RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/ACC/UKR/141 
20 September 2006 
 (06-4471) 
Working Party on the 
Accession of Ukraine Original:   English 
 
 
 
ACCESSION OF UKRAINE 
 
Additional Questions and Replies  
 
 
 The following submission, dated 30 August 2006, is being circulated at the request of the Delegation of Ukraine.  
_______________ 
  WT/ACC/UKR/141 
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  TABLE OF CONTENTS 
 
 
II. ECONOMIC POLICIES..........................................................................................................1  
- Monetary and Fiscal Policy..................................................................................................... .1 
- Foreign Exchange and Payments ............................................................................................1  
- Investment Regime.............................................................................................................. ......2  
- State Ownership and Privatization .........................................................................................2  
- Pricing Policies ............................................................................................................... ...........4  
III. FRAMEWORK FOR MAKING AN D ENFORCING POLICIES ......................................5  
IV. POLICIES AFFECTING TRADE IN GOODS ...................................................................10  
- Trading Rights ................................................................................................................. .......10  
A. IMPORT REGULATIONS....................................................................................................12  
- Ordinary cust oms duties ........................................................................................................ 12 
- Other duties and charges....................................................................................................... .13 
- Tariff rate quotas, tariff exemptions.....................................................................................14  
- Quantitative import restrictions, in cluding prohibitions and quotas ................................21  
- Customs valuation.............................................................................................................. .....24  
- Rules of origin ................................................................................................................ .........25  
- Other customs formalities ...................................................................................................... 25 
- Preshipment inspection ......................................................................................................... .26 
- Anti-dumping, countervailing duties, safeguard regimes ...................................................26  
B. EXPORT REGULATIONS ...................................................................................................27  
- Customs tariffs, fees and charges for serv ices rendered, application of internal 
taxes to exports............................................................................................................... .........27  
- Export rest rictions ............................................................................................................ ......28  
- Export subsidies ............................................................................................................... .......29  
C. INTERNAL POLICIES A FFECTING FOREIGN TRADE IN GOODS .........................30  
- Industrial policy, including subsidies....................................................................................30  
- Technical barriers to trade, sanita ry and phytosanitary measures ...................................31  
- Sanitary and phytosanitary measures...................................................................................31  
- Trade-related investment measures ......................................................................................33  
- State-trading entities......................................................................................................... ......33  
- Free zones, special economic areas........................................................................................34  
- Government procurement......................................................................................................34  
- Agricultural policies.......................................................................................................... ......35  
- Trade in ci vil aircraft........................................................................................................ ......37  WT/ACC/UKR/141 
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  V.
 TRADE-RELATED INTELLECTUAL  PROPERTY REGIME.......................................37  
- GENERAL........................................................................................................................ .......37  
VI. POLICIES AFFECTING TRADE IN SERVICES..............................................................38  
VIII.  TRADE AGREEMENTS .......................................................................................................38  
ANNEX 1 ........................................................................................................................ ......................39  
ANNEX 2 ........................................................................................................................ ......................43  
 
  WT/ACC/UKR/141 
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  II. ECONOMIC POLICIES 
- Monetary and Fiscal Policy Question 1 This section seems quite out of date.  It needs to be updated. 
Answer:
 
Ukraine has no objections to update this section 
8.  The representative of Ukraine said that th e National Bank of Ukraine (NBU) fulfilled the 
functions assigned to it under Article 99 of the Constitution and the Law "On the National Bank of 
Ukraine" No. 679-XIV of 20 May 1999.  The principal objective of the National Bank was to ensure monetary stability, thereby minimizi ng macroeconomic risk to promot e investment and facilitate rapid 
economic growth.  The National Ba nk had managed to curb inflation and to stabilize the exchange 
rate of the hryvnia to the US dollar.  The NBU met the demand for cash through interventions in the 
foreign exchange market; it refina nced banks and supported their liquidity through the use of short 
and medium-term tenders, extension of overnight credit to banks and direct REPO operations.  When 
required, the National Bank conducted mobilizati on operations, i.e. allocated its own depository 
certificates and conducted open market transactions w ith government securities.  In 2003, Ukraine's 
[real] GDP had increased by 9.3  per cent while the annual rate of inflation had been contained at 
8.2 per cent.  In 2005, Ukraine's [real] GDP had increased by 2.4 per cent while the annual rate of 
inflation had been contained at 10.3 per cent.  
- Foreign Exchange and Payments 
Question 2 
[This section requires enactment of pending legi slation; draft Law "On Amendments to the Law 
of Ukraine "On Procedures of Payments in Foreign Currency."] 
Ukraine's response to Question 4 of document WT/ACC/UKR/137 provides insight into the 
reasons that Ukraine has enacted Article 3 of the Law "On Procedure of Payments in Foreign 
Currency" No. 185/94 of 23 September 1994 (as amende d).  However, it does not respond to the 
specific questions in paragraph 21 of the draft report, which were not answered.  We would 
appreciate more specific responses for inclusion in the text. 
Further, we appreciate the economic conditions in  the past that caused Ukraine to establish 
exchange control requirements.  We are concern ed, however, that Ukraine is now imposing 
restrictions on the financing of current internat ional transactions.  We note that the current 
balance of payments does not appear to require these restrictions.   
We note in particular the 90 day limit on prepayment for imports, which  restricts current 
account transactions.  We believe that the simp lification of procedures outlined by Ukraine in 
paragraph 20, to be implemented by enactment of the draft law "On amendments to the law of 
Ukraine "On procedures of payments in Fo reign Currency," addresses our immediate 
concerns.  However, in the longer term, as the overall financial framework in the country 
improves, we expect that the Government  of Ukraine will remove these requirements. WT/ACC/UKR/141 
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  Answer:
 
Ukraine regularly holds the consu ltations with the International Monetary Fund on currency policy 
issues in line with the GATT Article XV. 
The above mentioned measures shall be gradually eliminated along with the improvement of the 
country's overall monetary system. 
Question 3 Ukraine should provide a commitment to apply restrictions on foreign exchange only in 
conformity with WTO provisions. 
Answer:
 
Ukraine will apply measures on foreign exchange  only in conformity with WTO provisions. 
- Investment Regime Question 4 Paragraph 25:  This material probably should be  addressed later in the report, in the section on 
TRIMs. 
Answer:
 
Ukraine doesn't object to this proposal. 
Question 5 
Paragraphs 27-28:  This material probably should be addressed later in the report, in the 
section on Application of Domestic Taxation to Imports. 
Answer:  
Ukraine doesn't object to this proposal. - State Ownership and Privatization Question 6 This section, and its companion section "State-trad ing entities" which is situated later in the 
report, both need substantial revision and reorganization. 
They cover a great deal of the same material.  Ukraine's privatization program deals with both 
state-owned and controlled enterprises, and state trading entities.  Both sections have reference 
to Article XVII.   
As a consequence, we suggest they be reorganiz ed by combining them to ensure a coherent and 
complete description that will be responsive to  the draft commitment language in paragraph 
294, which covers both State-owned and -controlled enterprises, and State trading entities.  Such a reorganization will also allow for text and commitment language more properly focused 
on Privatization, separate from the discussion on such enterprises.  WT/ACC/UKR/141 
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  Answer:  
Ukraine doesn't object to the proposed changes. 
Question 7 
It also seems to us more appropriate to include the discussion of State enterprises in the front 
part of the Report, perhaps following the Pri vatization discussion, because of the systemic 
nature of the issue. 
While we appreciate the information provided, there are a number of problems with the data, 
for example, the meaning of Table 1(b) is not cl ear; the questions asked in paragraph 37 are not 
answered in the Working Party text; and paragra ph 39 seems to initiate discussion of Ukraine's 
STEs that is resumed in paragraph 292.  The material on Khlib Ukrainy in paragraphs 42 and 
paragraphs 290-1 should be unified.   
Answer:  
We provide updated table 1 (b) 
Table 1 (b): Joint-stock enterprises with State-owned and private capital (1 July 2006)  
Percentage of private ownership in statutory 
capital Industry Total 
up to 25% 25-50 50-70 75-100 
Power engineering  35 7 9 7 1 
Fuels  14   2 1 
Ferrous metallurgy 105 3 2 1 18 
Chemicals and petrochemicals 113 5 4 7 20 
Machine building and metal processing 1,296 43 35 74 176 
Woodwork, and pulp and paper industry  146 2  4 19 
Light industry  226 6 5 6 38 
Food industry  835 3 4 29 172 
Transportation 923 7 2 61 141 
Construction  1,132 3 13 20 142 
Other industries 3,970 41 43 189 612 
Total: 8,795 120 117 400 1,340 
 
Question 8 
We support the commitments in paragraphs 43 and 294. 
Answer:  
With aim to avoid duplication of commitments in  paragraph 294, Ukraine proposes to delete the 
commitment language of the first paragraph and to  remove the square brackets from the commitment 
language of the second paragraph. 
Question 9 
The combined sections will provide an opportun ity for Ukraine to describe its state-owned, 
state-controlled, and state-trading enterprises without prejudice to the issue of notification. 
We will provide drafting suggestions in writing. WT/ACC/UKR/141 
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  Answer:
 
Ukraine is awaiting the afore-mentioned drafting suggestions in writing 
- Pricing Policies 
Question 10 This section needs substantial editing and reor ganization to isolate information on pricing 
controls and requirements and exclude material be tter addressed in other sections of the report. 
Answer:
 
