 3% of imports of the like product unless countries that individually account for less than 3% collectively account for more than 7% of imports of the like product.
Safeguards shall not apply to imports from developing countries that are WTO members if the volume of imports from this particular country is found to account for less than 3% of total imports unless the total share of all developing countries that are WTO members collectively accounts for more than 9% of total imports.
CVD investigations shall not be initiated if subsidised imports of the WTO member constitute less than 1% of the consumption volumes in Ukraine and the total imports of all WTO members collectively constitute less than 3% of the consumption volumes in Ukraine. CVD duties shall not apply to the developing country that is a WTO member if the import volumes of such country constitute less than 4% of the total imports of the like products from this country. However, CVD duties shall apply if the import volumes of the said developing countries exceed 9% of the total imports of the like products.
Additional exceptions are set out by the bilateral free trade agreements of Ukraine. Particularly, the CIS FTA sets out that the parties agreed to exclude other parties from the application of safeguards if the importation of the product concerned from such parties does not cause injury to the domestic industry; that is, if the following conditions are simultaneously met:
The EFTA–Ukraine FTA excludes the application of anti-dumping duties between the parties during the first five years of the agreement implementation (ie, starting from 20 September 2012). Thereafter, the parties could reconsider the above provision that has not been made yet. Moreover, the parties shall not apply safeguards to each other if imports of the relevant party do not cause serious injury. At the same time, the agreement is silent on the applicable criteria.
The Israel–Ukraine FTA excludes the application of safeguards between the parties if imports from the relevant party do not cause serious injury: ie, if the growth rate of imports of the relevant party is considerably lower than the growth rate of total imports from all sources.
As for interim, newcomer and accelerated reviews of AD/CVD duties, they shall be conducted only in situations when all relevant circumstances occur and upon a request of the entitled person. In the case of sunset reviews of AD/CVD duties, they shall be conducted every five years, if requested by the domestic industry or by the relevant executive agencies. If not, after a five-year period, the duties will terminate automatically.
As for a review of safeguards to speed up liberalisation, again, it could be initiated at any time when the State Customs Service of Ukraine or the relevant executive agency has justified grounds to initiate a review. An expiry review of safeguards could be initiated by the end of the initial period of application thereof. The relevant law directly sets out that the safeguards shall initially apply for a maximum of four years with a possible further extension. However, in any case, safeguards shall not apply for more than eight years.
Notably, newcomer and accelerated reviews of AD/CVD duties and reviews of safeguards to speed up liberalisation have not been conducted in Ukraine yet. Therefore, it is hardly possible to predict the process of such reviews.
As for sunset and interim reviews of AD/CVD, in practice, the same procedure is applied as set out in 5.6 Investigation and Imposition of Duties and Safeguards. The only difference is the applicable terms – basic investigations could be conducted within 12–18 months, while reviews could take a maximum of 12 months.
Ukrainian law does not precisely define how an expiry review of safeguards shall be performed. In practice, the Ministry tries to follow the same procedure as described in 5.6 Investigation and Imposition of Duties and Safeguards, but such procedure is usually held within a very limited period.
AD/CVD duties and safeguards could be appealed before Ukrainian courts. Notably, the relevant request to challenge the duties shall be submitted within one month after the adoption of the relevant decision by the Commission.
After the commencement of the war, the Ministry suspended all investigations from 28 February 2022 approximately until July 2022. The said suspension resulted in considerable delays in all investigations, reviews and/or the procedures for reviewing new applications. For instance, an anti-dumping investigation related to imports into Ukraine of galvanised steel with origin in China was initiated on 19 December 2020. As of 8 November 2022, it was not terminated – even preliminary disclosure of findings and individual dumping margin calculations were not done. It is worth emphasising that, notwithstanding such considerable delays, there have not been Commission’s decisions to extend basic terms of investigations/reviews as happened before. Therefore, it is unclear what procedural steps are performed by the Ministry in different proceedings.
On 17 and 31 August and 2 November 2022, the Commission conducted its first meetings since the commencement of the war. At the meetings, the Commission, among other procedural decisions, terminated four safeguard investigations (against imports of cheese, three-cone chips, PVC-profile and sodium hypochlorite) without the application of measures. The said decisions have been justified by national interests. Unfortunately, the Commission has not explained what is understood by “national interests”. However, most probably, this means a considerable change in circumstances (eg, some producers, unfortunately, have been destroyed or have lost access to raw materials and, thus, cannot produce the products in question; imports have considerably decreased). Moreover, taking into account the extraordinary nature of safeguard measures, application thereof with such considerable delay will violate Ukraine’s WTO obligations. In particular, for safeguard investigations that were pending when the war started, the investigation periods ended on 31 December 2020 or 30 June 2021. At the same time, as a result of suspension of the proceedings, the measures could be implemented only in December 2022. This means that 18 or 24 months passed between the investigation period and the actual implementation of measures, which is a direct violation of the WTO rules.
