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International Trade in Goods and Services in Ukraine: Overview

Practical Law Country Q&A 6-621-3097 (Approx. 22 pages)

International Trade in Goods and Services in Ukraine: Overview

by Anzhela Makhinova and Victoria Mykuliak, Sayenko Kharenko
Please note the law-stated date of this resource. It does not consider recent events, including legal developments related to the 2022 Ukraine crisis. For resources concerning these topics, see Russia Sanctions and Related Considerations Toolkit.
A Q&A guide to international trade in goods and services in Ukraine.
This Q&A covers key matters relating to the regulation of international trade in Ukraine, including recent trends, trade agreements, trade negotiations, rules relating to the supply of services, imports and exports requirements, trade remedies, and international trade sanctions.

Recent Trends

1. What are the recent trends affecting the regulation of international trade in your jurisdiction?
The following recent trends currently affect the regulation of international trade in Ukraine.

International Trade Agreements

Ukraine has been concluding free trade agreements (FTAs) to facilitate bilateral trade. To date, Ukraine has concluded 18 FTAs covering 47 states. FTAs with the EU and Canada entered into force in 2017. In 2018, Ukraine acceded to the Regional Convention on pan-Euro-Mediterranean preferential rules of origin (Pan-Euro-Med Convention). FTAs with the UK and Israel entered into force on 1 January 2021. Negotiations of an FTA with Turkey and of an update of the FTA with the EU are currently underway. See Question 2.

Trade Remedies and Application of WTO Instruments

Ukraine actively applies trade defence remedies to protect domestic producers, as allowed by the World Trade Organization (WTO) (mainly anti-dumping and safeguard measures). There has been a recent increase in safeguard measures. In addition, Ukraine applies anti-dumping and special protection measures to some products from Belarus, which is not a WTO member.
Ukraine has also been actively using other WTO instruments. For example, Ukraine has recently been making more statements at WTO committees and initiating more disputes. In 2020, Ukraine joined a Multi-Party Interim Appeal Arbitration Arrangement (MPIA) based on Article 25 of the Dispute Settlement Understanding (DSU). The MPIA establishes a special procedure among the parties to the arrangement to secure an appeal mechanism until the WTO Appellate Body (AB) becomes operational again.

Trade Disputes

Ukraine has acted as complainant and respondent in several international trade disputes in recent years.
The political tensions and mutual trade restrictions between Ukraine and Russia have resulted in an increase in WTO disputes between the two countries. Ukraine has initiated three disputes against Russia (DS499, DS512 and DS532), while Russia has initiated one (DS525). One of the disputes initiated by Ukraine (DS512) reached panel stage, and another (DS499) was subject to review by the panel and the AB.
DS512: Russia - Measures Concerning Traffic in Transit related to multiple restrictions on traffic in transit from Ukraine through Russia to third countries. In particular, Russia had banned all international cargo transit from Ukraine destined primarily for Kazakhstan and the Kyrgyz Republic. The panel report was adopted on 26 April 2019. The main question was whether violations of Ukraine's transit rights by Russia may be justified under the security exception of Article XXI of the General Agreement on Tariffs and Trade 1994 (GATT). The panel ruled that:
  • It had jurisdiction to review WTO members' invocation of the security exception.
  • While a member can take action "which it considers necessary" for the protection of its essential security interests, this discretion is limited to circumstances that objectively fall within the scope of the three subparagraphs of Article XXI. However, a WTO member has the discretion to designate what it considers to be an "essential security interest."
  • Russia's measures were justified by the protection of its essential security interests.
DS 499: Russia - Railway Equipment related to the prevention of Ukrainian producers from exporting their railway products to Russia. Restrictive measures included the suspension of valid conformity assessment certificates for Ukrainian producers, refusal to issue new conformity assessment certificates, and non-recognition of conformity assessment certificates issued by the competent authorities of other EAEU members (namely Belarus and Kazakhstan). The case was subject to the panel and AB review. The report of the AB was adopted on 5 March 2020. The measures at issue were found inconsistent with Russia's obligations under the Technical Barriers to Trade (TBT) Agreement and the GATT.
Ukraine acted as a respondent in DS493: Ukraine - Ammonium Nitrate, initiated by Russia. The case was subject to the panel and AB review, and arbitration under Article 21.3(c) of the DSU (regarding the "reasonable period of time" for implementing the recommendations and rulings of the Dispute Settlement Body (DSB)). The report of the Appellate Body was adopted on 30 September 2019. The dispute concerned anti-dumping measures applied by Ukraine against ammonium nitrate (fertiliser) from Russia. The main measure at issue was the gas cost adjustment applied to counteract the "dual pricing policy" implemented by Russia. Natural gas is the main raw material used for the production of ammonium nitrate. The Russian domestic price of gas used for the production of ammonium nitrate was considerably lower than the price of exported gas, and sometimes lower than Gazprom's cost of production. As a result, various states (including Ukraine) have applied gas cost adjustments to replace the state-controlled price with market pricing, which equalises competitive conditions and removes distortions on the Russian gas market. The panel agreed with Ukraine that investigating authorities in anti-dumping investigations are entitled to adjust the costs of raw materials of foreign producers if there is sufficient evidence for doing so. However, the panel and the AB concluded that Ukraine had acted inconsistently with its obligations under the Anti-Dumping Agreement because the investigating authorities had not provided an adequate basis to reject the reported gas cost. In other words, both the panel and the AB concluded that the Ukrainian anti-dumping duties were not compliant with the relevant WTO agreements.
Ukraine acted as a respondent in the trade dispute initiated by the EU under the EU-Ukraine Association Agreement. The report of the Arbitration Panel was issued on 11 December 2020. The dispute concerned the following restrictions applied by Ukraine on exports of certain wood products to the EU:
  • A ban on the exportation of both timber and sawn wood of ten wood species considered by Ukraine as "rare and valuable species" imposed in 2005 (2005 export ban).
  • A ten-year ban on all exports of unprocessed timber imposed in 2015 (2015 temporary export ban).
According to the Panel Report, the 2005 export ban was justified under Article XX(b) of the GATT (incorporated into the Association Agreement) as necessary to protect plant life or health. However, the 2015 temporary export ban was found incompatible with the obligation of Ukraine under the Association Agreement, which prohibits export restrictions. The Panel also found that this measure was not justified under Article XX(g) of the GATT, incorporated into the Association Agreement (which allows measures "relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption").