Ukraine doesn't object to this proposal. 
Question 11 
Specifically, the discussion of price supports for agricultural products that is scattered 
throughout the section, including Tables 6a-c,  would be better addressed in Agricultural 
Policies.  These are not price controls but rath er intervention prices to support agricultural 
prices. 
Answer:  
Ukraine doesn't object to this proposal. Question 12 The description of energy pricing in paragra phs 60-62 should be elaborated and updated. 
Answer:
 
Ukraine will update the description of energy pricing in paragraphs 60-62 in due course. 
Question 13 
The description and commitment la nguage in Paragraphs 66-67 should be revised to clearly 
distinguish the commitment from the descriptive text and to remove any issues not related to 
price controls. 
Answer:  
Ukraine has no objections to the said changes and pr oposes to re-draft paragraphs 66-67 as follows: 
66.  Some Members asked Ukraine to accept a commi tment to apply railway tariffs in conformity 
with WTO obligations and to end any discrimin ation upon accession.  A Member requested Ukraine 
to clarify, in particular, the situation with regard to transit.  In reply, the representative of Ukraine said 
that the process of harmonization of rail transporta tion tariffs had begun with the adoption of Cabinet 
of Ministers' Order No. 91-r "On Indexation of Ta riffs for Transportation of Cargos by Railway 
Transport and Related Services" of 1 April 2005.  Thus, tariffs for the transportation of coal and 
ferrous metal scrap had already been equalized.  Di fferential pricing was still applied to the tariffs 
charged for the transportation of iron ore raw materials, cast iron, rolled ferrous metal, mineral 
fertilizers, foodstuff and oil products.  As for grai n, Cabinet of Ministers Resolution No. 295-p of 
29 July 2005 had reintroduced lower tariffs for the transportation of grain until 31 December 2005.  
A moratorium on the increase of transportation tariffs  had been in force until 16 September 2005.   WT/ACC/UKR/141 
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  Following its expiration, a draft Cabinet of Mini sters Resolution "On the Indexation of Railway 
Tariffs for Freight Transportation", aimed at bri nging railway tariffs into conformity with WTO 
obligations, had been prepared.  This draft was under the consideration of relevant Ministries and 
State Committees and was expected to be adopted in the first quarter of 2006.  After its adoption, a table setting out harmonised railway transport fees by  product would be publishe d. He confirmed that 
Ukraine would harmonize dif ferential railway tariffs for the tran sportation of goods by the date of 
accession.   
67.  [The representative of Ukraine confirmed that  from the date of accession, the Government 
of Ukraine would apply price control measures in a WTO-consistent fashion, and take account of 
the interests of exporting WTO Members as prov ided for in Article III:4 and III:9 of the 
GATT 1994 and in Article VIII of the Genera l Agreement on Trade in Services (GATS).   [ H e  
confirmed that Ukraine did not apply minimum import prices to agricultural products, including raw 
cane sugar, and would not do so in the future.]  [He confirmed that Ukraine committed to not apply 
mandatory minimum price requirements to any im ported product.]  [Ukraine confirmed it would 
repeal provision of Artic le 8 of the Law "On State Support of Agriculture in Ukraine" providing for 
the application of minimum prices on imports on a te mporary basis.]  [He also confirmed that Ukraine 
would equalize differential railway tariffs  for the transportation of domestic a nd imported goods by 
the date of accession.]   The Representative of Ukraine confirme d that all rail transportation fees, 
including basic fees, surcharges and rebates,  would upon accession be applied without 
discrimination in law or in fact based on wh ether the goods are transported between domestic 
locations, whether the goods are imported or exported (w hether by land or tran sported from or to a 
port, and without discrimination in  law or in fact depending on the country of origin or 
destination) or whether they are in transit. He al so confirmed that Ukraine published notices of the 
goods and services subject to State price controls and would continue to do so after accession.  The 
Working Party took note of these commitments.]   
Question 14 
In relation to this section:  Ukraine states  in paragraph 54 that the "…Government was 
developing a draft law introducing changes to  the Law "On State Support of Agriculture in 
Ukraine" which it would repeal the provisions on minimum purchase prices applicable to imports, as well as the provisions on the introduction of quotas on imports or exports".  We are pleased that Ukraine is developing this draft law to repeal the provisions on minimum purchase 
prices applicable to imports.   
We seek removal of square brackets from appr opriate commitment language in paragraph 67, 
including a specific reference to the provisions th at have been repealed in the law mentioned 
above. 
Answer:
  
Ukraine agrees to the removal of brackets and to  restate the text of the commitment as follows: 
[Ukraine confirms that Ukraine w ill repeal the rules set out in Article 8 of the Law of Ukraine "On 
State Support of Agriculture in Ukraine", which contemplate a possibility to apply minimum import prices on a temporary basis and import and export quotas.] 
III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES 
Question 15 The treatment of right of appeal is very unc lear.  Paragraphs 80-84 should be reviewed and 
substantially revised to use the same terms for the same institut ions, to lay out once and clearly WT/ACC/UKR/141 
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  Ukraine's judicial hierarchy, and most import antly, to address clearly how Ukraine provides 
the right of administrative and judicial appeal  in matters covered by the WTO and likely to 
require adjudication.  The relevance to WTO of th e various types of courts described should be 
made clear. 
Answer:
 
Starting 1 September 2005 the Code of Administrati ve Proceedings (No. 2747-IV of 6 July 2005) 
came into effect.  The latter stipulates that admini strative courts will consider administrative cases, 
including WTO-related matters.  It means that the ri ght to appeal administrative rulings on matters 
subject to WTO provisions to an independent tribunal is provided in conformity with WTO 
requirements. 
We proposed also the following revision of the paragraph 80 and paragraph 84: 
80.  The judiciary is comprised of the Constitutiona l Court and courts of general jurisdiction, i.e. 
local (general and specialized) courts, appellate (g eneral and specialized) courts, higher specialized 
courts, and the Supreme Court of Ukraine.  Comme rcial and administrative courts are specialized 
courts in the system of courts of general jurisdiction. 
According to the Law of Ukraine "On Judiciary" (No. 3018-III of 7 February 2002), local general 
courts are those established at the level of districts, city districts, cities, and city-district courts, as well 
as military courts of garrisons.  Local commercial courts are commercial courts of the Autonomous 
Republic of Crimea, the oblasts, cities of Kyiv a nd Sevastopol.  Local administrative courts are okrug 
courts established at the level of okrugs (regions) acco rding to the Decree of the President of Ukraine. 
In addition, according to the Code of Administra tive Proceedings (No. 2747-IV of 6 July 2005) local 
administrative courts also include local general cour ts, jurisdiction of which encompasses the simplest 
administrative cases.  Local general courts consider civil, administrative and criminal cases, as well as 
cases of administrative violations.  Local commercial courts consider cases that arise from commercial legal relations, as well as other cases, wh ich, according to the procedural law, are under 
their jurisdiction.  Local commercial courts are commercial courts of the Autonomous Republic of 
Crimea, the oblasts, cities of Kyiv and Sevast opol.  Local administrative courts consider 
administrative cases related to legal relations in the sphere of state management and local self-
governance (cases of administrative ju risdiction), except cases of administrative jurisdiction in the 
sphere of military management that  are considered by military courts . Appellate general courts, which 
include the appellate courts of oblasts, Kyiv , Sevastopol, the Autonomous Republic of Crimea's 
appellate court, the appellate military courts of  th e regions, the appellate court of Ukraine's Navy, and 
the Appellate Court of Ukraine review appeals in accordance with procedural law and try cases, 
specified by law, as courts of first instance.  A ppellate specialized courts are appellate commercial 
courts and appellate administrative courts, whic h are established in appellate okrugs in accordance 
with the Decree of The President of Ukraine.  Th e higher specialized courts (including the Higher 
Commercial Court and the Higher Administrative Court) review, by cassation, cases of the 
appropriate jurisdiction and other cases as provide d by procedural law.  The Supreme Court of 
Ukraine, the highest judicial body in the judiciar y of Ukraine , reviews (by cassation) the judgments 
of the courts of general jurisdiction (general and specialized courts) in cases assigned to its 
jurisdiction by procedural law.   
Courts of General Jurisdiction: I.  The court system of general courts
: 
− Local courts established at the level of districts, city districts, cities, city-district courts, as 
well as military courts of garrisons;  WT/ACC/UKR/141 
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  − Appellate courts of the of Autonomous Republic  of Crimea, the oblasts, cities of Kyiv and 
Sevastopol; appellate military courts of the re gions and Ukraine's Navy ; the Appellate Court 
of Ukraine; and 
− The Supreme Court of Ukraine. 
II.  Specialized Courts : 
 A.  System of commercial courts: 
− Local commercial courts; 
− Okrug appellate commercial courts, which ar e established at the level of appellate 
okrugs (regions); 
− The Higher Commercial Court; and 
− The Supreme Court of Ukraine (Court Chamber for Commercial Cases). 
 B.  System of administrative courts: 
− Local administrative courts include okrug administrative courts and local general 
courts as administrative courts;  
− Okrug appellate administrative courts, which are established at the level of appellate 
okrugs (regions); 
− The Higher Administrative Court; and 
− The Supreme Court of Ukraine (Court Chamber for Administrative Cases). 
As far as WTO-related issues, administrative courts consider violations of payment procedure in the 
sphere of trade, and viol ations in the sphere of state control of exports.  Starting 1 September 2005 the 
Code of Administrative Proceedings came into effe ct.  The latter stipulates powers and authorities of 
administrative courts, procedure of application to these courts and procedure of administrative 
litigation.  The Code stipulates that an objective of administrative proceedings is to protect the rights, 
freedoms and interests of natural persons, rights and interests of legal entities in the sphere of public-
legal relations from violations on the part of state power bodies, local self-governance bodies, their 
officials, as well as the officials of other entities in  course of performing state management functions 
by the latter." 
84. Procedures of consideration. Article 17 of the Code of Administrative Proceedi ngs in Ukraine provides for the consideration the 
following disputes: 
1)  disputes arising between natu ral persons or legal entities and a government agency [subject 
with government authority] involving appeals against the latter's decisions (regulatory acts or legal acts of individual applicability), actions or inaction; 
2)  disputes involving the hiring of persons as civil servants, employment in the civil service and 
dismissal from the civil service; 
3)  disputes between government agencies [subjects with government authority], involving issues 
relating to the discharge of their competence in the area of administration, including those 
involving delegated powers, as well as disput es arising from the conclusion and performance 
of administrative agreements; and 
4)  disputes initiated upon requests of government agencies [subjects with government authority] 
in instances contemplated by law. 
According to Article 12 of the Code of Commercia l Procedure of Ukraine, commercial courts shall 
consider: WT/ACC/UKR/141 
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  1)  cases involving disputes arising from the conclusion, amendment, termination and 
performance of commercial contracts and on other grounds, as well as cases involving the 
invalidation of acts on grounds listed by law, except for: 
 -  disputes arising from the confirmati on of standards and technical conditions; 
 -  disputes involving the setting of prices for products (goods) and the setting of rates 
(tariffs) for services (works performed) if , pursuant to law, these prices and rates 
(tariffs) may not be set by agreement of the parties; and 
 - bankruptcy cases. 
A dispute falling within the jurisdiction of commercia l courts may be transferred by parties thereto to 
a reconciliation tribunal (arbitration) for resolution,  except for disputes involving the invalidation of 
acts and disputes arising from the conclusion, amendment, termination and performance of 
commercial contracts relating to satisfaction of State needs.  
Along with the foregoing, Articles 2 and 8 of the Civ il Code of Ukraine, Articles 5 and 9 of the Code 
of Administrative Proceedings in Ukraine, Article 4 of the Code of Commercial Procedure of Ukraine 
provide that proceedings in disputes shall be carried  out pursuant to the Constitution of Ukraine, these 
Codes and international agreements and treaties of Ukraine, the consen t to the binding force of which 
is granted by the Supreme Rada of Ukraine.  In th is respect, if such international agreements and 
treaties of Ukraine contain rules other than those contemplated by Ukrainian law, the rules of the 
international agreement or treaty shall prevail. 
Thus, in the course of considering cases involving violations of the WTO Agreements, after such 
WTO Agreements have become binding upon Ukraine, such dispute consideration procedures shall be 
used as are contemplated by these Agreements and, in particular, by the Understanding on Rules and 
Procedures Governing the Settlement of Disputes.  And in instances not covered by the Agreements 
there shall be used respective rul es from the Ukrainian national law.  
Question 16 
It would also be useful to have a better descript ion in paragraph 77 of the role of the various 
Ministries, Commissions, or other offices of th e executive involved in the development and 
execution of trade policy in Ukraine. 
Answer:
 