At several meetings with different Ukrainian business associations, the Ministry’s representatives have confirmed that all imports considerably decreased because of the war. Therefore, in the near future it will barely be possible to initiate safeguard investigations in Ukraine. As for anti-dumping cases, the Ministry is ready to consider them. However, between 24 February and 8 November 2022, the Commission did not initiate any investigations.
On 2 November 2022, the Commission suspended safeguard measures applied to imports of PVC-suspension for the period of martial law. This decision was substantiated by the fact that the domestic producer has not worked because of the war. Most probably, the Commission and Ministry will shortly consider suspension of certain effective anti-dumping or safeguard measures because some Ukrainian producers, unfortunately, have been destroyed or, due to different reasons, cannot produce products subject to anti-dumping or safeguard measures.
At the moment, Ukraine has no foreign investment security/screening mechanisms. Please see 6.8 Key Developments Regarding Investment Security with respect to the recent government initiative to launch the respective procedure in Ukraine.
Please see 6.1 Investment Security Mechanisms.
Please see 6.1 Investment Security Mechanisms.
Please see 6.1 Investment Security Mechanisms.
Please see 6.1 Investment Security Mechanisms.
Please see 6.1 Investment Security Mechanisms.
Please see 6.1 Investment Security Mechanisms.
To establish a foreign investment screening mechanism, in February 2021, the government of Ukraine submitted to the Parliament Draft Law No 5011 “On Foreign Investments in Entities that are Strategically Important for the National Security of Ukraine” (the “Draft Law”). However, in September 2021, the Draft Law was withdrawn from the Parliament’s consideration.
In a nutshell, the Draft Law defined a list of sectors that are strategically important for Ukraine’s national security (the “Strategic Sectors”). This list includes:
The screening mechanism is triggered in the case of making foreign investments into an entity operating in one of the Strategic Sectors during the last three years (the “Strategic Entity”). The definition of foreign investments covers acquiring shares of the Strategic Entity or acquisition of its assets, management functions, and rights to appoint executive bodies in the Strategic Entity.
According to the Draft Law, the screening procedure is provided in two stages. The first stage, conducted by the Ministry, involves the review of a request for investment approval (to be submitted by an investor to the Ministry along with the supporting documents). Following this stage, the Ministry decides whether the foreign investment impact assessment is required and, if yes, passes the respective documents to the Interdepartmental Commission for the Foreign Investments Impact Assessment, a new body to be established by the Ukrainian government for the purposes of this procedure. The second stage involves the impact assessment of the foreign investments on the national security of Ukraine that is provided by the Commission based on the criteria to be defined by the government. Based on this procedure, the Commission takes a decision regarding the foreign investment’s approval. The decision is of a mandatory nature and can be challenged before the court.
Taking into account that the Draft Law analysed in 6.8 Key Developments Regarding Investment Security has been withdrawn from the Parliament’s consideration, it is expected that this issue will be further elaborated on by the Ukrainian government.
While most of the governmental programmes/incentives supporting domestic industries are consistent with the WTO obligations of Ukraine, some of them have been questioned by Ukraine’s trading partners and warrant specific mention, particularly the following.
(a) compensation by the state of expenses of employers for wages of employees who have been relocated within the territory of Ukraine;
(b) grants for the small and medium businesses for creating new working places (the programme “Own Business”);
(c) compensation of interest credit rates by the state (the programme “Available Loans 5-7-9%”);
(d) grants for developing processing business;
(e) suspension of import tariffs for certain industries, eg imports of goods used for ensuring storage of grain and/or oilseed crops were exempted from import duties;
(f) state support for the enterprise’s relocation into the safer regions of Ukraine; and
(g) creation of industrial parks that will be granted different tax privileges.
See also 7.6 “Buy Local” Requirements with respect to the current legislative initiative on localisation.
Based on publicly available sources, it is hardly possible to conclude that certain technical regulations adopted in Ukraine are aimed at reducing imports.
Since Ukraine’s accession to the WTO, only two specific trade concerns have been raised by the WTO members in the TBT Committee regarding the technical barriers to trade (TBT) measures introduced by Ukraine:
No information is available as to whether the above points have been resolved. At the same time, these issues have not been reiterated by WTO members.
Based on publicly available sources, it is hardly possible to conclude that certain sanitary and phytosanitary requirements adopted in Ukraine are aimed at reducing imports.