Political Relations Between Ukraine and Russia

Since 2014, political relations between Ukraine and Russia have affected both countries and have resulted in the application of mutual restrictions, including in relation to the regulation of international trade. At the start of 2016, Russia:
  • Applied severe transit restrictions to Ukraine, prohibiting almost all transit through its territory to Kazakhstan and Kyrgyzstan.
  • Extended its food embargo to Ukraine.
  • Suspended the Commonwealth of Independent States Free Trade Area in respect of Ukraine.
In response to the annexation of Crimea and military actions in the eastern part of Ukraine, Ukraine:
  • Applied an import ban on certain Russian products.
  • Imposed most-favoured-nation (MFN) import duties on Russian-origin products.
  • Imposed sanctions against specific Russian individuals and legal entities.
Since then, both countries have expanded the scope of their mutual restrictions. For example, at the end of 2020, Russia expanded an existing food embargo against Ukrainian goods, while Ukraine has extended the scope of its import ban. Sanctions introduced by the President of Ukraine are also subject to revision and extension. The most recent of these took place in May 2020 (see Question 16). In November 2018, Russia imposed special economic measures on certain individuals and legal entities of Ukraine, which include freezing of their bank accounts, uncertificated securities and property in Russia, and a ban on transfers of money from Russia. This list was also extended in February 2021.

Export Strategy

One of the benchmark objectives of the Ukrainian Government is the facilitation of exports. At the end of 2017, the Cabinet of Ministers of Ukraine (CMU) approved the Export Strategy of Ukraine for 2017-2021. This is an action plan that indicates the key strategies for export development in Ukraine, including institutional reform and improvement of agencies focusing on the promotion of exports. The government is currently updating the Export Strategy.

Trade Agreements

2. Is your jurisdiction a member of the World Trade Organization (WTO)? What are the main international, regional or bilateral trade agreements to which your country is a party?

International Trade Agreements

Ukraine joined the WTO on 16 May 2008 and is a member of the Marrakesh Agreement establishing the WTO. It is a party to the following multilateral agreements:
  • GATT and 12 other multilateral agreements on trade in goods (including the WTO Trade Facilitation Agreement).
  • WTO General Agreement on Trade in Services 1994 (GATS) and its Annexes.
  • WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS).
  • DSU.
  • Trade Policy Review Mechanism (TPRM).
In addition, since 2016, Ukraine has participated in the Government Procurement Agreement (GPA), a WTO plurilateral agreement.
Ukraine has also ratified the:
  • Protocol amending the TRIPS Agreement (which allows certain flexibilities for WTO members with respect to compulsory licensing and export of pharmaceuticals).
  • Trade Facilitation Agreement (aimed at cutting red tape at the borders and speeding up customs clearance procedures), which came into force on 22 February 2017.

Regional and Bilateral Trade Agreements

Ukraine has concluded 18 FTAs covering 47 countries in total but is not a member of any customs union. Ukraine is a member of the following FTAs:
  • Political, Free Trade and Strategic Partnership Agreement between the United Kingdom of Great Britain and Northern Ireland and Ukraine, which entered into force on 1 January 2021 (UK-Ukraine FTA).
  • Agreement on Free Trade between the Cabinet of Ministers of Ukraine and the Government of the State of Israel, which entered into force on 1 January 2021 (Ukraine-Israel FTA).
  • Deep and Comprehensive FTA between the EU and Ukraine (DCFTA) (within the framework of the EU-Ukraine Association Agreement), which entered into force on 1 September 2017 and provisionally applied since 1 January 2016. The negotiations to update the DCFTA are currently underway.
  • Canada-Ukraine FTA (CUFTA), which entered into force on 1 August 2017.
  • FTA between the Government of Montenegro and the Government of Ukraine (Ukraine-Montenegro FTA), which entered into force on 1 January 2013.
  • Commonwealth of Independent States FTA (CIS FTA), which entered into force on 20 September 2012. The CIS FTA was concluded by Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Tajikistan, Uzbekistan, Moldova, and the Russian Federation. However, as of 1 January 2016, the Russian Federation and Ukraine have suspended the operation of the FTA with respect to each other.
  • EFTA-Ukraine FTA, which entered into force on 1 June 2012.
  • Agreement on Free Trade between the Republic of Macedonia and Ukraine (Ukraine-Macedonia FTA), which entered into force on 5 July 2001.
  • Agreement on Free Trade between the Government of Ukraine and the Government of the Republic of Azerbaijan (Ukraine-Azerbaijan FTA), which entered into force on 26 August 1996.
  • Agreement on Free Trade between the Government of Ukraine and the Government of Republic of Georgia (Ukraine-Georgia FTA), which entered into force on 4 June 1996.
  • Agreement on Free Trade between the Government of Ukraine and the Government of Turkmenistan (Ukraine-Turkmenistan FTA), which entered into force on 4 November 1995.
In addition to the CIS FTA, a number of bilateral FTAs with CIS countries (namely Belarus, Tajikistan, Kazakhstan, the Kyrgyz Republic, Armenia, Moldova, and Uzbekistan) remain in force but are expected to be terminated.
In 2017, Ukraine acceded to the Pan-Euro-Med Convention, which sets uniform rules of origin for trade in products manufactured in countries with which the EU has FTAs and customs unions. The Pan-Euro-Med Convention entered into force for Ukraine in February 2018.
Official publications of the international agreements concluded by Ukraine are available on the website of the Parliament of Ukraine (in Ukrainian).