Preparing of information on functions of central bodies of executive power in the area of execution of 
Ukraine's trade policy falls within the co mpetence of central bodi es of executive power. 
At the same time, national law, in particular Ar ticle 9 of the Law of Ukraine "On Foreign Economic 
Activities", sets forth the following responsibilities of  bodies of the executive power in the area of 
execution of trade policy in Ukraine: 
The Cabinet of Ministers of Ukraine: 
− undertakes measures aimed to implement foreign tr ade policy of Ukraine pursuant to the laws 
of Ukraine; 
− coordinates activities of Ukrainian trade missions in foreign states; 
− passes regulatory rules on issues of foreign economic activity as and when contemplated by 
the laws of Ukraine; and 
− conducts negotiations and concl udes inter-government agreements of Ukraine on issues of 
foreign economic activity as and when contempl ated by Ukrainian laws on international 
agreements and treaties of Ukraine, ensures th at international agreements and treaties of  WT/ACC/UKR/141 
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  Ukraine on issues of foreign economic activity are implemented by all governmental bodies 
subordinated to the Cabinet of Ministers of Ukraine, and involves other entities engaged in 
foreign economic activity into implementing such  international agreements and treaties on a 
contractual basis. 
The National Bank of Ukraine: 
− provides saving and use of gold and foreign exchange reserve of Ukraine and other State 
valuables that ensure  Ukraine's solvency; 
− represents interests of Ukraine in relations with  central banks and other financial and credit 
institutions and concludes resp ective inter-bank agreements; 
− regulates the exchange rate of the Ukrainian national currency against currencies of other 
countries; and 
− keeps records of, and makes settle ments in respect of, extended and received State credits and 
loans, carries out operations with centralized fo reign exchange resources that are allocated out 
of the State Foreign Exchange Fund of Ukraine into the disposal of the National Bank of 
Ukraine. 
The Ministry of Economy of Ukraine: 
− ensures the pursuit of single foreign economic  policy when entities engaged in foreign 
economic activity enter external markets, coordinates their foreign economic activity, including pursuant to international agre ements and treaties of Ukraine; and 
− provides control of all entities engaged in fo reign economic activity to comply with and 
observe effective Ukrainian law and terms and conditions of international agreements of 
Ukraine. 
The State Customs Service of Ukraine: 
− carries out customs control in Ukraine accord ing to the effective laws of Ukraine. 
The Antimonopoly Committee of Ukraine: 
− provides control of entities engaged in foreign economic activity to comply with and observe 
laws on protection of economic competition. 
The Intergovernmental Commission on International Trade: 
− passes decisions on violations and decisions on  carrying out anti-dumpi ng, countervailing or 
special investigations and on applying anti- dumping, countervailing or special measures, 
respectively.  
Question 17 
We support the commitment language in paragraphs 79 and 85. 
Answer:
 
Ukraine has already accepted the commitmen t language in paragraphs 79 and 85. WT/ACC/UKR/141 
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  IV. POLICIES AFFECTING TRADE IN GOODS 
- Trading Rights Question 18 [This section requires enactment of pending legislation; a draft Law of Ukraine "On 
Amendments to Certain Legislative Acts of Uk raine" (No. 8373 of 1 November 2005), amending 
Law No. 481, dated 19 December 1995, in order to bring licensing fees for alcohol beverages and 
tobacco in compliance with Arti cle VIII GATT 1994; and draft Law to amend Article 14 of the 
Law of Ukraine "On the Taxation System", whe reby the annual fee for  alcohol and tobacco 
addiction prophylaxis and trea tment measures must be included into the list of national 
mandatory fees and charges).] 
This section is shaping up, but it contains a lot of different material, with several kinds of state 
licensing of trade activity described.  It should be re-organized and edited for clarity, e.g., sub-section headings for each product category. 
Specific outstanding issues that should be addresse d in the text include (a) clarification of the 
scope of activity licensing for the right to  import and export; (b) establishment of a 
non-discriminatory fee structure that meets th e requirements of Article VIII of the GATT for 
activity licensing for importation of alcoholic  beverages, and (c) determining the scope of 
activity licensing required for importation. 
Answer:
 