Since Ukraine’s accession to the WTO, four specific trade concerns have been expressed in the WTO TBT Committee regarding the sanitary and phytosanitary (SPS) measures introduced by Ukraine. Three of them have been resolved already:
In addition, in 2019–20, Brazil raised trade concerns regarding Ukraine’s restrictions on Brazilian pork and other swine products. No information is available as to whether the above issue has been resolved by the parties.
According to the Law “On Prices and Pricing” No 5007-VI, dated 21 July 2012, the state regulation of prices may be introduced on goods that have a decisive impact on the overall level/dynamics of prices, socially important products and goods manufactured by entities having a monopolistic (dominant) position on the market. In addition, state price control may be applied to entities violating the legislation on the protection of economic competition.
At the moment, Ukraine employs price controls on certain products, such as alcoholic beverages, fuels and pharmaceuticals. A detailed analysis in each case is needed to understand whether these policies/price controls aim to reduce imports and/or encourage domestic production of the respective products. Moreover, because of the war, the government of Ukraine has applied, from time to time, price control measures on certain products.
Since its independence, Ukraine has been struggling with the privatisation of state-owned enterprises. According to the State Property Fund of Ukraine, at the moment, around 1,000 companies are potentially open to privatisation. The list of enterprises that cannot be privatised includes the enterprises that have strategic value or fulfil governmental functions, such as:
During the war, Ukraine simplified privatisation procedure. As of the beginning of October 2022, the government of Ukraine had given notice that about 800 state objects would shortly be privatised.
On 16 December 2022, the Ukrainian Parliament adopted the Law of Ukraine “On Amendments to the Law of Ukraine ‘On Public Procurement’ to Create Conditions for Sustainable Development and Modernisation of the Domestic Industry” No 1977-IX. The document sets out localisation requirements as a mandatory criterion for participation in public procurements of certain goods (mainly machinery). The level of localisation required for participation in public procurements is 10% during the first year (2022). After that, this threshold has to be increased by 5% each year up to a ceiling of 40% in 2028. The aforementioned procedure shall apply for ten years.
Notably, many international trading partners have questioned the consistency of the Law on Localisation with the WTO obligations of Ukraine and its obligations under other agreements, such as the EU–Ukraine Association Agreement. However, the final version of the said Law sets out that it shall not apply to public procurement proceedings subject to the Public Procurement Agreement and in respect of the trading partners with which Ukraine has the relevant international obligations.
Following the implementation of the EU–Ukraine Association Agreement, Ukraine provides a similar treatment of geographical indications (GIs) established in the EU. Most of the GIs protected in Ukraine originate from foreign countries (eg, under the EU–Ukraine Association Agreement, Ukraine is obliged to protect more than 3,000 GIs of EU origin). Thus, the measures employed by Ukraine are not designed to reduce imports but, at the same time, aim to encourage domestic producers to protect local GIs.
It is worth emphasising that, most probably, Ukrainian regulations in different fields will be further amended from time to time to react to the consequences of the war. For instance, since 24 February 2022, Ukraine has applied many different restrictions in the field of foreign currency payments. Namely, from 24 February until July 2022, Ukrainian companies were able to use foreign currency to pay for only those products included in the list of critical imports. Considering that, in the beginning, the list included only ten products, and it took some time to widen the list, the above restriction has considerably decreased imports of many products. Moreover, in the beginning, the list of critical imports did not cover services at all. Now it contains some types of services, but the restriction is still in place. Currently, there are many other different restrictions and requirements in the field of foreign currency payments. Since the commencement of the war, Ukraine has applied export restrictions to food products (eg, poultry, grains, eggs) as well as other products (eg, coal, fertilisers). Lists of products subject to export restrictions are being amended from time to time.
Moreover, in view of the fact that Ukraine was granted EU candidate status, there will be many legislative developments in different fields to approximate the EU acquis. As of today (December 2022), different Ukrainian authorities have already elaborated many draft laws and by-laws.
Additionally, Ukraine will improve instruments allowing for the efficient confiscation of assets belonging to the Russian Federation, its residents, as well as other individuals and legal entities somehow contributing to the Russian invasion of Ukraine. As of today, Ukraine has already adopted two laws in this field, namely: the Law of Ukraine “On Major Principles of Confiscation in Ukraine of Objects of Property Rights of the Russian Federation and its Residents” No 2116-IX, dated 3 March 2022, and the Law of Ukraine “On Amending Some Legislative Acts of Ukraine to Make More Efficiently Sanctions related to Assets of Certain Persons” No 2257-IX, dated 12 May 2022.