RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/ACC/SPEC/UKR/6/Add.3 
7 January 2005 
 
 (05-0073) 
Working Party on the 
Accession of Ukraine Original:   English 
 
 
 
ACCESSION OF UKRAINE 
 
Questions and Replies on Domestic Support and  
Export Subsidies in the Agricultural Sector  
 
Addendum  
  The following submission is being circulated at the request of the Delegation of Ukraine.  
 
_______________ WT/ACC/SPEC/UKR/6/Add.3 
Page 2  
 
 - State Support of Agriculture 
Question 1 Based on our preliminary review of this new law, we are concerned that certain provisions are 
not WTO-consistent. 
We also need a better understanding of how certai n support provisions will operate in order to 
evaluate how they should be notified to the WTO. 
In particular, we are very concerned with th e provisions of Article 8, which allow for the 
imposition of import quotas (Article 8.6(d)), as well as the use of minimum import prices (Article 8.8.1(a)). 
These measures are clearly WTO-inconsistent.  When does Ukraine intend to introduce 
amendments to this law to bring it into compliance with WTO rules?   
Answer: 
 
Ukraine is going to amend the Law "On State Support to Agriculture of Ukraine" before accession to 
the WTO. 
We have some specific questions about different prov isions in the law, which we can present now or 
in writing (in any event, we will submit in writing after the meeting). 
Law "On Amending Certain Laws of Ukraine on Taxa tion of Agricultural Enterprises and Support of 
Social Standards of Their Employees" 
Question 2 
We understand that Ukraine also adopted a law "On Amending Certain Laws of Ukraine on 
Taxation of Agricultural Enterprises and Support of Social Standards of Their Employees" and 
that this law repeals the current VAT system th at supports farmers.  Has Ukraine submitted 
this text to the Secretariat for distribution and comment? 
If not, please provide a copy of the legislat ion to the Secretariat as soon as possible. 
Answer:  
The term of action of special regime of VAT (VAT  accumulation and zero rates of VAT for milk and 
meat) applied to agricultural producers is extende d till 1 January 2005 by the Law of Ukraine "On 
Extending the Action of Certain Provisions of the Law of Ukraine 'On Value Added Tax'" No.1352.  
Beginning from 1 January 2005, the Law of Ukra ine "On Amending Certain Laws of Ukraine on 
Taxation of Agricultural Enterprises and Support  of Social Standards of Their Employees" 
supplements the Law "On VAT" with a new Article  81 on the new special regime of taxation of 
agricultural producers.  The new special regime pr ovides for taxation with a lower VAT (10 per cent 
till 1 January 2007) and allows agricultural producers to  use the computed tax at their own disposal. 
The regime is applied on a voluntary basis.  If the agricultural enterprise deci des to apply the special 
regime, it needs to register as a subject of special regime, if not – the common regime of VAT payment with rate of 20 per cent shall be applied.  WT/ACC/SPEC/UKR/6/Add.3 
 Page 3 
 
 
 Ukraine will provide the text of the Law "On Am ending Certain Laws of Ukraine on Taxation of 
Agricultural Enterprises and Support of Social Sta ndards of Their Employees" supplements the Law 
"On VAT" to the Secretariat in the nearest future. 
Question 3 
This law establishes a 10 per cent VAT on domestic agricultural products and a 20 per cent 
VAT on imported ones.  This is a clear violat ion of GATT Article III.  When will Ukraine 
amend this law to bring it into conformity with WTO rules? 
Answer:  
In order to remove the inconsistency with WTO ru les, Ukraine is going to amend the Law of Ukraine 
"On Amending Certain Laws of Ukraine on Taxati on of Agricultural Enterprises and Support of 
Social Standards of Their Employees" before accession to the WTO. 
Question 4 
We continue to believe that it is very importan t to make sure we have a strong understanding of 
Ukraine's current agricultural programs in order to evaluate the best way forward on the issues 
of the base period and supporting tables. 
At the May 2004 plurilateral meeting, we focused our comments on the Annex to 
WT/ACC/SPEC/UKR/1/Rev.9 (starting on page 36).   
We reserve the right to submit technical comm ents on Ukraine's supporting tables once an 
appropriate base period has been identified a nd supporting tables have been provided for those 
years. 
We would reiterate our position that no tax exemptions shall be included in the supporting 
tables.  Ukraine's revised domestic support ta bles should not include any tax exemptions or 
write-off. 
Answer:  
Ukraine excluded tax exemptions and write-offs from its tables for the base period 1994-1996.  In the 
tables for 2000-2002 tax incentives provided through the mechanism of VAT, are explained by the 
reservation of a sum to be taken into account in AM S in the future similar programs of support, which 
will be provided in 2005 via direct budgetary transfers. 
Question 5 
We remain puzzled by Ukraine's explanation of why it has excluded a program for public 
stockholding for food security purposes from its tables.  The program either meets the criteria or it doesn't.  If Ukraine has determined that  the program does not meet the criteria, then 
nothing should be entered for this category. 
Answer: 
 