Trade Negotiations

3. What are the authorities responsible for negotiating trade agreements? How long does it usually take to conclude a trade deal with your country?
Both the Ministry for Development of Economy, Trade and Agriculture of Ukraine (Ministry of Economy) and the Ministry of Foreign Affairs of Ukraine (MFA) are responsible for the negotiation of trade agreements in Ukraine. The Ministry of Economy:
  • Is the primary negotiator of trade agreements.
  • Prepares economic evidence in relation to the conclusion of trade agreements.
  • Signs agreements falling under its competence.
The MFA provides diplomatic maintenance and assistance in negotiations of potential trade agreements.
There is no fixed time limit for the duration of negotiations. For example, Ukraine is has been negotiating an FTA with Turkey since 24 January 2011. More than ten rounds of talks have been completed. In February 2020, the parties entered into a Memorandum of Understanding on FTA Negotiations, according to which the negotiations are planned to be completed in 2021.
Ukraine has also recently concluded N FTA with Israel. Negotiations of the FTA started on 22 July 2013. The negotiations were suspended in 2013 due to the political situation in Ukraine and were resumed in the second half of 2015. Finally, after around ten rounds of talks, the Israel-Ukraine FTA was signed on 21 January 2019 and ratified by Ukraine on 11 July 2019. The FTA entered into force on 1 January 2021.
The negotiations of the UK-Ukraine FTA started before the UK formally left the EU on 31 January 2020 and were completed relatively quickly. The text of the agreement was signed on 8 October 2020 and ratified by the Ukrainian Parliament on 16 December 2020. The UK-Ukraine FTA entered into force on 1 January 2021.

Supply of Services

4. Is your jurisdiction a party to international agreements on cross-border trade in services? Is your jurisdiction taking part in the negotiations of the Trade in Services Agreement (TiSA)?
On accession to the WTO, Ukraine became a party to the GATS and made a considerable level of commitments in relation to trade in services (horizontal commitments and sector-specific commitments). Sector-specific commitments are commitments made regarding specific services sectors or sub-sectors. According to Ukraine's Schedule of Commitments, the country liberalised modes one to three (cross-border trade, consumption abroad and commercial presence) in:
  • Business services (professional services, computer and related services, research and development services, real estate services, certain rental and leasing services, and other business services).
  • Communication services (including postal and courier services (subject to licensing procedures)) and telecommunication services (subject to a specific regulatory framework).
  • Construction and related engineering services.
  • Distribution services.
  • Educational services (with certain limitations).
  • Environmental services.
  • Financial services (including insurance, insurance-related services, banking and other financial services, with certain limitations).
  • Health-related and social services (subject to certain exceptions).
  • Tourism and travel-related services.
  • Recreational, cultural and sporting services (subject to certain exceptions).
  • Transport services (including maritime, internal waterway, air, rail, road and pipeline transportation, as well as auxiliary and other services, but with certain exceptions).
This liberalisation has been undertaken with respect to both market access and national treatment obligations.
Horizontal commitments apply to all sectors included in the Schedule of Commitments. Ukraine left mode four (presence of natural persons) in all these categories unbound. Foreign nationals must generally obtain a work permit, but certain categories of employees are exempted from this requirement, such as:
  • Intra-corporate transferees.
  • Service sellers.
  • Natural persons providing services without a commercial presence.
  • Natural persons responsible for establishing a commercial presence.
Ukraine has also scheduled exemptions and reservations relating to national treatment with respect to land ownership and access to subsidies and other forms of state support.
In addition, Ukraine has committed to publish promptly its legislation relating to trade in services and to allow any interested parties to submit their comments and proposals.
Ukraine is not currently participating in the TiSA negotiations being held under the framework of the WTO.
Four of Ukraine's FTAs provide for liberalisation in service sectors, the:
  • UK-Ukraine FTA.
  • DCFTA.
  • EFTA-Ukraine FTA.
  • Ukraine-Montenegro FTA.
Official publications of the international agreements concluded by Ukraine are available on the website of the Parliament of Ukraine (in Ukrainian).
5. What domestic legislation and international rules apply to the supply of financial services and legal services in your jurisdiction? What are the main requirements that service providers must comply with?

Financial Services

Regulatory Framework. The general legal framework is established by the Law On Financial Services and State Regulation of Financial Services Markets No. 2664-III dated 12 July 2001. Certain financial services, such as banking activities, insurance business and securities transactions, are also subject to special laws, including the:
  • Law On Banks and Banking Activity No. 2121-III dated 7 December 2000.
  • Law On Insurance No. 85/96-VR dated 7 March 1996.
  • Law On Securities and Stock Market No. 3480-IV dated 23 February 2006 (renamed as the Law on Capital Markets and Organised Commodity Markets with effect from 1 July 2021).
The provision of financial services is subject to licensing/registration by the competent Ukrainian authorities. Generally, only legal entities incorporated in Ukraine are eligible to obtain the relevant licence/registration. Therefore, with certain exceptions, there are no express rules governing the financial activities of foreign financial institutions in Ukraine. Foreign financial institutions must therefore take special care when contacting clients/prospects in Ukraine. The rules relating to foreign institutions include that:
  • Foreign banks and foreign insurance companies can establish branches in Ukraine and provide their services in Ukraine though these branches.
  • The cross-border supply of certain insurance services into Ukraine is permitted for foreign insurance companies if those services are limited to:
    • maritime and air transportation;
    • spaceship and satellite launching; and
    • reinsurance services.
Cross-border public offerings/marketing of securities in Ukraine requires the filing of a prospectus or a public offer with the National Securities and Stock Market Commission, the Ukrainian securities regulator. Cross-border marketing of securities in Ukraine also requires a filing with the Commission. An exemption applies to cross-border offerings/marketing limited to 150 potential investors contacted individually or on a similar basis.
In addition, there are rules applicable to customers of cross-border financial services in Ukraine that inevitably affect foreign suppliers of these services. In particular, these rules relate to cross-border loans taken by Ukrainian borrowers. Ukrainian borrowers must generally submit information on cross-border loan agreements to the National Bank of Ukraine (NBU), the Ukrainian central bank. In this regard, Ukrainian legislation requires Ukrainian banks to verify that interest rates under cross-border loan agreements reflect existing market conditions. Otherwise, a Ukrainian bank may be required to prohibit a Ukrainian borrower to make payments of interest under a relevant cross-border loan agreement.
The cross-border supply of financial services into Ukraine may be substantially liberalised for European suppliers in the mid-term. Under Articles 93 (Market Access) and 94 (National Treatment) and Annexes XVI-B and XVI-E to the EU-Ukraine Association Agreement, Ukraine is under an obligation to:
  • Allow cross-border supply of services by EU suppliers of banking and other financial services.
  • Grant EU suppliers of these services treatment no less favourable than Ukraine accords to its own suppliers.
Main Requirements. The main requirements differ depending on the type of financial institution, as follows:
  • Banks. The banking system in Ukraine is a two-tier structure made up of the central bank, the NBU, and commercial banks or branches. A commercial bank or branch can only carry out exclusive banking activities (taking deposits, opening bank accounts and investing raised funds) with a banking licence issued by the NBU. The minimum authorised capital of a newly established bank or branch is UAH200 million. Commercial banks and branches must become members of the deposit guarantee fund and remit to that fund an initial contribution of 1% of their authorised capital and certain regular quarterly contributions. The NBU also requires the holding of mandatory reserves in the amount of 10% for funds in foreign currency. No mandatory reserves requirements apply to funds in national currency. Banks and branches must submit to the NBU annual and interim financial statements, information on related parties, statistical data, and so on. Generally, NBU approval is required for ultimate beneficial owners to establish or acquire qualifying holdings (starting at 10%) in a bank or branch.
  • Non-bank financial institutions. Non-bank financial institutions are subject to specific requirements. A licence/registration and a minimum authorised capital is usually required (UAH1 million for securities brokers, UAH22 million for full-service investment firms from 1 July 2021, EUR10 million for life insurers, and EUR1 million for other insurers). Generally, approval is required for the ultimate beneficial owners to establish or acquire qualifying holdings (starting at 10%) in a non-bank financial institution. The regulation of non-bank financial institutions is currently undergoing reform. It is expected that all non-banking financial institutions will be subject to higher standards of licensing, capital and prudential requirements, professional record for qualifying shareholders and directors, disclosure of ownership structure, corporate governance and consumer protection.