Ukraine confirms that starting from the date of the WTO accession the non-discriminatory system of 
fees and payments related to the alcoholic be verages import licensing (complying with the 
requirements of GATT Article VIII) will be applied. 
Question 19 
In particular, the extremely high fees for lic enses to import tobacco or spirits (US$47,000) 
annually is not consistent with the fees char ged domestic traders, including exporters.   
Answer:  
In the nearest future the amount to be paid for the licence granting the right for alcoholic beverages 
and tobacco products import will be brought into co nformity with the provisions of Articles VIII and 
III of the GATT. 
Question 20 
Any subsequent fees for addiction prophylaxis an d treatment applied to these products should 
be carefully established to be consistent with Articles I and III of the GATT 1994. 
Answer:  
Ukraine confirms that from the date of the WTO accession any subsequent fees for addiction 
prophylaxis and treatment applied to the said products  would be established cons istent with Articles I, 
III and XX of the GATT 1994  WT/ACC/UKR/141 
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  Question 21 
In addition, we seek information on the permissi ble activities of foreign firms in the importation 
of alcohol and detailed information on the operation s of the state trading entities that deal in 
ethyl spirit and cognac and fruit spirits.  How do these firms allow purchases and sales of 
imports?  
Concerning pharmaceuticals, we are concerned that the "fees for expertise" charged in 
connection with registration of these products may not be established in line with the cost of the 
services rendered.  In particular, we would want to know about the fee structure, if the charges 
were differentiated based on what expertise wa s required, and how the fees are established.  
Reference to these issues in the Working Party report would be helpful in demonstrating how 
Ukraine's pharmaceutical registrat ion process is non-discriminatory vis-à-vis  imports. 
We will provide detailed questions and drafting suggestions in writing. 
Answer:  
Ukraine has established effective fees for state regi stration (re-registration) of medicines and tariffs 
for inspection of registered materials in the State Ph armacological Centre of the Ministry of Health of 
Ukraine, which are the same for all business entiti es. The cost of registration and inspection of 
registered materials is on a par with the value of  services provided and is di versified by type of 
application.  
Ukraine is awaiting the afore-mentioned drafting suggestions in writing. 
Question 22 
We note the Ukrainian system of licensing for alcohol beverages and tobacco remains in breach 
of Article VIII GATT.  In particular, we seek confirmation of: 
− reductions in licence fees to levels approxima ting the cost of services rendered (required 
by Article VIII), and removal of fees that var y according to the volume of importation; 
Answer:  
The draft Law of Ukraine, which brought into conf ormity with the provisions of Articles VIII and III 
of the GATT the amount to be paid for the licence  granting the right for alcoholic beverages and 
tobacco products import, will be submitted to th e Supreme Rada of Ukraine for consideration. 
Question 23 
− removal of trading right limitations on foreign enterprises in paragraph 89 to engage in 
import and export of cognac spirits. 
Answer:  
Ukraine believes that such limitation is reasonable. See answer in paragraph 91. WT/ACC/UKR/141 
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  A. IMPORT REGULATIONS 
- Ordinary customs duties Question 24 Some of the material in this section should be  updated, e.g., the discussion in paragraph 101 
concerning Ukraine's multi-column tariff system .  We understand that the common rate of duty 
has been abolished, but this is not reflected in the description.  Also, we understand that 
conversion to HS 2002 has been delayed.  Will conv ersion require legislation, or can it be done 
by the government on its own authority. 
Answer:
 
We would like to suggest the following wording for Paragraphs 101 – 103: 
101.  The representative of Ukraine said that impor t duties were established on the basis of the Law 
"On the Customs Tariff of Ukraine" No. 2371-III of  5 April 2001, as amended.  The Law set out the 
framework for the regulation of tariffs and reserved th e right to make tariff changes exclusively by the 
Verkhovna Rada of Ukraine.  Imports  from trading partners holding MFN status were assessed at the 
"privileged" (preferential) rate of import duty, except in cases where duties were established in the 
context of a special preferential trade agreement.  For the current moment, Ukraine applies the most 
favoured treatment to its trade with 82 countri es, and conducts trade based on the free trade 
agreements with 12 countries.  An "ordinary" (fu ll) import duty is applied to goods imported from the 
other countries. Along with this, during the year  2005 the Verkhovna Rada of Ukraine adopted a 
number of laws designed to liberalize the access of goods into the domestic market of Ukraine.  The 
import duty rates changed, in particular – accordi ng to the consolidated commitments of Ukraine 
within the scope of the negotiations on accession to  the WTO.  Thus, the applied import duty rates 
correspond to practically all consolidated commitme nts.  However, some commodity subcategories 
are subject to the import duty rates of a lower leve l than those established by the Consolidated Tariff 
Offer.  Along with that, for the most commodity su bcategories of the Customs Tariff the full import 
duty rates were established to the level of privileged ones.  
The GSP scheme is not applied in Ukraine.  U pon accession to the WTO, Ukraine would apply the 
"privileged" (MFN) import duty rate to all goods originating from the WTO members, in accordance 
with Article 1 of the GATT 1994. 
The current Customs Tariff of Ukraine is based  on the Ukrainian Commodity Classification of 
Foreign Economic Activity of Uk raine, which is based on the Harmonized Commodity Description 
and Coding System of 1996 (HS 1996). For the current moment, the Government has prepared and 
submitted to the Verkhovna Rada of Ukraine the Dr aft Law of Ukraine "On Amendment of the Law 
of Ukraine "'On the Customs Tariff of Ukraine".  The given Draft Law provides for the application of 
the Customs Tariff of Ukraine based on the new ve rsion of the Ukrainian Commodity Classification 
in Foreign Economic Activity, which is based  on the Harmonized Commodity Description and 
Coding System of 2004 (HS 2004).  The Draft Law is e xpected to come into effect on 1 January 2007. 
102.  Some Members asked Ukraine to provide a c oncordance table for the conversion of Ukraine's 
tariff commitments to HS 2002.  Th ese Members noted their expectati on that they would be able to 
study the table prior to the finalization of Ukrain e's new applied tariff, and in any case prior to the 
finalization of the accession process to the WTO.  The representative of Ukraine replied that the draft 
Law "On Amendment of the Law of Ukraine 'On th e Customs Tariff of Ukraine'" had been submitted 
to the Verkhovna Rada and was available from the Verkhovna Rada's website.  He added that 
Members would receive the concordance table in due course.   WT/ACC/UKR/141 
 Page 13 
 
 
  103.  The current Customs Tariff comprised more th an 11,000 tariff lines.  Most tariffs were levied 
at ad valorem  rates, but 671 tariff line items (5.93 per cent)  were subject to the specific rates of import 
duty.  Further details on the current appl ied tariffs are presented in Table 10.   
Table 10:  Import duties (privileged rates) levied on goods  
and other items imported into Ukraine's  territory  
Ukrainian applied customs tariff 
Import duty rate 
(%) 0 0-5 5-10 10-15 15-20 20-25 greater 
than 25 specific 
rate Total 
number of tariff 
lines 3,500 3,427 2,263 898 388 43 124 671 11,314 
Share from the 
total number of 
lines (%) 30.94 30.29 20.00 7.94 3.43 0.38 1.10 5.93 100 
The maximum of the import duty rate is: 
for items of groups 1-24: 50 % (of which 4.84% are higher than the 25% rate) 
for items of groups 25-97: 25 % (the number of rates is only 0.47%) 
average arithmetic rate of the applied custom tariff  (%) 6,51     
average weighted rate of the app lied custom tariff (%) 5,10     
 
- Other duties and charges 
Question 25 Paragraph 109:  The first sentence of the comm itment paragraph should be eliminated to 
ensure that it is not read as exempting duties and fees from WTO obligations. 
Answer:
 
Ukraine agrees with this suggestion. 
Question 26 
We note the discussion of a 1 per cent tax and Ukraine's confirmation that wholesale and retail 
sale of domestic and imported alcohol is taxed on equivalent terms.  In order to clarify that this 
is tax is not an ODC within the meaning of Article II:1(b), but instead an internal tax within the 
meaning of Article III of GATT 1994, we request that the following information be included in 
paragraph 108: 
Information on the point at which (i.e. at the border, upon wholesale sale, upon retail sale) the 
1 per  cent tax applied to imported wines and spirits. 
Information on the point at which (i.e. at the border, upon wholesale sale, upon retail sale) the 
1 per cent tax applied to domestic production of wines and spirits. 
Ukraine confirm that this tax is applied only once to domestic and imported goods. 
Answer:  
The said fee is collected on a monthly basis from business entities, irrespective of the forms of their 
ownership and subordination, in the amount of 1 per cent of proceeds from the sale of alcohol 
beverages and beer in the wholesale and retail network. WT/ACC/UKR/141 
Page 14  
 
  - Tariff rate quotas, tariff exemptions 
Question 27 [This section requires enactment of pending legislation; draft Regulation governing the 
allocation of the TRQ on raw cane sugar.] 
We seek a commitment that Ukraine will administ er its TRQs in a WTO-consistent fashion, 
with particular reference to eliminating auctioni ng as an acceptable method of administration. 
Answer:
 
The commitment that Ukraine will administer its TRQs  in a WTO-consistent fashion, with particular 
reference to eliminating auctioning as an accepta ble method of administration is set forth in the 
paragraph 119 of the Working Party report: 
"119.  The representative of Ukraine said that from th e date of accession Ukraine would allocate 
its only tariff rate quota on raw cane sugar only in conformity with the WTO Agreement,  including 
Articles I, II, VIII, X, XI and XIII of GATT 1994,  Article 4 of the Agreement on Agriculture, the 
Agreement on Import Licensing Procedures and other WTO provisions.  Ukraine would not 
maintain, apply or revert to the auctioning of tariff quota for any product.   Allocation methods used 
would not have trade-restrictive or -distortive e ffects on imports additional to those occasioned by a 
quantity-limited in-quota rate and an out-of-quota rate  and would take account of the need to issue 
any licenses in economic quantities.  Any arrangements applied would be administered and applied in 
a uniform, impartial, reasonable, transparent, pred ictable and fair manner.  Ukraine would introduce a 
process for consultation with trading partners, impor ters and exporters prior to the amendment of 
tariff quota regulations, involving public notificatio n of intended arrangements and the provision of 
adequate opportunity for comments to be made be fore final decisions are taken and implemented on 
such changes.  [Tariff quota under the bound tariff rate quota for raw cane sugar would be allocated 
by the first-come-first-served method.] The Wo rking Party took note of these commitments". 
Question 28 
We propose the following amendments to paragraphs 116-199. 
116. In reply, the representative of Ukraine sa id that upon accession to the WTO, Ukraine 
would apply a system of TRQ allocation for ra w sugar in accordance with the terms described 
in its Consolidated Schedule of Concessions on Goods (Annex X etc.).  He confirmed that Ukraine would abide by the provisions of the Agreement on Import Licensing Procedures and would allocate each share of the quota fairly, in order to secure it s full utilisation.  In addition, 
he stated that Ukraine would not use auctioning fo r the allocation of raw sugar from the date of 
accession. 
Answer:
 
