Business news from Ukraine

UKRAINE TO INTRODUCE DUTY ON IMPORT OF WIRES

The Interdepartmental Commission on International Trade (ICIT) published its decision of April 23 this year in the Uriadovy Kurier newspaper on the application of a special duty on the import of wires to Ukraine, regardless of the country of origin for a period of three years: in the first year of the duty application it will be 23.5%, in the second – 22.3% and in the third – 21.2%. According to the announcement, the decision will take effect 30 days after publication. “This case is unprecedented, since the decision of the commission was not published for almost five months due to pressure from some MPs and officials who lobbied for the interests of importers,” Olena Omelchenko, a partner at Ilyashev & Partners, which represented the interests of Ukrainian manufacturers, said, commenting on this publication in a Tuesday release.
According to her, special duties will only apply to interchangeable goods to prevent problems with shortages.
According to the ICIT document, on July 28, 2020, at the initiative of the Odeskabel and Yuzhcable factories (in total, they produce over 50% of these products in Ukraine), the ICIT initiated a special investigation into the import of insulated wires, cables and other insulated electrical conductors to Ukraine, and also fiber optic cables. These are commodity codes according to Ukrainian foreign activity classifier 8544 49 20 00, 8544 49 91 00, 8544 60 10 10 8544 60 10 98, 8544 60 90 10 8544 60 90 90, 8544 70 00 10 8544 70 00 90.
During the investigation period – from the beginning of 2017 to the middle of 2020 – import volumes surged by 128.8%, the share of imports in total production – by 180.4%, in consumption – by 74.8%.
“The growth of imports of goods to Ukraine was due to such unforeseen circumstances as an increase in production, an increase in warehouse stocks and exports of goods from China, an exacerbation of trade tensions between China and the United States, a decline in demand in Belarus, global trends in the development of the renewable energy industry and the introduction of 4G technology,” the commission said.
According to the ICIT, as a result, with an increase in consumption by 30.9%, the volume of domestic production decreased 7.3%, sales fell by 8.6%, sales profit slid by 38.9%, while prices decreased 9.2%, and an increase in production costs by 3% was seen.
According to the State Customs Service, imports to Ukraine under code heading 8544 insulated wire, cable and other insulated electrical conductors, optical fibre cables in the first half of 2021 amounted to 30,200 tonnes by $310.95 million, having increased by 24.6% vs. 44.9%.
The export of these products in January-June-2021 amounted to 40,900 tonnes for $882.6 million, which, respectively, is 40.1% and 57.9% higher than in January-June 2020.
Among the countries from which most of the similar products are imported to Ukraine in monetary terms are Hungary (29.4%), Poland (17.2%), China (9.6%), Romania (11.4%), Czech Republic (7.7%) and Germany (7.4%), while the main countries of export of Ukrainian products are Germany (23.2%), Poland (19.7%), Romania (14.3%) and Hungary (13.8%).
The commission said that duties will not be applied to imports originating from a number of countries, including Iceland, Liechtenstein, Norway, Switzerland, Montenegro, Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Moldova, Uzbekistan, Tajikistan, Turkmenistan, Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic.
This list also includes Chad, the Union of the Comoros, Congo, Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Republic of Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal , Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Sudan, Timor Leste, Togo, Tuvalu, Uganda, Tanzania, Yemen, Zambia, Brazil, Mexico and Indonesia.
The introduction of duties was supported by the Ukrelektrokabel association, which unites 16 enterprises, including 12 manufacturers of cable products, three manufacturers of basic materials and Ukrainian Research Cable Industry Institute. More than 95% of cables and wires used in Ukraine are annually produced at the facilities of the enterprises belonging to the association, with a total value of more than UAH 3.9 billion per year.
At the same time, the American Chamber of Commerce in Ukraine opposed it. “The potential introduction of additional import duties will actually be an additional tax for the telecommunications industry. This will negatively affect the investment ability of mobile network operators, since they will have to pay additional duties instead of investing in infrastructure,” the American Chamber of Commerce said.

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UKRAINE INTRODUCES SPECIAL DUTY ON IMPORT OF PVC AND POLYETHYLENE

The Interdepartmental Commission on International Trade (ICMT) of Ukraine has introduced a special three-year duty on the import of some types of polyvinyl chloride (PVC) suspension and polyethylene, reducing its rate compared to the preliminary duty from 18% to 12.4% in the first year and again slightly narrowing its application in relation to PVC.
As stated in the announcement in the Uriadovy Kurier newspaper on November 21, the decision of the commission under an application of Karpatnaftokhim LLC (Kalush, Ivano-Frankivsk region) was made on November 20.
In the first decision made on May 22, the special duty was applied to polyethylene with a specific gravity of 0.94 or more, classified by codes 3901 20 10 00, 3901 20 90 00 of tariff heading, and polyvinyl chloride, classified by codes 3904 10 00 00, 3904 21 00 00, 3904 22 00 00.
This decision came into force on June 8, was suspended by the District Administrative Court of Kyiv on June 10 in the form of an interim measure under a claim of Subos-Techno LLC, and now the ICMT canceled it. The plaintiff said that initially the investigation was initiated under two commodity codes of the Ukrainian tariff headings, and the special duty was introduced under three codes, of which only one coincides with the original two. Subos-Techno also claimed that the PVC of the KSR-67 brands (for the production of rigid, semi-rigid and plasticized PVC, pipes, profiles, films, sheets) and KSF-70 (for the production of plasticized films, profiles, insulation, injection molded parts) are also different from those imported on the market.
As a result, on June 22, the commission narrowed the application of the provisional duty on PVC, indicating that it is a product with a Fickentcher constant in the range from 59 to 72, which can be classified under code 3904 10 00 00, except for emulsion and microsuspension polyvinyl chloride.
In the new decision, the duty is set for PVC with a Fickentcher constant from 64 to 69.

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UKRAINE TO INTRODUCE ZERO DUTY ON WINE IMPORTS FROM EU FROM 2021

Zero duty on the import of wine from the EU will be introduced from 2021 in accordance with Ukraine’s commitments to zero import duties on a number of goods within a seven-year period after the signing of the economic part of the Association Agreement with the European Union, the Development Director of the Ukrainian Horticultural Association, the international consultant to the UN FAO, Yekateryna Zvereva, has said.
“From 2021, a zero duty will be introduced on the import of wine into Ukraine (from the countries of the European Union). At the same time, the situation in the wine market is not the best today – wine import to Ukraine increased by 25-30% compared to last year,” she wrote in a column to the Interfax-Ukraine agency.
She clarified that at present the duty on the import of wine from the EU is EUR 0.3-0.4/liter.
With reference to the data of the State Statistics Service, Zvereva reported that in 2019 Ukraine exported $11.9 million worth of wine. At the same time, Kazakhstan became the largest foreign market for Ukrainian winemakers, where products worth $1.3 million were delivered. In addition, one of the largest markets remains Germany, where $1 million worth of wine was exported.
At the same time, according to the expert, import of wine last year amounted to $ 146.7 million.
In addition, in the first half of this year, according to the State Customs Service, Ukraine exported $6.1 million worth of wine, while imports amounted to $67.9 million, the expert said.

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