Legal Services

Regulatory Framework. The legal requirements depend on the nature of the legal services provided. For example, the Law On State Registration of Legal Entities, Individual Entrepreneurs and Public Organisations No. 755-IV dated 15 May 2003 applies to all non-governmental providers of legal services based in Ukraine (such as law firms, notaries or advocates). The activity of law firms is not regulated by specific legislation. However, some legal services are regulated in detail, for example:
  • Advocacy is regulated by the Law On Advocacy and Advocacy Activities No. 5076-VI dated 5 July 2012.
  • Notary activities are regulated by the Law On Notaries No. 3425-XII dated 2 September 1993.
Ukraine has not concluded any agreements for the mutual recognition of legal professional qualification or standards.
Main Requirements. Ukrainian and foreign legal entities, and individual entrepreneurs or public organisations, can provide consultancy on domestic or international law without special legal qualifications, except in relation to advocacy. An entity that provides legal services either for free or on a commercial basis must register with the state.
To obtain the status of advocate in Ukraine, a person must:
  • Have acquired a full higher legal education.
  • Speak Ukrainian.
  • Have practised in the field of law for not less than two years.
  • Have passed the bar exam.
  • Have completed a six-month internship as an advocate (an internship is not required for individuals who have practised as advocate assistants for at least one year during the last two years on the date of the bar exam).
  • Take the advocate oath.
  • Obtain the advocate certificate of enrolment.
Foreign advocates can provide advocacy services in Ukraine if they are included in the Unified Advocates Register of Ukraine (the Advocate Council of Ukraine determines the necessary documentation for this).
Notary services can only be provided by Ukrainian citizens.
6. Are there restrictions on market access for specific services sectors?
Under the Law On Licensing of Economic Activity Types No. 222-VIII dated 2 March 2015, services sectors that are subject to special licensing requirements include:
  • Banking and financial services (see Question 5, Financial Services).
  • Television and radio broadcasting.
  • Telecommunications.
  • Medical services.
  • Production, importation, wholesale and retail trade of pharmaceuticals.
  • Educational services.
  • Tour operator activities.
  • Services in the energy sector.
  • Certain construction works.
The full list is available at Legislation of Ukraine.
Corresponding CMU Resolutions determine the special licensing requirements for each of the listed activities, for example:
  • The supply of medical services is licensed under CMU Resolution On Approval of Licensing Conditions on Commercial Activity related to Medical Services No. 285 dated 2 March 2016.
  • Educational services provided by educational institutions are licensed under CMU Resolution On Approval of Licensing Conditions on Educational Activity of Educational Institutions No. 1187 dated 30 December 2015.
In addition, the list of natural monopolies of Ukraine is approved by the Antimonopoly Committee of Ukraine (AMCU) and comprises both state-owned and private enterprises. The list includes, among others, a wide range of companies supplying natural gas, electricity, water and water drainage, and transporting heat energy. It is available on the AMCU website.

Imports

Customs Authority

7. What is the authority responsible for enforcing customs laws and regulations?
The State Customs Service of Ukraine (SCS) is responsible for implementing the state customs policy and enforcing customs laws and regulations in Ukraine.
The functions of the SCS in the field of customs regulation include the following:
  • Development of draft laws.
  • Control and supervision.
  • Customs clearance.
  • Administration of customs duties, fees and related payments.
  • Administration of customs statistics and Ukrainian Foreign Economic Activity Commodity Classification.
  • Control of food and non-food products crossing the border, control of the movement of culturally valuable goods, and so on.
  • State control of international transfers of military and dual-use products.
  • Prevention and suppression of customs violations.
(Regulation on the SCS of Ukraine, approved by CMU Resolution No. 227 dated 6 March 2019.)
Depending on the type of violation, both customs authorities and courts have the power to hear cases on the violation of customs rules (Article 522, Customs Code of Ukraine No. 4495-VI dated 13 March 2012 (Customs Code)). Under the Code on Criminal Procedure, state courts have exclusive competence in criminal proceedings, including to impose criminal penalties for violations of customs rules under the Criminal Code (Article 30, Code on Criminal Procedure of Ukraine No. 4651-VI dated 13 April 2012).
8. How can customs decisions be challenged?
Customs decisions can be challenged through judicial and administrative procedures, while import restrictions can only be challenged before a court.