Ukraine does not object to such changes in paragraph 116. 
Question 29 
Paragraph 119:  Amend language in square br ackets and remove brackets so as to read 
"The representative of Ukraine said it would adopt a system of allocating raw-cane sugar on a 
First-Come-First-Served basis within th ree years of the date of accession."  WT/ACC/UKR/141 
 Page 15 
 
 
  Answer:  
Ukraine does not object to such changes in paragraph 119. 
- Fees and charges for services rendered 
Question 30 [This section requires enactment of pending legislation; draft amendments to the Cabinet of 
Ministers Resolution No. 1183, which would ab olish the discriminatory fees on testing and 
registration of plant varieties;]. 
The last sentence of paragraph 125 reflects a co mmitment on the part of Ukraine and should 
therefore be included in the comm itment paragraph (paragraph 126). 
We will provide drafting suggestions in writing. 
Answer:
 
Ukraine is awaiting the aforementioned drafting suggestions in writing. 
Question 31 
We note that within the new "Unified" Customs Fee, Ukraine proposes to charge a 
"supplementary fee" for use of Ukrainian highways (for goods travelling to final destination).  
As we noted in the recent Working Party meeting, there is a lack of clarity as to the nature of 
this fee and whether it is better characterised as a fee within the meaning of Article VIII of GATT 1994 or an internal charge within the meaning of Article III.  We seek inclusion of the following language in this section of the report: 
"In the view of a Member, the supplementary fe e was not related to a service connected with 
importation, but represented an internal charge applied to the use of Ukrainian highways 
associated with the distribution of cargo within Uk raine.  This fee, then, would be subject to the 
disciplines of Article III:1 of GATT 1994, which requires that such charges not be applied in excess of those applied to like domestic produc ts.  The Member sought clarification from 
Ukraine as to whether such 'supplementary fees' are levied on:  (i) imported product that has 
crossed the Ukrainian border; and (ii) domestic  product that is being distributed within 
Ukraine (but has not crossed the border).  Th e Member also sought information on how 
Ukraine would ensure this fee was brought into  conformity with Article III of GATT 1994." 
Answer:
 
Pursuant to the Law of Ukraine "On Amendments to the Law of Ukraine 'On the Introduction of the 
Unified Fee charged at Points of Entry through the State Border of Ukraine'", dated 12 July 2001, 
No. 2659- ІІІ, the unified fee is to be imposed on motor vehicles of domestic and foreign owners that 
cross the State border of Ukraine and is to be levi ed at points of entry through the State border of 
Ukraine pursuant to Ukrainian law for customs inspection of goods in transit and of motor vehicles; 
sanitary, veterinary, phytosanitary, radiological a nd environmental controls  of freight and motor 
vehicles; as well as for the use of Ukraine's hi ghways and passage of motor vehicles which exceed 
prescribed amounts of total weight, ax ial loads and/or overall dimensions. 
In addition, the Law provides that the unified fee may not exceed the costs related to the conduct of 
customs inspection of goods in transit and of mo tor vehicles; sanitary, veterinary, phytosanitary, WT/ACC/UKR/141 
Page 16  
 
  radiological and environmental controls of freight  and motor vehicles, as well as expenses related to 
the restoration of highways. 
Thus, the requirements of the said Law are in full compliance with the provisions of Articles III and 
VIII GATT 1994. 
Question 32 
We note in paragraph 166 (under Import Licensing Systems) that an importer seeking an 
import licence must also apply to the Chamber of Commerce and Industry of Ukraine to receive 
an "expert examination act" certifying the goods' code identification.  This represents a "fee for 
service" related to the right to import and is therefore covered by Article VIII of GATT 1994.  
We seek: 
− additional language in this section indicating that "a Member asked as to the nature of 
any fees charged by the Chamber of Commerce  of Ukraine in relation to issuing an 
"expert examination act" required by the Ukrainian Government as a condition of importation.  The Member noted that any such  fees would be subject to the disciplines 
of Article VIII of GATT 1994." 
− clarification in the report as to the nature/level of the fees charged and how they relate 
to the cost of the service provided.   
Answer:
 
This rule was introduced to conf irm the conformity of the goods to the list of licensable goods 
approved by the Cabinet of Ministers of Ukraine.  However, Ukraine takes measures to abolish the 
said requirement in the nearest future.  The Minist ry of Economy had developed the draft to remove 
this requirement. 
Question 33 
We note in paragraph 166 that a "State duty" is also required to be paid for issuance of a 
licence.  We seek clarification as to the nature a nd level of this "State duty" and how it relates 
to the charges of UAH 220 and UAH 780 noted later in the same paragraph. 
Answer:  
A letter warranting payment of the State duty for licence issuance is a proof that the applicant paid the 
fees for processing import licence application (State  duty is equal UAH 220 for automatic licence or 
UAH 780 for non automatic licence). 
- Application of internal taxes to imports 
Question 34 [This section requires enactment of pending legi slation; a draft Law "On Amending Certain 
Laws on Issues of Excise Taxation" which would accelerate the elimination of discriminatory 
excise taxes on alcoholic beverages; amendments  to the Law "On Amendments to Certain Laws 
of Ukraine on Taxation of Agricultural Pro ducers and Support of Social Standards for their 
Employees" and to the law "On Value Added Tax" eliminating the discriminatory VAT 
provisions.] 
We will provide drafting suggestions for both  sections (Excise Taxes; VAT) in writing.  WT/ACC/UKR/141 
 Page 17 
 
 
  Answer:  
Ukraine is awaiting the aforementioned drafting suggestions in writing. 
 - VAT 
Question 35 The discussion on VAT is confus ing and should be revised.  Parts of paragraph 139, and 
paragraphs 140-141 may be obsolete and can be eliminated. 
Answer:
  
Ukraine doesn't object to the revision of the said paragraphs.  
Question 36 
What is the status of the legislative amendmen t to the discriminatory provision in the Law of 
Ukraine on Taxation of Agricultur al Enterprises and Support of Soci al standards."   Is it part 
of the WTO  package of laws proposed for enactment by the new Rada? 
Answer:  
The Law of Ukraine "On Amendments to Certai n Laws of Ukraine on Taxation of Agricultural 
Producers and Support of Social Standards for thei r Employees" introduced changes to the main laws 
on taxation, in particular, the La w of Ukraine "On Value Added Tax"  by supplementing it with a new 
Article 8-1 "Special Regime for Taxation in the Field of Agriculture, Forestry and Fishery." Therefore, in the future, Article 8-1 of the Law of Ukraine "On Value Added Tax" should be 
discussed. 
Currently, the said issue is regulated by the Law of Ukraine No. 2987 of 18 October 2005, "On 
Introducing Changes to the Law of Ukraine "O n Value Added Tax" Regarding Taxation of 
Agricultural Enterprises" that suspends Article 8-1. 
To finally regulate the said issue, the draft la w of Ukraine on introducing changes to the Law of 
Ukraine "On Value Added Tax" has been developed regarding special regimes of taxing agricultural 
producers. It proposes to abrogate Article 8-1, which would provide an opportunity to avoid a 
discriminatory approach in imposing the value adde d tax on transactions carried out by agricultural 
enterprises and agricultural import transactions.   
This Draft law is part of the WTO  package of  laws proposed for enactment by the new Rada. 
Question 37 
Has the zero rate VAT for milk and meat pro ducts entered into force?  We were under the 
impression that it was to enter into force on 1 January 2006. 
Answer:
 
Before 1 January 2007, the amount of VAT payable to the budget by processing enterprises of all 
forms of ownership for milk and milk products, meat and meat products sold by them is transferred in 
full only for payment of subventions to agricultural producers for milk and meat sold by them in live 
weight to processing companies.  WT/ACC/UKR/141 
Page 18  
 
  We also provide explanations regarding speci al VAT regime for agricultural producers.  
Special VAT regimes for agricultura l producers envisage the following: 
1.  the mechanism for paying subve ntions by processing enterprises; 
Agricultural producers of all forms of ownership and business sell to processing companies, milk and 
meat in live weight. The said sale transaction is ta xed at a zero rate. This means that agricultural 
producers do not have tax liabilities resulting from such sale transactions, and the amount of tax credit 
under the same transactions is refunded from the stat e budget (due to the lack of the source for VAT 
refund paid as part of the price of purchased tangibles). 
Sales by processing companies of milk and milk products, meat and meat products produced from 
milk and meat sold by agricultural producers in live weight are taxed at the rate of 20 per cent. 
Based on results of the said sale transactions, processing enterprises in accordance with the general 
tax accounting rules determined the amount of VAT th at they must pay to the budget (that is, the 
difference between the "incoming" and "outgoing" VAT). 
Having determined the VAT amount payable to the budget, processing enterprises do not transfer it to 
the budget but rather accumulate it in separate bank accounts and transfer these funds to agricultural 
producers as subventions for milk and meat sold by agricultural producers in live weight. 
2. the mechanism for accumulati ng funds by agricultural producers.
 