Ukraine acknowledges that the program of public  stockholding for food security purposes during the 
base period did not correspond to the criteria of paragraph 3 of Annex 2 of the Agreement on agriculture. That's why the sum for financing this program is not included in Supporting Table DS:1. 
The explanation was provided at the page 34 in Annex to document WT/ACC/SPEC/UKR/1/Rev.9. WT/ACC/SPEC/UKR/6/Add.3 
Page 4  
 
 The inclusion of the name of program "public  stockholding for food security purposes" into 
Supporting Table DS:1 means that Ukraine is going to  introduce this program in the future in line 
with the criteria of paragraph 3 of Annex 2 to th e Agreement on Agriculture.  If the right to introduce 
this program in the future is not connected with th e inclusion or non-inclusion into the tables, then 
Ukraine may at all exclude this program from its Supporting Tables. 
Question 6 With respect to infrastructural measures, we ar e still confused as to why Ukraine believes it 
needs to include any expenditure related to the pr ovision of social services (e.g., institutions for 
education, health protection, culture and sports , household service facilities, beautification of 
territories, and in villages with deficit of labo ur resources - besides th at - house-building is 
conducted at the expense of State and local budget s).  These services don't belong in any of the 
supporting tables, that is to say, they don't need to be notified. 
Answer: 
 
Ukraine will take into account this comment in it s updated tables and will exclude this expenditure 
from the supporting table DS:1.  
Question 7 We appreciate Ukraine's review of payments re lated to environmental programs.  Can you 
confirm that the programs that were notified under this category involve direct payments to 
producers?  Can Ukraine also identify whic h programs were removed from this category and 
where they have subsequently been notified (i.e., in which supporting table)? 
Answer: 
 
Payments related to the environmental program s notified in document WT/ACC/SPEC/UKR/1/Rev.7 
of 19 February 2002 were reviewed and ab ridged during the preparation of document 
WT/ACC/SPEC/UKR/1/Rev.8 of 12 June 2003.  In the document WT/ACC/SPEC/UKR/1/Rev.9, 
these payments were supplemented with the bu dgetary outlays for program "Fundamental Land 
Improvement" transferred from the Supporting Table DS :9, since they meet the criteria of paragraph 
12 of Annex 2 to the Agreement on Agriculture. 
Question 8 
The inclusion of negative components of the s upport amounts in the tables of the amber box is 
not an objective measure that avoids "inflating" the expenditures included in this box; it's quite the opposite. 
First, the fact that there is an administered pr ice inferior to the international price does not 
mean that said price is the one effectively coll ected by producers.  Thus, in the case of most 
support or direct payment programs depending on  a price difference, producers may export or 
not sell their output to the government a nd collect the international price.   
Also, the negative components of the support am ounts would allow to circumvent the amber box 
reduction commitments, making it possible to set  low administered prices for some products so 
that the subsidy level for others is maintained  or increased and the bound price is not exceeded. 
This situation could be complemented by the la tent possibility of selling the products at a low 
administered price in a market other than the domestic one and, thus, collecting an international price.   WT/ACC/SPEC/UKR/6/Add.3 
 Page 5 
 