Customs Decisions

Any person has the right to administratively challenge decisions, acts or omissions by the customs authorities by filing a complaint with the head of the relevant customs body. If a decision, act or omission is taken by the head of a customs post, the petition can be filed with the relevant customs house (of which the customs post is a structural division). If the action is taken by the head of the customs house, specialised customs body or customs organisation, it can be challenged before the SCS as the central executive authority responsible for implementing the state customs policy (Articles 24 to 30, Customs Code).
A ruling issued by the customs office on a customs offence can also be appealed to the SСS or a court. Filing an appeal suspends the enforcement of the customs offence ruling until the appeal is finally considered (Articles 529 to 533, Customs Code).

Customs Decisions and Import Restrictions

Both customs decisions and import restrictions can be challenged before an Ukrainian administrative court at any time. The decisions of a first instance administrative court can be appealed to the relevant Administrative Court of Appeal, the decisions of which can be revised by the Supreme Court of Ukraine (on limited grounds).

Import Duties, Tariffs and Rates

9. Where can information be found about import tariffs and other customs charges?

General Tariffs and Rates

Ukraine bound 100% of its tariff lines on accession to the WTO. Currently, Ukraine's average bound rate is 5.8% (10.9% for agricultural products and 5% for non-agricultural products) and average applied rate is 4.5% (9.2% for agricultural goods and 3.7% for non-agricultural goods). Approximately 30% of all tariff lines are bound at 0%.
In addition, imported products are subject to internal taxes and other charges that are applied in the territory of Ukraine (border tax adjustment). Examples of these taxes and charges are value added tax (VAT) and excise duties. The rates and application of these charges are regulated by the Tax Code of Ukraine No. 2755-IV dated 2 December 2010.

Preferential Tariffs

Preferential tariffs are applied to goods originating from countries that have concluded FTAs with Ukraine. These include the:
  • UK-Ukraine FTA. The FTA provides for the liberalisation of trade in goods at a level not lower than that provided for in the DCFTA. Import duties on products originating from both parties are:
    • fully liberalised immediately;
    • gradually liberalised over the indicated period; or
    • subject to tariff rate quotas (meaning that producers can export a pre-determined volume of goods duty-free but once the quota is filled, MFN rates apply).
  • Israel-Ukraine FTA. Israel and Ukraine have agreed to eliminate about 80% of import duties for Ukrainian industrial products and 70% of import duties on industrial goods originating from Israel. The level of liberalisation with respect to agricultural products is much lower. Immediate duty-free access covers only 9% of Ukrainian and 6% of Israeli agricultural products. For other goods, gradual and partial liberalisation and tariff rate import quotas are envisaged.
  • DCFTA. The EU and Ukraine have agreed to eliminate 98.1% and 99.1% of duties in trade value respectively. The level of liberalisation with respect to agricultural products is lower than with respect to industrial goods. Import duties on products originating from the EU and Ukraine (and included in the EU or Ukraine's tariff schedule attached to the DCFTA) are:
    • fully liberalised immediately;
    • gradually liberalised over the indicated period (up to ten years for Ukraine); or
    • subject to tariff rate quotas (meaning that producers can export a pre-determined volume of goods duty-free but once the quota is filled, MFN rates apply).
    The parties undertook not to maintain or introduce any export duties, and Ukraine is obliged to eliminate its existing export duties in accordance with the schedule annexed to the agreement. The DCFTA also provides for temporary (for the first 15 years of operation of the agreement) special safeguard mechanisms with respect to passenger cars that can be used by Ukraine.
  • EFTA-Ukraine FTA. Most goods originating in EFTA states and destined for Ukraine were granted immediate duty-free access, while the remaining tariffs covered by the agreement must be gradually eliminated over the transitional period of a maximum of ten years. The level and conditions of liberalisation with respect to agricultural goods is governed by bilateral agreements on agriculture between Ukraine and the respective EFTA states.
  • CUFTA. Ukraine has granted immediate duty-free access for 72% of products. Another 27% are subject to gradual elimination of tariffs over three-, five- or seven-year periods. The agreement envisages special safeguard mechanisms (referred to as emergency actions) that can be applied by the parties during the transitional period in cases where, following liberalisation, imports from one party are injuring or threatening to injure the domestic industry of the other party.
  • CIS FTA. This covers more than 90% of total intra-CIS trade and provides for the elimination of most import and export duties in trade between the parties, with the exception of several tariff lines reserved by each party. The parties have also agreed not to increase their bound rates of export duties.
  • Ukraine-Montenegro FTA. Import duties on products originating in Ukraine and Montenegro are eliminated and no new customs duties will be introduced. However, certain goods were excluded by Ukraine from the scope of the agreement (for example, certain pork, poultry and sugar products), and are therefore not subject to any commitments.
  • Ukraine-Macedonia FTA. Ukraine undertook to eliminate existing import duties and not to introduce new ones on industrial products (with some exceptions, for example, certain chemicals, wood products and textiles). Trade liberalisation with respect to agricultural products is limited, as the scope of liberalisation only comprises certain tariff lines, all of which are subject to tariff rate quotas. Export duties are also eliminated.
  • Ukraine-Georgia FTA, Ukraine-Azerbaijan FTA, Ukraine-Turkmenistan FTA and bilateral FTAs with CIS countries. These agreements are classified as "old generation" FTAs and all contain similar provisions. The parties agreed to eliminate any existing import and export duties. All the agreements provide that if the parties decide to exclude certain goods from the free trade regime, an appropriate separate instrument (protocol) listing those goods must be drafted and constitute a part of the respective agreement. For example, these protocols are available for the Ukraine-Kazakhstan and Ukraine-Moldova FTAs and they exclude certain industrial goods, such as certain types of raw hides or skins exported from Ukraine to Kazakhstan (meaning that Ukraine can apply export duties on these products).
Official publications of the international agreements concluded by Ukraine are available on the website of the Parliament of Ukraine (in Ukrainian).

