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On 11 March the European Commission announced a proposal for a package of measures to help stabilise Ukraine’s economy, including the temporary removal of customs duties on Ukrainian exports to the EU. Once adopted by the EU, the measure will allow Ukrainian exporters to benefit from preferential access to the EU’s market of 500 million consumers in line with the schedule of concessions negotiated under the Deep and Comprehensive Free Trade Agreement negotiated between the EU and Ukraine. Because the EU is implementing the measures unilaterally, Ukraine will not have to provide extra access to EU exports in return. The temporary lifting of customs duties will be total or partial, depending on the sector. The proposal is in the form of an EU Council/Parliament Regulation.
The proposal in detail:
• Industrial Products: Existing EU tariffs for industrial goods exported from Ukraine will be removed immediately for 94.7% of products. For the remaining handful of products (some chemical products, etc.) the tariffs will be reduced.
• Agricultural Products: For agricultural goods, the EU has taken important but more limited action to open up its market to Ukrainian agriculture. This will ensure the European agricultural sector is not harmed by this unilateral trade action.
In concrete terms, the EU will grant immediate and unlimited preferences to 82.2% of Ukraine’s exports. For the other products (cereals, pork, beef, poultry and a handful of additional products) a partial liberalisation is achieved by the granting of duty-free tariff rate quotas (TRQs), which limit the amount of certain goods able to benefit from the trade preference.
• Processed food products: The EU will grant immediate preferences to 83.4 % of Ukraine’s exports. The remaining 15.9% will be partially liberalised through TRQs.
• Safeguard systems: In order to prevent any risk of fraud, the entitlement to benefit from autonomous trade preferences is conditional on the compliance by Ukraine with the relevant procedures linked to the ‘rules of origin’ of products as well as involvement in effective administrative cooperation with the EU. Moreover, Ukraine must abstain from introducing new duties or charges having equivalent effect or new quantitative restrictions or measures having equivalent effect or from increasing existing levels of duties or charges or from introducing any other restrictions.
Safeguards are available and the reintroduction of normal customs duties is possible where products cause, or threaten to cause, serious difficulties to Union producers of like or directly competing products. This system is based on statistical data collected from national customs officials throughout the EU. In case the data demonstrates a sharp or swift increase of imports (meaning that, for example, products originating from another country (not Ukraine) end up flooding the EU market through false Ukrainian certificates of origin and benefit unduly of the DCFTA), the EU may re-establish the tariffs on a said product.
The idea is not to await the entry into force of the Association Agreement’s (AA) provisions on a Deep and Comprehensive Free Trade Area (DCFTA), but to advance the implementation of its tariffs section by means of autonomous trade preferences and to start unilaterally the reduction or elimination of the EU’s customs duties on goods originating in Ukraine. However, the preferences are not a substitute for the DCFTA and will be granted for a limited period only: until 1 November 2014. It is expected that the DCFTA between the EU and Ukraine will be signed and provisionally apply before the 1st November 2014 in which case the unilateral system of autonomous trade preferences ends.
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