 
 Additionally, WTO Members are negotiating di sciplines concerning all forms of distorting 
domestic support, which are sought to cope with the negative components of the support 
amounts.  
Answer:  
The search for hidden opportunities to invalidate Uk raine's commitments to reduce domestic support 
is groundless.  Negative amounts of market price support reflect nothing else but indicators inherent 
to the economy-in-transition circa 1994-1996.  At th at time the choice of the products' distribution 
channels was influenced not only by the government's price policy.  The government did offer the highest price, but at that time there were other beneficial channels of distribution boasting other 
advantages, namely:  receiving foreign currenc y while exporting, accumulating capital, developing 
your own business, privatizing storing and processing capacities. 
Question 9 
We are concerned with Ukraine's statement that  it is not committed to exclude the negative 
amount of market price support in its calculation of the AMS.  It is our position that negative market price support should be set to zero in s upporting table DS:5 and not subtracted.  Other 
acceding countries (such as Lithuania) have not included negative price support in the AMS 
calculation – the set these negative figures to zero as  we have described.    We expect to see 
Ukraine's revised supporting tables utilize this approach. 
Answer: 
 
Ukraine will take into account this comment. The question of the exclusion the negative amount of 
market price support from calculation of the AMS and its setting to zero in supporting table DS:5 will 
be considered at the nearest Agriculture Plurilateral Meeting. 
Question 10 
It would be appropriate to ask Ukraine wheth er those products with administered prices 
inferior to the international ones are subject to any import or export restriction and, if yes, 
require Ukraine to describe them. 
Answer:  
The list of goods under import restrictions is presented in document WT/ACC/UKR/120 Tables 3-8, 
and under export restrictions – Tables 9-19.  
Question 11 
We have concerns with the way in which Ukraine is calculating market price support.  It seems 
to us that if the Ukrainian government sets th e price for the commodity in advance ("prices 
were set and made known at the beginning of the marketing year"), then that is the price that 
should be used for the purposes of the market pr ice support calculation, not the average of what 
was actually paid. 
Answer:  
In its supporting tables, Ukraine is using the app lied administered prices, which mean the average 
purchase prices on agricultural products set by the government at the beginning of the year.  
"Average" reflects the average formed quality of th e product with consideration of the class and grade WT/ACC/SPEC/UKR/6/Add.3 
Page 6  
 
 by the regions of the country.  For example, the av erage price for wheat consists of the prices for 
wheat of classes 1-4, for milk – of grades 1-2. 
Question 12 
Moreover, there is no scope in the Agreement on Ag riculture to make the kind of adjustment to 
the fixed external reference price that Ukraine has described in this document.  Ukraine is 
correct in using either the average fob export pr ice or the average cif import price (depending 
on its status as a net importer/exporter of the product), but there should be no adjustment made for transportation.  It does not matter if the OECD makes calculations in this manner.  The 
WTO has its own methodology and should be followed correctly. 
Answer: 
 
Ukraine will take into account this comment.  This question will be considered at the nearest 
Agriculture Plurilateral Meeting. 
Question 13 
If we understand correctly, Ukraine is using the leve l of production that was eligible to receive 
the applied administered price.  So, in other words, if Ukraine announced that 1,000 tons of 
product X was eligible to receive the applied ad ministered price, Ukraine has multiplied the 
price gap times 1,000 tons.  If this is correct, we agree with Ukraine's approach.  If it is not the approach Ukraine has taken, we ask that it rec alculate market price support based on the 
approach we have outlined, consistent with Annex 3 to the URAA. 
Answer: 
 
Yes, members have understood Ukraine's approach in using the "eligible" production correctly. 
Question 14 We wish to note that the very high levels of trade distortive domestic support Ukraine proposes 
to bind in its domestic support schedule (about  US$ 1.3 billion per year in Amber Box; more 
than US$ 30 per hectare), resulting from both: 
- the use of a not recent base period (1994-1996); and 
- the fact that Ukraine, as a transition economy , is using currently high levels of support 
in its effort to overcome its soviet past. 
The level of support Ukraine is proposing to bind is too high and might disrupt world markets 
in the future.  Thus, some solution should be  agreed so as to address the concerns of members 
and the legitimate needs of Ukraine in its transition process. 
Answer: 
 