Non-Tariff Barriers to Imports

10. Are there non-tariff barriers to imports into your jurisdiction?
On importation into the territory of Ukraine, goods must comply with sanitary and phytosanitary measures, depending on their characteristics, as well as relevant technical requirements (including packaging, marking or labelling regulations). Imports of certain goods covered by embargoes and sanctions are restricted.
The lists of goods subject to sanitary, phytosanitary control, compliance with food, feed, animal by-products, animal health and welfare requirements are specified in CMU Resolution No. 960 dated 24 October 2018.
The lists of goods (or their characteristics) covered by technical regulations are specified in the respective technical regulations.
Exports and imports subject to licensing and quotas are approved by CMU resolution on an annual basis. As of 2021, the relevant lists of goods were approved by CMU Resolution No. 1329 dated 28 December 2020 specifying:
  • Quotas for goods whose export is subject to licensing in 2021 (including for valuable metals).
  • A list of ozone-depleting substances and fluorinated greenhouse gases and a list of goods that may contain ozone-depleting substances and fluorinated greenhouse gases, the export and import of which is subject to licensing.
  • A list of goods for which import from Macedonia is subject to licensing within the tariff quota under the Ukraine-Macedonia FTA (including products such as sheep or goat meat, certain fruit and vegetables, sugar confectionery, chocolate and other food preparations containing cocoa, some prepared foods, and so on).
  • Goods subject to export licensing (only anthracite is listed).
In addition, importation and placement of certain goods on the Ukrainian market may be prohibited depending on other factors (such as infringement of IP rights). In particular, putting "fake goods" into circulation is prohibited (Article 6(4), Law of Ukraine On Protection of Consumers' Rights No. 1023-XII dated 12 May 1991). Clearance of goods suspected of infringing IP rights can be suspended, their marking can be changed and, in certain instances, these goods can be destroyed (Articles 397 to 403, Customs Code). Other remedies may also apply, including criminal liability, depending on the type of violation (see, for example, Articles 176, 177,and 229, Criminal Code).

Trade Remedies

Regulatory Framework

11. What is the main legislation relating to trade remedies? What are the authorities responsible for investigating and deciding on trade remedies?

Regulatory Framework

In addition to the WTO legislative framework, trade remedies are regulated at the national level in Ukraine by the following laws:
  • Law On Protection of National Producers from Dumped Imports No. 330-XIV of 22 December 1998 (Anti-Dumping Law).
  • Law On Protection of National Producers from Subsidised Imports No. 331-XIV dated 22 December 1998 (Anti-Subsidy Law).
  • Law On the Application of Safeguard Measures against Imports to Ukraine No. 332-XIV dated 22 December 1998 (Safeguard Law).
  • Law On Foreign Economic Activity No. 959-XII dated 16 April 1991 (Foreign Economic Activity Law). Article 31 establishes deadlines for challenging decisions relating to the application of trade remedies in Ukraine.

Regulatory Authority

The following state authorities are involved in trade remedies proceedings:
  • The Interdepartmental Commission on International Trade (Commission), which is responsible for key decisions during proceedings, including on the:
    • initiation of investigations;
    • existence of dumping, specific subsidies or surges in imports, and their amounts;
    • existence of injury; and
    • termination of proceedings with or without trade remedies.
  • The Ministry of Economy, which is responsible for procedural issues, including:
    • registration of interested parties;
    • collecting answers to questionnaires;
    • holding hearings and consultations; and
    • drafting preliminary and definitive reports following preliminary or final results of investigations with the relevant recommendations to the Commission on the decisions to be adopted.
  • The Ministry of Finance of Ukraine and the SCS, which are responsible for providing the Ministry of Economy with all relevant statistics related to trade remedies proceedings.
Information on pending trade defence proceedings, effective trade defence remedies, and other information relating to the regulation of trade remedies in Ukraine is available on the website of the Ministry of Economy.

Investigations and Enforcement

12. Does your jurisdiction apply a lesser duty rule and/or a public interest test in trade remedy investigations? Are there any other notable features of your jurisdiction's trade remedy regime?
The competent authorities can, but are not obliged to, impose duties at a level lower than the margin of dumping if this level is adequate to remove injury (Article 16(5), Anti-Dumping Law). In practice, the lesser duty rule is not applied in cases of considerable market distortions (for example, state regulation of prices of raw materials).
Anti-dumping duties cannot be imposed if they are contrary to the public interest, even if all the conditions for adoption of anti-dumping duties are satisfied (Article 36, Anti-Dumping Law). Investigative authorities must take the following into account as part of the public interest test:
  • Interests of the domestic industry.
  • Interests of end customers.
  • Effect of imports on employment, investments in the domestic industry, customers, international economic interests, and competition.
In 2020, several investigations were terminated without measures because the investigative authorities considered that their application could potentially contradict public interests.

Appeals

13. Is there a domestic right of appeal against the authority's decision? What is the applicable procedure?
A decision by the Interdepartmental Commission on International Trade on the application of trade remedies can be challenged before the administrative court not later than one month after imposition of the relevant remedies (Article 31, Foreign Economic Activity Law). See Question 8 for the structure of administrative courts in Ukraine.
Under current court practice, foreign producers and exporters cannot challenge trade remedy decisions before the Ukrainian courts because their rights are not violated by the measures (as these are borne by importers).