Under transactions to sell agricultural products ot her than milk and meat, agricultural enterprises 
accrue VAT at the rate of 20 per cent. 
Based on results of the said sale transactions, processing enterprises in accordance with the general 
tax accounting rules determined the amount of VAT th at they must pay to the budget (that is, the 
difference between the "incoming" and "outgoing" VAT). 
The amount of VAT determined in such a manner is not  paid to the budget but is rather transferred to 
separate bank accounts of agricultural producers. The funds in these accounts are used to purchase 
material and technical resources for production. 
Provisions of the WTO Agreement on Agriculture allow subsidizing the sector. 
The above mechanisms for levying VAT in the agricu ltural sector are, in fact, subsidies to the sector 
as the cost of income rejected by the state in favour  of agricultural producers.  The advantage of such 
subsidies is that the term during which the funds reach agricultural producers is shortened due to the 
fact that the funds are immediately credited to separate accounts (the accounts are separate to enable 
control over the use of state funds) and not transferred to the state budget and after that transferred to agricultural producers. 
As a supplement to the explanations of curre nt mechanisms for levying VAT on agricultural 
producers, we hereby provide their schematic representation (Annex 1). 
Question 38 
We look forward to Ukraine's confirmation  that it has removed discriminatory VAT 
exemptions applied in agriculture.  In particular , we reiterate our concerns in relation to two 
aspects of VAT policy:  WT/ACC/UKR/141 
 Page 19 
 
 
  -  the VAT regime governing production of milk and meat - whereby producers sell output 
to processors without VAT, and processors a re able to deduct VAT from inputs despite 
the fact that no VAT is paid on inputs fr om producers.  The VAT liability is transferred 
back to producers. 
We note that paragraph 139 of document WT /ACC/SPEC/UKR/5/Rev.4 of 18 May 2006 differs 
in its description of the VAT regime that wa s contained in paragraph 130 of document 
WT/ACC/SPEC/UKR/5/Rev.3.  In particular, we note that the previous draft of the Working 
Party report noted that "The processors applie d 20 per cent VAT to the sales of the final 
products, deducting 20 per cent VAT on all inputs,  even though no VAT was collected on the 
milk and meat in live weight purchased from agricultural producers."  We request that this 
description be reinstated to the Working Party report. 
Answer:  
In the course of preparing a new version of th e draft Report (document WT/ACC/SPEC/UKR5/Rev.4, 
dated 17 May 2006), Ukraine made changes to the desc ription of the VAT regime that was contained 
in paragraph 130 of document WT/A CC/SPEC/UKR/5/Rev.3, in order to correct inaccuracies in the 
translation from Ukrainian into English that  arose in the course of preparing document 
WT/ACC/SPEC/UKR/5/Rev.3.  Ukraine requests to accept apologies for this technical mistake.  
Updating the text of paragraph 130 makes no sense.  
Ukraine provide explanations regarding special  VAT regime for agricultural producers.  
Special VAT regimes for agricultura l producers envisage the following: 
1) the VAT mechanism for paying subsidies to agricultural producers of milk and meat  
Agricultural producers sell to processing companies, milk and meat in live weight.  The said sale 
transaction is taxed at a zero rate of VAT.  Sal es by processing companies of milk and milk products, 
meat and meat products produced from milk and meat  sold by agricultural producers in live weight 
are taxed at the VAT rate of 20 per cent. 
Based on results of the said sale transactions, processing enterprises in accordance with the general 
tax accounting rules determined the amount of VAT th at they must pay to the budget (VAT balance, 
which is the difference between the "incoming" and "outgoing" VAT). 
Having determined the VAT amount payable to the budget, processing enterprises do not transfer it to 
the budget but rather accumulate it in separate bank accounts and transfer these funds to agricultural 
producers as subsidies for milk and meat sold  by agricultural producers in live weight. 
2) the mechanism for VAT accumulation by agricultural producers  
Under transactions to sell agricultural products ot her than milk and meat, agricultural enterprises 
accrue VAT at the rate of 20 per cent. 
Based on results of the said sale transactions, agri cultural enterprises in acco rdance with the general 
tax accounting rules determined the amount of VAT th at they must pay to the budget (VAT balance, 
which is the difference between the "incoming" and "outgoing" VAT). 
The amount of VAT determined in such a manner is not  paid to the budget but is rather transferred to 
separate bank accounts of agricultural producers. The funds in these accounts are used to purchase 
inputs for production of agricultural products. WT/ACC/UKR/141 
Page 20  
 
  The above mechanisms in the agricu ltural sector are, in fact, subsid ies to the agriculture as the VAT 
tax revenues granted by government to agricultural pr oducers. The advantage of such subsidies is that 
the term during which the funds reach agricultural produ cers is shortened due to the fact that the funds 
are immediately credited to separate accounts (the accounts are separa te to enable control over the use 
of state funds) and not transferred to the state budget and after that transferred to agricultural 
producers. 
As a supplement to the explanations of curre nt mechanisms for levying VAT on agricultural 
producers, we hereby provide their schematic representation (Annex 1). 
Question 39 
We also seek inclusion of the following language  in this section:  A Member noted that the 
scheme described in paragraph 139  in relation to meat and milk, conferred a subsidy on 
processors that is conditional upon the use of do mestic over imported inputs.  This arises from 
the fact that it is able to deduct VAT costs of 20 per cent of domestically-sourced inputs from its 
overall VAT liability, despite the fact that it di d not incur any VAT in purchasing such inputs.  
Hence, its overall VAT liability is less than woul d otherwise be the case – a benefit which is 
conditional on the purchase of domestic inputs (a prohibited subsidy).  The Member noted that, 
additionally, the fact that VAT is not levied on the basic domestic agricultural inputs (i.e. meat and milk of farmers) but is levied on import ed like inputs (when purchased by processors) also 
results in dissimilar competitive conditions for imported vis-à-vis  domestic meat and milk.  This 
is because the domestic processor has a clear incentive to purchase domestic meat and milk 
inputs as no VAT is charged on the domestic input, while VAT is charged on the imported 
input.  While the processor may claim back the VAT on the imported input at a later stage, 
there is an unfavourable competitive advantage to  the domestic producer of milk and meat 
inputs and hence the VAT is being applied in su ch a way to afford protection to domestic 
production.  This is a violation of Article III:I of GATT 1994. 
Answer:
 
Ukraine cannot agree to the proposal to include th e above suggested wording into the section "Value 
Added Tax" in the draft Working Party Report due to the fact that such wording is based on the 
incorrect interpretation of the VAT regime, which is a technical mistake that ar ose in the course of the 
translation from Ukrainian into English.  Ukrain e requests to accept apologies for this technical 
mistake. 
Question 40 
-  the VAT regime concerning other agricultura l inputs – which provides for accumulation 
of VAT for purchase of inputs.  We require further clarity on the way in which this 
scheme works.  In particular can Ukrain e explain how the processor calculates the 
amount of VAT liability that he/she should pay to the Government and the amount of 
liability that would be transferred to the sp ecial accounts and accumulated for use by 
farmers as subsidies?  Does Ukraine require that the processor makes payments of VAT 
to the Government that are associated with  the sale of goods which are processed using 
imported inputs?  Does Ukraine require that  the processor make payments to special 
accounts of that proportion of VAT that is  associated with the sale of their goods 
processed from domestic inputs? 
-  Introduction of a new "special regime" ; under which allowed domestic producers to 
subject to a 10 per cent VAT, compared with a 20 per cent VAT applicable to imported 
product.  WT/ACC/UKR/141 
 Page 21 
 
 
  This appears to allow domestic  producers to face VAT liabiliti es based on a 10 per cent rate 
instead of the 20 per cent applicable to imported goods.  This is a violation of Article III of GATT 1994. 
Answer:
 
Currently, the said issue is regulated by the Law of Ukraine No. 2987 of 18 October 2005, "On 
Introducing Changes to the Law of Ukraine "O n Value Added Tax" Regarding Taxation of 
Agricultural Enterprises" that suspe nds this new "special regime". 
To finally regulate the said issue, the draft la w of Ukraine on introducing changes to the Law of 
Ukraine "On Value Added Tax" has been developed regarding special regimes of taxing agricultural 
producers. It proposes to abrogate Article 8-1, which would provide an opportunity to avoid a 
discriminatory approach in imposing the value adde d tax on transactions carried out by agricultural 
enterprises and agricultural import transactions.   
This Draft law is part of the WTO package of  laws proposed for enactment by the new Rada. 
- Quantitative import restrictions, including prohibitions and quotas 
Question 41 
[This section requires enactment of pending legislation; draft Veterinary Medicines Law to 
eliminate bans on imported meat products and est ablish basis for use of international veterinary 
standards; draft law to eliminate age limit on import of used vehicles] 
The text on products with encryption refers (par agraphs 150-154) to an approval system that 
operates like licensing.  It should be moved to the Import Licensing Procedures section. 
Answer:  
Ukraine doesn't object to this proposal. 
Question 42 
In relation to paragraph 149, we need to see conf irmation of the removal of the import ban on 
second-hand vehicles by the date of WTO Accession.   There is no justification for a transition 
period for its removal. 
Answer:  
The draft Law of Ukraine "On Amendments to the Law of Ukraine 'On Some Issues Related to 
Importing Motor Vehicles to the Customs Territory of Ukraine'", which suggests removing the ban on 
the importation of used motor vehicles into the cust oms territory of Ukraine, will be submitted to the 
Supreme Rada of Ukraine for consideration. 
Question 43 
In relation to paragraph 156, we need confirma tion that the import ban on ground beef has 
been eliminated upon accession.  We also seek co nfirmation that an import ban on offal more 
generally has been eliminated. WT/ACC/UKR/141 
Page 22  
 