The level of domestic support set in Ukraine duri ng the 1994-1996 basic period at US $1.3 billion was 
never a destabilizing factor for the world markets in the past.  So the statement to the effect that it 
could happen in the future is groundless.  Esp ecially since that was a ceiling amount for the AMS 
levels.  After accession that amount would be gradua lly reduced to allow a sufficient reduction of the 
AMS level of support over the next years.  The ma jor support programs will be aimed at resolving the 
industry's internal problems, as it was reiterated by Ukraine at numerous occasions.  We are not in the 
position to agree with the description of Ukraine's AMS as "too large".  The level is set at only  WT/ACC/SPEC/UKR/6/Add.3 
 Page 7 
 
 
 11 per cent of total value of production of Ukraine' s agricultural goods, which is perfectly compatible 
with the AMS levels set by other counties with  transition economy.  For instance, Lithuania's 
US$ 118 million of AMS for the 1995-1997 basic period represented 10 per cent of the total value of production of  its agricultural products.  
Question 15 
Are there any unspecified amber box programs that have been eliminated and/or reduced since 
1997?  If yes, please indicate them. 
Answer: 
 
Since entering the negotiations Ukraine retained  the right to implement any new "amber box" 
programs and cancel or reduce any existing programs.  It's important to know that since 1996 until 
now Ukraine has never exceeded the basic period's AMS level.  
- Specific Questions on the Law on State Support of Agriculture of Ukraine 
Question 16 Does the Law cover animal products?  There a re other laws dealing with support for sugar 
production.  Is raw sugar covered by this law as well? 
Answer:
 
Yes, the Law of Ukraine "On State Support of Agricu lture of Ukraine" No.1877 contains the articles, 
which provide for the state support to the animal husbandry producers.  Article 15.2 lists the animal 
products, which are the objects of budgetary subsidies.  This Law also covers the sugar produced of 
beets (CN FEA code 170112), see Article 3.3.1 
Question 17 
What is the relationship of this law to the Law on State Regulation of Import of Agricultural 
Products No. 468/97-VR dated 17 July 1997 which would appear to prohibit minimum prices on agricultural goods except sugar and sugar beet? 
Answer:
 
Indeed, Article 5 of the Law of Ukraine "On the State Regulation of Import of Agricultural Produce" 
No. 468/97 of 17 July 1997 prohibits the fixation of obligatory minimal prices on sale of agricultural 
produce, except for obligatory minimal sales prices on sugar beet for production of sugar of quotas "A" and "B", and sugar of quota "A", which are dete rmined according to the law of Ukraine "On State 
Regulation of Production and Sales of Sugar" 
But pursuant to point 8, Article 18, "Final Provisi ons", of the Law of Ukraine "On State Support of 
Agriculture of Ukraine" No. 1877, provisions of other normative and legal acts shall be effective in 
the parts that do not contradict to the provisions of the Law of Ukraine "On State Support of 
Agriculture of Ukraine" No. 1877 of 24 June 2004. WT/ACC/SPEC/UKR/6/Add.3 
Page 8  
 
 Question 18 
Article 2.7 defines the concept of a marketing year.  Has Ukraine established specific marketing 
years for crop and livestock products?  For exampl e, in the United States, the marketing year 
for corn is October/September. 
If so, Ukraine should include this informat ion in its next revision of the DS tables. 
Answer:
 
For the current moment, a marketing year for crop is not yet officially established, and thus, the 
provisions of the Law of Ukraine "On State Support of Agriculture of Ukraine" are not implemented yet. In preparation of the current analyses and foreca sts of market situation, the market analytics in 
Ukraine use the following marketing years: for whea t – 1 July – 31 June; for maize – 1 November – 
31 October, for sunflower seeds – 1 September – 31 August, for sugar beet – 1 September – 
31 August, and for the livestock products – cale ndar year from 1 January to 31 December. 
Question 19 
Article 4.1:  When will minimal purchase prices be set?  Prior to the start of the marketing 
year?  Will these prices be adjusted during the ma rketing year?  Is all production eligible to 
receive the minimal purchase price, or will Ukrain e announce that a specific amount is eligible 
for this price?  Will these prices be imposed as the official customs valuation for the purpose of 
applying tariffs and taxation to imports? 
Answer:
 
