. /.  WORLD TRADE  
ORGANIZATION   
G/TRIMS/W/109 
20 September 2012 
 (12-5055) 
Committee on Trade-Related Investment Measures Original:   English 
  
 
CERTAIN LOCAL CONTENT PROVISIONS IN THE DRAFT LAW No. 10183  
ON AMENDMENTS TO THE LAW OF UKRAINE  
"ON ELECTRIC POWER INDUSTRY" 
 
Questions from the EUROPEAN UNION 
   The following communication, dated 19 September 2012, is being circulated at the request of the Delegation of the European Union.  
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  On 18 November 2011, Ukraine adopted amendments to its Law on Electricity.    On the 4 July 2012 the Verkhovna Rada of Uk raine adopted further amendments in first 
reading the Law No. 10183 "On Amendments to the Law of Ukraine "On Electric Power Industry"".  
  The main aim of the amendments to the Law on Electricity is to promote the generation of 
electricity from renewable resources (solar, wind, biogas, waste, etc.).   
 As they stand, the amendments of 2011 and th e amendments adopted in first reading in 2012 
to the Law on Electricity seem to develop specific requirements.    On the one hand, there are requirements for the purchase and payment of electricity by energy supply companies. The amendments would impose for new investments in energy power plants "local 
component requirements" related to raw materials, supplies, fixed assets, works and services.  The 
share of this local component would considerably increase over the next year s, since the amendments 
set the share of Ukrainian component at 15% in 2012, 30% in 2013 and 50% in 2014.   On the other hand, the new legislative regime  would also create a green Feed-In-Tariff (FIT) 
in relation with the production of electricity fro m renewable sources.  The amendments concerning 
the production of electricity pro duced from renewable energy resources would make the granting of a 
Feed-in-tariff contingent on the purchase or use of  products of domestic origin or from a domestic 
source for the production of such electricity.    The European Union has already discussed  the measures adopted at the end of 2011 
bilaterally with Ukraine. These measures and the amendments adopted in first reading in 2012 raise 
concerns in terms of WTO compatibility and the following clarifications from Ukraine would be appreciated:  G/TRIMS/W/109 
Page 2  
 
  Clarifications regarding the status of the law and its amendments 
 
 Following the adoption of the amendments referre d to above in first reading in July, it 
is our understanding that a second reading is to take place and that the Law will be 
signed by the Ukrainian President.  
 
Could Ukraine inform about when those step s are expected to be taken and when the 
Law will effectively enter into force?  
 
 We would also appreciate that Ukraine circulates an English translation of the draft 
legislation under consideration.  
 Could Ukraine inform whether the rele vant measures would be conferred any 
retroactive effect?  In particular, would those amendments be applicable to investments started before the entry into force of the new Law?  If the relevant 
measures were entitled to have retroactive e ffect, there could be substantial problems 
for investors in pursuing their activities a nd a deterioration of the general business 
climate. 
 
Clarifications regarding th e measures at stake 
 
 Could Ukraine explain in detail how the me asures would be applied, both regarding 
the local component requirements imposed in power industry equipment construction 
and the green Feed-In-Tariff (FIT). As to the latter, clarifications would be welcome 
regarding who would pay the tariff and to whom.  
 
 On the basis of the currently available info rmation, the European Union has questions 
as to the compatibility of these amendmen ts with Ukraine's WTO obligations. 
Therefore, could Ukraine explain how the measures at stake would be compatible with the obligations set out in Article II I(4) of GATT (national treatment obligations) 
and of Article 2 of the TRIMs Agreement  in conjunction with pa ragraph 1(a) of the 
Annex (which refer to Art III GATT and wh ich prohibit local content requirements). 
Could Ukraine also clarify how the Feed-in- Tariff - which seems to contain a subsidy 
element contingent upon the use of local c ontent - is compatible with the Agreement 
on Subsidies and Countervailing Measures (in pa rticular Article 3.1(b) and 3.2 of the 
SCM Agreement)? 
 
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