. /.RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/UKR/67
29 July 1999
(99-3197)
Working Party on the
Accession of UkraineOriginal:  English
ACCESSION OF UKRAINE
Memorandum on State Trading Enterprises
The following information concerning the state trading enterprises of Ukraine has been
received from the Governmental Commission on Ukraine's Accession to WTO.
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The concept of “state trading enterprises”, according to the definition applied to such types of
enterprises in the Law of Ukraine “On Business”, refers to enterprises owned by the state and
operating with state property. Communal enterprise s, operating with the property of corresponding
territorial communities, are not considered as state enterprises.
Legislative and normative acts of Ukraine stipulate equal rights and responsibilities for trade
enterprises, irrespective of the form of ownershi p, in such matters as taxation, financing, lending,
price formation, bookkeeping records and reporting, le gal liability, etc. State trading enterprises are
not privileged in government procurement matters.
Furthermore, as a result of the Decree of the President of Ukraine “On the commercialization
of state trade and public catering” No.70, 31 January 1992, the number of state trading enterprises is
greatly reduced. Mainly they are enterprises whose activity is directly connected to servicing certaincategories of citizens working under special conditions  or in closed territories; they include certain
organisations under the Ministry of Defense, the Ministry of Energy, the Ministry of Internal Affairs,
etc.
Since 1996, the ratio of state enterprises to the overall number of production enterprises has
clearly been decreasing, as has their share in the total production output. While in 1996 the proportion
of state-owned enterprises to the overall total number of producer enterprises was 28.8 per cent, it was
24.3 per cent in 1997, 19.9 per cent in 1998, and 16.6 per cent in Q1/99. Actually, their proportion to
the total number of producer enterprises has declined by over 40 per cent compared to 1996. In terms
of production volumes, the proportion of state enterprises to the total production output was 40.6 percent in 1996, 34.7 per cent in 1997, and approximately one-third in 1998 and Q1/99.
The number of exporting enterprises under state ownership was 1,500 in 1996 (7 per cent of
the total number of exporting members), 1,200 in 1997 (7.4 per cent), 1,100 in 1998 (7.3 per cent),
and 600 in Q1/99 (8.1 per cent). The increase in the proportion of the number of exporting enterprisesis due primarily to the drastic fall in the volume of exports. The volume of exports by state-owned
enterprises compared to total exports was 17 per cent in 1996 and 1997, 18.6 per cent in 1998, and 19
per cent in Q1/99. It should be noted that the increase in this figure is not connected with absolute
increases in trade volumes by state-owned enterpri ses, but to the reduction in the overall volume of
exports.WT/ACC/UKR/67
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The number of importing enterprises under state ownership compared to the total number of
importing enterprises was 8 per cent for the three years (1996-1998) and 6.6 per cent in Q1/99. In
addition, the ratio of value of commodities imported by state-owned enterprises compared to total
imports, fell from 20 per cent in 1996 to nearly 10 per cent in 1997, 1998, and Q1/99.
During the 1996-1998 and Q1/99, over 99 per cent of the enterprises participating in external
trade in commodities had a combined volume of less than 3 per cent of the total volume of
commodities import and export. Since 1996, the Mariupol Illich Metallurgical Works open joint-stock
company, the Azovstal Metallurgical Works open joint-stock company, the Zaporizhstal
Ordzhonikidze Metallurgical Works open joint-stock company, the United Energy Systems Ukraine
closed joint-stock corporation with foreign invest ment, the Ukrgazprom joint-stock company (all the
aforementioned under collective ownership), and the Kryvorizhstal State Mining and Metallurgy
Works (under state ownership, city of Kryvyi Rih) have each had external trade in commod ities of
between 3 and 10 per cent of the overall country totals, and in Q1/99 the Naftogaz Ukrainy national
joint-stock company joined this group.
During 1992–1998 the trade and public catering sector experienced significant market
reforms, part of which entailed the elimination of centralized distribution of commodity resources;
former markets, trusts, associations, etc., were liquidated; trade enterprises acquired full economic
independence by changing their forms of ownership; and the administrative management hierarchy
was replaced by horizontal relations between market participants.
As a result of these organisational and legal transformations, at the start of 1998 (according to
statistical reports) 13.1 per cent of retail trade enterprises remained under state ownership (7.2 per
cent under general state ownership and 6.9 under communal ownership), as well as 24.5 per cent of
public catering enterprises (11.9 per cent under general state ownership and 9.6 under communalownership), and nearly 5 per cent of wholesale enterprises. In retail trade 78 per cent of enterprises
were collectively owned, as were 69.5 per cent of public catering enterprises, while 6 and 9 per cent
of such enterprises, respectively, were under private ownership.
In the overall volume of retail commodity circulation in 1998, the proportion of state-sector
enterprises was 10.8 per cent, with 78.4 per cent collective enterprises and 9.9 per cent private
enterprises (compare 12.3 per cent, 78.5 per cent, and 9.2 per cent, respectively, in 1997).
At the same time we note that, due to the critical economic conditions, budget financing of
trade enterprises has not been fulfilled for several year, and no refunds for any kind of expenditures
are planned for this sector in the near future.
The above data established that the role and place of state enterprises in the trade sector are
becoming less important with each passing year, and their number has every reason to diminish
further with the passage of time.
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