The minimal purchase prices will be set prior to the start of the marketing year.  Pursuant to 
Article 4.2.2, the minimal purchase price for certain  agricultural products can not be changed during 
the period established for the state price regulation in respect of these products. 
Minimal purchase price is used as an indicator for making decisions on whether to proceed with 
financial intervention. It is also set to support th e proceeds of domestic agricultural producers at the 
level that makes it impossible for an average pric e regulation subject to not make a profit. The 
customs valuation of imported goods is defined in compliance with the provisions of Article 273 of 
the Customs Code of Ukraine.  
Question 20 
Article 6 of State Support of Agriculture of Ukraine, establishes:  "In exceptional cases, the Agricultural Fund can carry out a commodity intervention if a threat 
emerges during one trading session that the equilib rium price may settle at a level that exceeds 
the maximal purchase price level or when th e Cabinet of Ministers of Ukraine issues a 
regulation in respect of sale of such objects of st ate price regulation, which is not connected with 
state price regulation (including sale from the state reserve)." 
How are those exceptional circumstances determin ed? Which entity takes the decision? Which 
criteria are used to infer that "exceptiona lity" may imply additional purchases above the 
maximum price.   WT/ACC/SPEC/UKR/6/Add.3 
 Page 9 
 
 
 Answer:  
Article 6.2.d) reads about the exceptional cases, diff erent from the ones described above in the text of 
Article 6.2. (more precisely - in paragraphs a), b) and c)).  The decision is taken by the Agricultural 
Fund. In exceptional cases, the Ag ricultural Fund may carry out a co mmodity intervention, i.e. sell 
agricultural products in order to achieve equilibrium. 
Question 21 If intervention stocks are exported, how does Ukraine ensure that it does not circumvent its 
commitment not to provide export subsidi es or pose a threat to such commitment?  
Answer: 
 
Ukraine has a relevant commitment and will comply with it.  Question 22 Article 6.1 states that commodity intervention shall be carried out by the Agricultural Fund 
through sale of products.  Can these products be exported?  Does the Agricultural Fund have 
authority to export products that it has purch ased under financial intervention (Article 7)? 
Answer:
 
Paragraph 6 of Article 6.3 stipulates that commodi ty interventions in respect to price regulation 
objects are not carried out with the purpose of their further export until 1 January 2009.  
Question 23 
Article 7.3.1 (a and b) is not clear to us.  Could you explain what is meant by "commodity 
derivatives" (7.3.1(a) and "objects of state price regulation that had previously been imported 
to Ukraine – until 1 January 2009" (7.3.1(b))? 
Answer:  
According to Point "b" of sub-item 1.5.4. of item 1.5, Article 1 of the Law of Ukraine "On Taxation 
of Income of Enterprises" No. 334/94 of 28 Decemb er 1994, the commodity derivative is a standard 
document, which certifies the right to sell and/or pu rchase in the future a st ock commodity (except for 
securities) at the agreed standard conditions. Th e rules of issue and circulation of commodity 
derivatives are determined by the authority, which is  empowered with the regulatory functions at the 
commodity stock market.  
In compliance with paragraph b of Article 7.3.1 financial interventions are not carried out until 
1 January 2009, in respect to state price regulation ob jects that have been previously imported.  Until 
1 January 2009, the Agricultural Fund is carry ing out commodity and financial interventions 
exclusively for the purpose of stabilizing the price situation at the domestic market. 
Question 24 Article 8.6 appears to provide the Government au thority to establish import quotas, which is 
not consistent with the WTO Agreement on Ag riculture.  Under what circumstances does 
Ukraine contemplate using such measures? WT/ACC/SPEC/UKR/6/Add.3 
Page 10  
 
 Answer:
 