Sanctions and Export Controls

Regulatory Framework

14. What is the main legislation governing sanctions and export controls? What are the authorities responsible for enforcing sanctions and export controls?
Trade sanctions are applied in Ukraine based on:
  • The Law On Sanctions No. 1644-VII dated 14 August 2014 (Sanctions Law).
  • Article 29 of the Foreign Economic Activity Law.
The following governmental authorities can take the initiative to impose sanctions under the Sanctions Law:
  • Parliament of Ukraine.
  • President of Ukraine.
  • Government of Ukraine.
  • NBU.
  • Security Service of Ukraine.
Decisions to introduce, abolish and/or amend personal sanctions are made by the National Security and Defence Council of Ukraine and enacted by a decree of the President of Ukraine.
The CMU can also impose retaliatory measures under Article 29 of the Foreign Economic Activity Law.
The Customs Code is the main legal instrument setting out export requirements. Chapter 15 deals with the export of goods. The procedure for completing a customs declaration is set out in Chapter 40 of the Customs Code and CMU Resolution On Questions related to the Application of Customs Declarations No. 450 dated 21 May 2012.
Depending on the nature of the transaction, some specific regulations may be applicable, for example, the Law On Currency and Operations Connected with Currency dated 21 June 2018 regulates foreign currency payments involving Ukrainian companies.
A number of legal acts establish special procedures, including export permits, conduct of state inspections and so on, for the export of specific goods, including, for example:
  • Goods designated for military purposes and dual-use goods.
  • Goods of cultural value.
  • Drugs, psychotropic substances and their precursors.
The SCS generally enforces controls on the importation and exportation of goods through the customs border. However, depending on the type of products, specific authorities are responsible for the issuance of export permits and for export controls. For example:
15. Are certain categories of goods subject to non country-specific export controls?
A number of export duties and restrictions apply that Ukraine has committed to gradually reduce on its accession to the WTO. The list of products subject to export duties includes:
  • Live cattle.
  • Raw hides and skins.
  • Oilseeds.
  • Natural gas in liquefied or gaseous form (natural gas export duties are no longer applied to Energy Community members as of 2014).
  • Ferrous metal scrap (Ukraine applies an export duty of EUR58 per tonne for ferrous metals scrap until 15 September 2021, although under the Report of the Working Party on the Accession of Ukraine to the WTO, the maximum level of this export duty cannot be higher than EUR10 per tonne).
There is also a special procedure regulating exports of goods designated for military purposes and dual-use. Export of the goods is primarily regulated by the Law On State Control over International Transfers of Military and Dual-Use Products No. 549 dated 20 February 2003.
16. Are there specific restrictions on trade with certain jurisdictions, entities or persons?
Under the Sanctions Law, sanctions can be imposed on, among others:
  • Foreign countries.
  • Foreign citizens (personal sanctions).
  • Foreign legal entities (personal sanctions).
  • An unlimited number of persons that conduct certain type of activities (sectoral sanctions).
To date, Ukraine has not applied any sectoral sanctions.
The Sanctions Law specifies the following grounds for the introduction of sanctions:
  • Actions of a foreign country, legal entity, an individual, or other actors that:
    • create a real or potential threat to the national interests, security, sovereignty and territorial integrity of Ukraine;
    • contribute to terrorist activity and/or violate the rights and freedoms of Ukrainian individuals and citizens, or the interests of society and the state;
    • lead to the occupation of Ukrainian territory, expropriation or restriction of property rights, damage to property, or the obstruction of sustainable economic development or the full exercise by citizens of Ukraine of their rights and freedoms; or
    • any such actions executed in relation to any other country, its legal entities or citizens.
  • Resolutions of the UN General Assembly and Security Council.
  • Resolutions and regulations of the EU Council.
  • Violations of the UN Universal Declaration of Human Rights 1948 and the UN Charter.
Sanctions under the Sanctions Law include:
  • Asset freezes.
  • Limitation of trading operations.
  • Bans on the export of capital.
  • Suspension of economic and financial transactions.
  • Annulment or suspension of permits/licences to carry out particular economic activities.
There are currently personal sanctions against individuals and legal entities (sanction lists) related to the Russian Federation listed in the Decision of the National Security and Defence Council of Ukraine On Application of Special Personal Economic and Other Restrictive Measures (Sanctions) dated 28 April 2017 and enacted by Decree of the President No. 133/2017 dated 15 May 2017 (as amended on 14 May 2020).
The sanction lists were initially introduced in September 2015 for a one-year period. Further new sanction lists were subsequently adopted and are subject to constant revision and extension. The most recent amendments were introduced in May 2020.
In February 2021, personal sanctions were introduced against Ukrainian citizens related to the Russian Federation and legal entities relating to these individuals. These are listed in the Decision of the National Security and Defence Council of Ukraine On Application and Amendments of Special Personal Economic and Other Restrictive Measures (Sanctions) dated 19 February 2021 and enacted by Decree of the President No. 64/2021 dated 19 February 2021.
According to the sanction lists currently in force, sanctions are applicable to legal entities and natural persons for periods of one to three years, or permanently.
Under Article 29 of the Foreign Economic Activity Law, the CMU can introduce trade restrictions (retaliatory measures) in response to discriminative or unfriendly actions by a state recognised by the Parliament of Ukraine as an aggressor and/or an occupier. The restrictions that can be introduced under Article 29 include:
  • Quotas.
  • Full or partial bans on trade.
  • Safeguard duties.
  • Licensing of foreign economic operations.
  • Termination of trade preferences.
The following trade restrictions have been enacted in relation to the Russian Federation under Article 29 of the Foreign Economic Activity Law:

Penalties

17. What are the consequences of non-compliance with sanctions and export controls?
As compliance with trade sanctions is strictly monitored by the state authorities (including the Security Service of Ukraine and SСS), it is not generally possible in practice to circumvent trade restrictions.
Products will not be cleared for export if it is established, in the course of customs controls, that the goods are not authorised for export due to non-compliance with export regulations.
Depending on the nature of the violation, type of exported product, intention of the infringer and other factors, violations of export regulations can lead to administrative and criminal liability, for example:
  • Failure of an exporter to declare precisely and accurately information with respect to the exported goods (description of the goods, quantity and so on) is punishable by a fine equal to 100% of the value of the exported goods and seizure of the goods (Article 472, Customs Code).
  • Circumvention of (hiding from) customs control when exporting products (for example, by giving one product the appearance of others, hiding goods, or the submission of documents containing false descriptions of goods or their country of origin, or false information necessary to determine tariff classification and customs value) is punishable by a fine equal to 100% of the value of the exported goods and seizure of the goods (Article 483(1), Customs Code).
  • Submission by an exporter of false information on a customs declaration with the purpose to evade customs duties is punishable by a fine equal to 300% of the unpaid customs duties and charges due (Article 485, Customs Code).
  • Smuggling (that is, the movement of certain goods across the customs border of Ukraine bypassing customs control (including cultural valuables, poisonous, strong, radioactive or explosive substances, and 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 is punishable by imprisonment for a term of five to 12 years and by confiscation of the goods (Article 201, Criminal Code).