  Answer:
 
The import ban on ground beef will be eliminat ed soon after the enactment of the new Law on 
Veterinary Medicine which is expected in 2006.  Curr ently, there is not a general import ban on offal.    
Question 44 
In relation to paragraph 158, we require confir mation that the mandatory requirement for 
exportation of sugar refined from import ed raw cane sugar has been repealed. 
Answer:  
The Draft law On Introduction of Changes to the Law of Ukraine "On State Regulation of Sugar 
Production and Sale", which repeal the mandatory requirement for exportation of sugar refined from 
imported raw cane sugar and eliminate quotas B and C, will be submitted to the Supreme Rada of 
Ukraine for consideration. 
Question 45 
We would appreciate confirmation in this section that the provisions of Article 8 of the Law of 
Ukraine on State Support of Agriculture allowing for "setting of non-tariff limitations (quotas) 
as to import or export of a specific object of state price regulation" have been repealed. 
Answer:  
The Draft law "On Amendments to the Law of Ukraine "On State Support for Agriculture", which 
amend Article 8 to repeal the rights for imposing quotas on import or export of a specific object of state regulation, will be submitted to the Supr eme Rada of Ukraine for consideration.   
 - Import licensing systems 
Question 46 
[This section requires enactment of pending legi slation; draft amendments to the Law on 
Foreign Economic Activities to eliminate import  approval requirements for precious metals and 
scrap metal] 
Ukraine should eliminate the requirement that importers must secure an "expert evaluation" 
from the Chamber of Commerce in order to appl y for import licenses for the goods in question 
(paragraphs 166-168).  There does not appear to  be any justification for this measure. 
Answer:
 
This rule was introduced to conf irm the conformity of the goods to the list of licensable goods 
approved by the Cabinet of Ministers of Ukraine.  However, Ukraine takes measures to abolish the 
said requirement in the nearest future. 
Question 47 
We seek confirmation that import requirements for scrap metal have been eliminated as 
indicated in paragraph 164.  Table 14 (c) woul d need to be amended to remove reference to 
scrap metal.  WT/ACC/UKR/141 
 Page 23 
 
 
  Answer:  
Ukraine confirms that currently there were no im port requirements for scrap metal.  Ukraine would 
completely eliminate import approval requirements for scrap metal by the date of WTO accession. 
Question 48 
We note Ukraine's statement that "no import  approval was applied to precious metals and 
alloys".  However, Table 14 (c) continues to ref er to non-automatic licensing of precious metals 
and alloys and precious stones.  We request that Ukraine clarify this issue and adjust Table 14 (c) accordingly.   
Answer:
 
Ukraine commits to amend the Law of Foreign Eco nomic Activities to change "precious metals and 
stones" to "gold and silver" by the date of WTO accession. 
Question 49 
Table 14 (c) also still contains references to non- automatic import licensing of "precious stones" 
and "precious metals and alloys".  The justification they are seeking is GATT Article XX (c) - but this Article pertains to only gold and silv er.  Ukraine notes it will address this issue in 
paragraph 164, but it is not clear that this has happened. 
Answer:
 
Ukraine commits to amend the Law of Foreign Eco nomic Activities to change "precious metals and 
stones" to "gold and silver" by the date of WTO accession. 
Question 50 
In relation to paragraph 166, we note that an importer seeking a licence must also apply to the 
Chamber of Commerce and Industry or Ukrain e to receive an "expert examination act" 
certifying the goods' code identification.  This rep resents a "fee for service" related to the right 
to import and is therefore covered by Article VIII of GATT 1994.  We seek: 
− additional language in this section indicating that "a Member asked as to the nature of 
any fees charged by the Chamber of Commerce  of Ukraine in relation to issuing an 
"expert examination act" required by the Ukrainian Government as a condition of 
importation.  The Member noted that any such  fees would be subject to the disciplines 
of Article VIII of GATT 1994.  In response,  the representative of Ukraine confirmed 
that this fee would be subject to Article VI II.  The Working Party took note of this 
commitment." 
− clarification in the report as to the nature/level of the fees charged and how they relate 
to the cost of the service provided.   
Answer:  
This rule was introduced to conf irm the conformity of the goods to the list of licensable goods 
approved by the Cabinet of Ministers of Ukraine.  However, Ukraine takes measures to abolish the 
said requirement in the nearest future. WT/ACC/UKR/141 
Page 24  
 
  Question 51 
We note in paragraph 166 that a "State duty" is also required to be paid for issuance of a 
licence.  We seek clarification as to the nature a nd level of this "State duty" and how it relates 
to the charges of UAH 220 and UAH 780 noted later in the same paragraph. 
Answer:
 
A letter warranting payment of the State duty for licence issuance is a proof that the applicant paid the 
fees for processing import licence application ( UAH 220 for automatic licence or UAH 780 for non 
automatic licence). 
Question 52 
In relation to paragraph 168, we will need to  update section concerning sugar following 
finalisation of bilateral negotiations.  
Answer:  
Ukraine passed the draft of Regulation on Allo cation of Tariff Rate Quota on Raw Cane Sugar 
Importation into Ukraine to the WTO Secretariat for further circulation as a separate document. 
However Ukraine doesn't object to amend text in paragraph 168. 
- Customs valuation Question 53 [This section requires enactment of pending legislation; Draft Order of the State Customs 
Service of Ukraine on approval of methodologi cal recommendations on application of certain 
provisions of the Customs Code of Ukraine dealin g with the issues of customs valuation of goods 
imported into customs territory of Ukraine (leg islation meant to implement the Interpretative 
Notes).] 
We have reviewed Ukraine's Customs Code, it s amendments, and the draft Regulation "On 
Interpretative Notes for Application of the Cu stoms Code Provisions on Customs Valuation," 
legislation meant to bring Ukraine into comp liance with the WTO Valuation agreement.  We 
agree that these provisions largely cover our outstandi ng problems with Ukraine's legislation.   
We have forwarded our last comments to Ukraine.   We consider this section in substance terms 
essentially completed.   
Answer:
 
Please see observations by Ukraine on this Member's comments the Customs Code of Ukraine in 
Annex 2.  
Question 54 
Please confirm when the draft Regulation will become law.  WT/ACC/UKR/141 
 Page 25 
 
 
  Answer:  
The Draft Order of the State Customs Service of Ukraine implementing the Interpretative Notes is 
being revised by the Customs Service and is expect ed to be finalized and adopted before the next 
working party meeting. 
- Rules of origin 
Question 55 
Please add material from the response to Question 44 of document WT/ACC/UKR/137 to 
paragraph 187 of the report, to confirm that CM Resolution No. 1443 "On Making Additions to the Procedure for Determining the Country of Origin of Goods Carried Across the Customs 
Territory of Ukraine" ensures the observance of the requirements of Article 2 (h) and Annex II, 
paragraph 3(d) of the Agreement on Rules of Origin.   
Answer:
 
Ukraine doesn't object to the proposed changes.   The paragraph could be amended as follows: 
"187. A Member noted that an examination of the amendments to Section XI of the Customs Code 
had revealed that the amendment to Article 277 w as not specific enough to ensure implementation of 
the provisions of Article 2(h) and Annex II, paragra ph 3(d) of the Agreement on Rules of Origin.  In 
reply, the representative of Ukraine pointed to Cabinet of Ministers' Resolution No. 1443 of 
28 October 2004 intended to ensure the observance of the aforementioned requirements.  The 
Resolution had taken effect on 1 January 2005". 
Question 56 
Please review paragraph 190 to clarify the status of the default option for determining the Rule 
of Origin for goods  without certificates of origin  issued by Chambers of Commerce or other 
competent authorities. 
Answer:  
If there is no properly formalized goods origin cer tificate or additional information about the goods 
origin, or if it is impossible to determine the count ry of origin of the goods with certainty, such 
country is considered unknow n and, in this case, the full import duty rate is paid.  The privileged rate 
is established for imports of goods ha ving a properly authorized certificate of goods origin. If the full 
and privileged rates for the goods are the same, the goods origin certificate is not necessary. 
- Other customs formalities 
Question 57 This section is very misleading, and should be rev ised in light of the information provided in the 
response to Question 47 of WT/ACC/UKR/137.   Paragraph 193 in the report does not reflect 
that classification rulings by the Chambers are voluntary.   
The commitment in paragraph 194 is not clea r.  What does it mean "according to the 
recommendations of the World Customs Organization?"   WT/ACC/UKR/141 
Page 26  
 
  Answer:
 
As it was agreed at the Working Party meeting Ukra ine is awaiting the drafting suggestions in writing 
of the commitment in paragraph 194.   
- Preshipment inspection 
Question 58 
The commitment text should clearly confirm th at use of PSI firms will not undermine access to 
the due process or transparency protections of the Agreements. We will provide additional drafting suggestions in writing. 
Answer:
 
Ukraine is awaiting the aforementioned drafting suggestions in writing. - Anti-dumping, countervailing duties, safeguard regimes Question 59 The price comparability provisions in paragraph 205 may need to be altered, as Ukraine now 
has market economy status for anti-dumping. 
Answer:
 