Ukraine is going to use such measures at th e conditions and in cases envisaged by the GATT 
Articles XI and XIX. 
Question 25 
Article 9.2 describes the functions of the Agricu ltural Fund.  Specifically, 9.2.2 states that the 
Agricultural Fund "has the exclusive right for purchase and sale of state price regulation 
objects".  Does this include import and export of these products?   
Answer:  
Export and import of agricultural products is not included. 
Question 26 
Does this include the storage of  a state reserve of agricultural products, and the use of this 
reserve to intervene in the domest ic market to affect prices? 
Answer:  
In compliance with Article 9.3.1 the state foodstu ff reserve is formed by the Agricultural Fund 
exclusively to conduct commodity interventions in th e organized agricultural ma rket; in other words, 
its essence is that of an intervention fund used fo r the purposes of stabilizing price situation at the 
agricultural markets.  It is the function of the State Committee of Ukraine on State Material Reserve 
to store state (mobilized) reserves of agricultural products to insure the country's food security.  
Question 27 
Based on our reading of the provisions of Article 9.3.1, it does not appear to us that the state 
food reserve would meet the Annex 2 criteria for public stockholding for food security purposes 
because the commodities will be purchased at admi nistered prices.  If we do not understand this 
provision correctly, please explain how it will work and how it would meet the criteria of 
Annex 2, paragraph 3. 
Answer:  
The creation of the state food reserve (Article 9.3.1 of the Law of Ukraine "On the State Support of 
Agriculture of Ukraine") shall belong to the "amb er" box measures, because it is essentially formed 
with the purpose of carrying out commodity interventi ons. At the same time the function of the State 
Committee of Ukraine on State Material Reserve to  form state (mobilized) reserves of agricultural 
products to insure the country's food security is consistent with the crite ria of Annex 2 of the 
Agreement on Agriculture (green box). 
Question 28 
Article 10 discusses insurance programs.  Are we correct to understand that farmers must 
purchase insurance, i.e., that it is mandatory ?  Who will provide the insurance – private 
companies or the government?  What level of cov erage will be available?  In general, we would 
like more information on how this mechanism will operate.    WT/ACC/SPEC/UKR/6/Add.3 
 Page 11 
 
 
 Answer:  
Yes, insurance is mandatory, as is provided by th e provisions of the Law of Ukraine "On Insurance" 
and the Law of Ukraine "On State Support of Agricu lture of Ukraine". Pursuant to the Point 11 of 
Article 7 of the Law of Ukraine "On Insurance" No. 85/96 of 7 March 1996, subject to mandatory 
insurance is "the insurance of agricultural crops and perennial plantations in the state agricultural 
enterprises and grain and sugar beet in agricu ltural enterprises of all types of ownership". 
Pursuant to Point 10.1.1 of Article 10 of the La w of Ukraine "On State Support of Agriculture of 
Ukraine": 
A person is obliged to insure in a dvance the risks of loss of agricultural produce (its part) and capital 
assets (in the instances defined in sub-clauses "c" - "d " of the present sub-clause) if such a person: 
- sells any type of commodity derivative, who se basic asset is agricultural produce, at an 
organized agricultural market; 
- is a recipient of a budgetary grant-in-aid or subsidy connected with production of agricultural 
commodities or reduction of their prices; 
- is a recipient of a bank credit (loan) for ag ricultural production or purchase of capital assets if 
the interest incurred on such a credit (loan) if  fully or partially compensated (refunded) from 
the budget; and 
- is a recipient of a budgetary credit (loan) or a bank credit (loan) guaranteed by the state or 
local government for agricultural production or purchase of capital assets. 
The insurance services shall be provided by the priv ate companies – insurers. The level of coverage 
shall be established by the insurance companies acco rding to the actuary calculations and the specifics 
of the insurance product developed by them. 
Ukraine will provide a more detailed informa tion on the mechanism of the insurance program 
(Article 10) after the relevant normative acts implementing the provisions of the above Law are drafted. 
Question 29 
Article 11 sets out agricultural insurance subsidies.  Are we correct in understanding that this 
fund will subsidize 50 per cent of the cost of the premium as well as 50 per cent of the insurance deductible?  
Answer: 
 
Yes.  But such subsidies will be granted only on the condition that the insurance premium (fee) does 
not exceed 5 per cent of the sum of the insure d risk, and the insurance franchise does not exceed 
30 per cent of the sum of the noted risk. 
Question 30 
Article 12.1 makes reference to "the period before the state forward grain purchases are 
introduced" - what is meant by "state forward grain purchases"? 
Answer:  
The answer will be given later. WT/ACC/SPEC/UKR/6/Add.3 
Page 12  
 