Compliance

18. Are businesses subject to specific compliance requirements? What practical steps should a business take to ensure compliance with trade sanctions and import/export requirements?
There are no mandatory compliance programmes for companies in relation to sanctions applied under the Sanctions Law and retaliatory measures. However, due to the practical consequences of sanctions (such as the impossibility of making payments through banks, the customs clearance of products and so on), in practice, many businesses usually take all reasonable measures to ensure compliance with applicable legislation before conclusion of any contracts and check whether counterparties are included on any sanctions lists.
However, there are mandatory compliance requirements for:
  • Certain public/municipal companies, and legal entities engaged in certain public procurement processes, which must implement anti-corruption programmes and measures, and designate a person in charge of their anti-corruption programmes (Chapter X, Law On Prevention of Corruption No. 1700-VII dated 14 October 2014).
  • Legal entities in relation to personal data processing requirements (Law On Protection of Personal Data No. 2297-VI dated 1 June 2010).

Foreign Trade Barriers

19. What is the procedure for local exporters to complain against foreign trade barriers contrary to the WTO or other trade agreements?
The interaction between the government and businesses on the introduction of trade barriers against Ukraine is governed by the Regulation on Protection of Ukraine's Rights and Interests in Trade and Economic Field within the Framework of the WTO approved by CMU Resolution No. 346 dated 1 June 2016 (Trade Interests Regulation).
The Trade Interests Regulation defines, among other things, the rules and procedures on protection of the rights and interests of Ukrainian companies through all the stages of the WTO dispute settlement process, from the consultation stage to the implementation of recommendations or rulings of the WTO DSB. The Regulation expressly recognises the right of Ukrainian companies to apply to the Ministry of Economy if any WTO member violates the WTO agreements, as well as sets out further procedures (such as for the initiation of a dispute).
In addition, the state bodies and foreign diplomatic missions of Ukraine monitor trade barriers applied by WTO members with respect to Ukraine. When relevant violations are detected, the Ministry of Economy must be notified within five business days to initiate the relevant procedures and address the violations.
Although Ukrainian law is silent on how local exporters can refer issues to the Government of Ukraine under bilateral treaties, in practice it is likely that the same procedure can be applied for violations under FTAs.

Developments and Reform

20. Are there impending developments or proposals for reform affecting international trade in goods and services?
On 27 December 2017, the CMU approved the Export Strategy of Ukraine: Roadmap for Strategic Development of Trade for the Period 2017-2021 (Export Strategy), envisaging an action plan for key vectors of export development in Ukraine. As specified in the Export Strategy, the most promising sectors for Ukraine's exports are:
  • Information and communications technology.
  • Creative industries.
  • Tourism.
  • Maintenance and repair of aircraft.
  • Machinery.
  • Food industry.
  • Production of spare parts for the aerospace and aviation industry.
The document also provides a list of new markets that would replace traditional export markets where access was restricted due to the political situation. These include EU, Egypt, India, Belarus, Georgia, Moldova, Japan, China, Bangladesh, and so on. Under the Export Strategy, Ukraine will create institutional and other capacities to facilitate exports. The Export Strategy is currently being updated.
Ukraine is also revising its legislation in the field of trade defence instruments to fully align it with established WTO jurisprudence. In 2020, the Ministry of Economy presented updated draft laws elaborated in collaboration with the legal and business community. These draft laws were submitted for the consideration of the Ukrainian Parliament at the end of 2020 and are expected to be adopted in the near future.

Contributor Profiles

Anzhela Makhinova, Partner

Sayenko Kharenko

T +38 044 499 6000
F +38 044 499 6250
E amakhinova@sk.ua
W www.sk.ua
Professional Qualifications. Attorney-at-law, Ukraine
Areas of Practice. International trade/WTO; trade defence remedies, contractual structuring; contract law; distribution; franchise; agency.
Recent Transactions
  • Representing clients in trade defence proceedings both in Ukraine and abroad. Has advised clients in more than 50 trade remedies cases.
  • Representing clients in WTO dispute settlement proceedings and advising clients on different WTO issues.
  • Advising clients on issues related to compliance with foreign trade regulations, such as sanctions, importation/exportation, foreign currency regulation, and so on.
Languages. English, Ukrainian, Russian
Professional Associations/Memberships. Country expert of the International Distribution Institute (IDI) on franchising, distribution and agency in Ukraine; Chair of the working group on international trade of the American Chamber of Commerce in Ukraine.
Publications. Frequent author of international and Ukrainian publications (more than 70) for example, The International Trade Law Review, - Edition 5 (published in September 2019 - editors Folkert Graafsma, Joris Cornelis), Chapter on Ukraine.

Victoria Mykuliak, Senior Associate

Sayenko Kharenko

T +38 044 499 6000
F +38 044 499 6250
E vmykuliak@sk.ua
W www.sk.ua
Professional Qualifications. Senior Associate, Ukraine; Germany
Areas of Practice. International trade/WTO-related issues; regulatory advice; contractual structuring (distribution, franchise, agency agreements).
Recent Transactions
  • Representing clients in WTO dispute settlement proceedings and advising on different WTO issues.
  • Representing clients in trade defence proceedings both in Ukraine and abroad.
  • Advising on market access to the Ukrainian and EU markets (tariff and non-tariff regulation including application of TBT and SPS measures).
  • Advising on the functioning of FTAs concluded by Ukraine, and so on.
Languages. English, Ukrainian, Russian
Professional Associations/Memberships. American Chamber of Commerce in Ukraine; European Business Association; Ukrainian Bar Association.
Publications. Author of a number of publications relating to international trade issues in Ukraine and abroad, for example, Russia - Measures Concerning Traffic in Transit. WTO Dispute Settlement System. Report of the Panel in Latin American Journal of International Trade Law, Volume 7, Issue 1, Year 2019 ISSN: 2007-7440.
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Law stated as at 01-Jul-2021
Resource Type Country Q&A
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