 Question 31 
How will loan rates be established under the stat e pledge grain purchase regime?  Will it be 
based on the minimal prices established for that commodity? 
Answer: 
 
Yes.  They will be based on the minimal prices. Pursuant to Article 12.2.2, the amount of the 
budgetary loan may not exceed 80 per cent of the va lue of the pledged object, which is calculated 
proceeding from the amount of the set minimal purchase price. 
Question 32 
Article 14.2.1 and 14.2.2 discuss the costs of inputs (energy, natural gas, water, etc.) and 
transportation tariffs, and stipulates that rates for these services cannot be set higher than for 
other (non-agricultural) products and that there will be no mark-ups, surcharges, etc. for these 
services.  Can these inputs and services ever be provided at a price lower than other, non-agricultural, products?  Can Ukrainian products  for export be charged lower transportation 
tariffs than product sold within the country?  Are imported products charged a higher rate for transportation or other services?   
Answer: 
 
Article 14.2.2 clearly indicates that tariffs for tran sportation of Ukrainian e xported goods, as well as 
the cost of services on storage, loading, trans-lo ading, trans-shipment, and other services rendered by 
transport organizations, harbour, port, or storage organizations (including elevators, and grain 
warehouses) shall be set at the same level - i.e. neith er lower, nor higher - than the tariffs applied for 
rendering of such services at the domestic market or during the transit of goods. These provisions of 
the Law were incorporated into the Law with a pur pose of preventing the application of lower tariffs 
than those applied to other goods. The Law of Ukra ine "On State Support of Agriculture of Ukraine" 
does not contain the provisions which would provide for the application of higher tariffs to imported 
goods for the relevant provided services. 
Question 33 
Article 16 covers certification of objects of the budgetary (special budgetary) subsidies for 
export.  These provisions are not clear.  Is it possible for an exporter of a livestock product to 
receive a subsidy for exporting the product? 
Answer:  
No. Pursuant to the current legislation, the e xporter of livestock does not receive a subsidy for 
exporting the product. 
Question 34 Article 18.5 makes reference to provision of the Law of Ukraine "On Operations with give-and-
take raw materials in foreign economic relatio ns" and stipulates that it does not apply to 
products classified under HS chapter 1-24.  What  is meant by "give and take raw materials" 
and what does this law cover?  Why did Ukrain e choose to use chapters 1-24?  We would note 
that this coverage does not correspond to the definition of agricultural products in Annex 1 to 
the URAA.  WT/ACC/SPEC/UKR/6/Add.3 
 Page 13 
 
 
 Answer:  
According to the Article 18.5 of the Law of Uk raine "On Tolling Operations in Foreign Economic 
Relations", starting from 1 January 2005, provisions of  this Law shall not be applied to goods, which 
fall within the definition of UCN FEA (Ukrainian  Commodity Nomenclature of Foreign Economic 
Activity) groups 1 – 24.  Pursuant to the law of Ukraine "On Tolling Operations in Foreign Economic 
Relations", operations with raw materials for tollin g in foreign economic relations are the operations 
on processing (treatment, enrichment or use) of the raw materials for tolling as the result of technological process with changing of code of th e Commodity Nomenclature of Foreign Economic 
Activity, regardless of the number of performers, as well as stages of processing of these raw materials with the goal of receiving a finished pr oducts for the corresponding remuneration.  Foreign 
operations with raw materials for tolling include opera tions in which the raw material of the customer 
at particular stage of processing, as well as at the fina l stage, is the basic material and its value is not 
less than 20 per cent from the total value of a finished product.  Preliminary supplies of raw materials for tolling to the performer are mandatory with resp ect to delivery to the customer of the finished 
products made thereof. 
Ukraine is ready to submit the text of th e above mentioned Law to the Secretariat. 
Ukraine is aware that the list of goods cove red by the Uruguay Round Agreement on Agriculture 
includes the goods, which do not fall within the 1- 24 groups of UCN FEA. But according to the Law 
of Ukraine "On State Support of Agriculture of Uk raine", agricultural products that are the objects of 
price regulation and subsidy payments are listed in  the group 1-24.  That's why Ukraine uses this 
definition. 
__________