During the recent Working Party meeting it was agreed  that paragraph 205 should be eliminated as 
Ukraine now has market economy status for anti-dumping. 
Question 60 
We support the first commitment text in paragraph 206. 
Answer:  
Legislation of Ukraine in the field of anti-dumpi ng, countervailing and safeguard measures has been 
passed in 1998.  All current legislation in the menti oned fields has been developed with due regard to 
the provisions of the WTO Agreement on the Appli cation of Article VI and the WTO Agreements on 
Anti-Dumping Measures, Subsidies and Counterva iling Measures as well as Safeguard Measures. 
With regard to the fact that Uk raine already passed the relevant la ws that are in line with the WTO 
Agreement on the Application of Article VI and the WTO Agreements on Anti-Dumping Measures, 
Subsidies and Countervailing Measures as well as Safeguard Measures, we believe it would be 
reasonable to accept the second wording of the text of the commitment.  All the laws in this field were 
provided to the WTO Secretariat at the request of the Working Party members. 
Thus Ukraine supports maintaining the second para graph of the commitment language in paragraph 
206: 
[The representative of Ukraine confirmed that fro m the date of accession Ukraine would apply any 
anti-dumping, countervailing or safeguard measure  in full conformity with the relevant WTO 
provisions, particularly with the provisions of  the WTO Agreements on the Implementation of 
Article VI, on Subsidies and Countervailing Measur es, and on Safeguards.  The Working Party took 
note of these commitments.]  WT/ACC/UKR/141 
 Page 27 
 
 
  B. EXPORT REGULATIONS 
- Customs tariffs, fees and charges for services rendered, application of internal taxes to 
exports 
Question 61 [This section requires enactment of pending legisl ation; draft laws reducing export duties on 
oilseeds, scrap metal and hides and skins.] 
We appreciate Ukraine's efforts to reduce its expo rt duties as reflected in the commitment in 
paragraph 216 and Tables 17b and 17c. 
Minimum export prices act against competitive exports and can, under certain circumstances, 
create artificially low internal prices for exportable goods.  We seek a commitment for their 
elimination from the date of accession, resp onsive to the request in paragraph 215. 
Answer:
 
Ukraine took note of this comment. 
Question 62 
In relation to export duties on live cattle, the prop osed starting point for reductions is very high 
(50 per cent) and will continue to have a prohibit ive effect on exports fo r a considerable period 
after accession.  We seek a much lower starti ng point for reductions upon accession, with a 
more rapid reduction in subsequent years. 
Answer:  
Ukraine believes that the proposed  schedule for reduction of export duties on hides and skins is 
reasonable. 
Question 63 In relation to export duties on hides and skins, th e proposed plan in Table 17(c) also involves no 
adjustment upon accession.  We request a cons iderable reduction from the current rate of 
30 per cent immediately upon accession to a lower end point. 
Answer:
 
Ukraine believes that the proposed  schedule for reduction of export duties on hides and skins is 
reasonable. 
Question 64 
On export duties on ferrous and non-ferrous sc rap, we also support calls for more ambitious 
reductions in final bound duties. 
Answer:  
Ukraine believes that the proposed  schedule for reduction of export duties on hides and skins is 
reasonable. WT/ACC/UKR/141 
Page 28  
 
  Question 65 
We also seek confirmation that Ukraine will rep eal provisions imposing minimum export prices 
on any goods, as these act as a form of additi onal export restriction within the meaning of 
Article XI when exporters are legally  bound to set prices at this level. 
Answer:
 
Ukraine doesn't apply minimum export prises.  Ukra ine use indicative export prices aimed to inform 
companies about the level of world prices, in order to avoid antidumping measures, special import procedures and in accordance with inte rnational obligations of Ukraine. 
- Export restrictions 
Question 66 
[This section requires enactment of pending legisl ation; draft Laws "On cancellation of export 
ban for alloyed ferrous metal scrap, non-ferrous  metal scrap and semi-products, manufactured 
using the latter" (regarding of replacement expo rt ban for alloyed ferrous metal scrap, non-
ferrous metal scrap with introduction of export duty for above products);  draft Amendments to 
the Law on Foreign Economic Activities to elim inate all measures other than those affecting 
gold and silver; draft law On Introduction of  Changes to the Law of Ukraine "On State 
Regulation of Sugar Production and Sale " (abolishing export quotas and mandatory 
exportation of raw cane sugar)] 
Paragraph 224 indicates that the ad valorem  licensing fee has been eliminated.  This information 
should also be recorded in paragraph 166 as well, for import licenses.   
Answer:
  
Ukraine doesn't object to this proposal 
Question 67 
The commitment text in the second set of brackets in paragraph 228 represents a good basis 
from which to develop an appropriate commitmen t.  We will provide drafting suggestions in 
writing. 
Answer:  
Ukraine doesn't object to maintaining the second pa ragraph of the commitment language which states 
that the export ban of non-ferrous scrap will be eliminated upon accession: 
[The representative of Ukraine confirmed that  from the date of accession the export licensing 
requirements and other export restrictions and co ntrol requirements listed in Table [19(b)] and 
paragraphs [218 and 220] of this re port or any introduced in the future would be applied in conformity 
with WTO provisions, including those contained in Articles XI, XVII, XX and XXI of the 
GATT 1994.  [He also confirmed that any existing or  future export licence fee would be consistent 
with Article VIII the GATT 1994.] The export ban on  nonferrous scrap metal would be eliminated 
from the date of accession.  The Working Party took note of this commitment.] 
Ukraine is awaiting the aforementioned drafting suggestions in writing  WT/ACC/UKR/141 
 Page 29 
 
 
  Question 68 
We seek confirmation in paragraph 227 of the indication that the Rada had adopted laws 
removing export bans on scrap ferr ous and non-ferrous metals.  This needs to be clarified as 
Table 19(a) continues to refer to a prohibition on  export of non-ferrous scrap.  We also seek 
confirmation that all precious metals curren tly listed in Table 19(b) would no longer be 
subjected to export restrictions. 
Answer:  
The first sentence of Paragraph 227 sh ould be replaced with the following: 
"The representative of Ukraine said that a Draf t Law "On Cancellation of Export Ban for Alloyed 
Ferrous Metal Scrap, Non-Ferrous  Metal Scrap and Semi-Products, Manufactured Using the Latter" 
providing for the elimination of the export ban on ferrous metal scrap and on scrap non-ferrous metals 
(to be replaced by export duties), will be submitted to the Supreme Rada of Ukraine for 
consideration.. 
Question 69 
We seek confirmation of adoption of amendments  to abolish the scope of Government to apply 
quotas (B and C) on the export of raw cane sugar. 
Answer:  
The Draft law On Introduction of Changes to the Law of Ukraine "On State Regulation of Sugar 
Production and Sale", which repeal the mandatory requirement for exportation of sugar refined from 
imported raw cane sugar and to eliminate quotas B and C, will be submitted to the Supreme Rada of 
Ukraine for consideration. 
- Export subsidies Question 70 What is the scope of shipbuilding contracts concluded prior to March 2005 that still receive 
customs duties exemptions on inputs used in th e production process?  How long does Ukraine 
believe these benefits will continue, e.g., more th an five years?  This information should be 
included in the text. 
What portion of its shipbuilding production does Ukraine export? We have sought confirmation from Ukraine that its incentives with respect to exemptions and 
remissions of import duties are consistent with Article 3 and Annexes I, II and Annex III of the 
SCM Agreement, including the requirement that limits duty remission and rebate schemes to inputs that are consumed in the production of the exported product (making allowance for 
waste).  Ukraine has indicated that the benefits granted to shipbuilding are not duty drawback.   
Answer:
 
During 2005, export of shipbuild ing industry constituted US$230.2 million (34 vessels), and that 
accounts for 76 per cent of the overall volume of production, production for internal needs was US$71.3 million (15 vessels) that accounts for 24 per cent. 
The number of contracts signed before March 2005 is 118. WT/ACC/UKR/141 
Page 30  
 
  In 2005 the export share in shipbuilding industry made  up 0.57 per cent in the overall country's export 
that accounts for US$230.2 million.  
In accordance with the Law of Ukraine "On Stat e Support of Shipbuilding Industry of Ukraine" 
No. 1242 of 18 November 1999, the following preferences are in effect: 
− in accordance with Article 1, a delay is stipul ated in payment of the profit tax on advances 
made to shipbuilding industry enterprises before the moment of commissioning a ship. 
− Land tax exemption effective: 
- from 1 April 2005 – at the level of 75 per cen t of the effective rates in the relevant 
territories; 
- from 1 January 2006 – at the level of 50 per cent of the effective rates in the relevant 
territories; and 
- from 1 January 2007 – at the level of 25 per cent of the effective rates in the relevant 
territories.   
Question 71 
Whether in this section or elsewhere, however,  we continue to seek inclusion of this 
commitment. 
We support the second commitment paragraph in paragraph 232. 
Answer:
 
Ukraine has no objections to the second comm itment paragraph in  paragraph 232: 
[The representative of Ukraine confirmed that, fro m the date of accession, Ukraine will eliminate all 
export subsidies, within the meaning of Article 3.1( a) of the SCM Agreement.  To this end, Ukraine 
will, by accession, cease to maintain all pre-existing export subsidy programmes and, upon accession, make no further payments or disbursements, nor fo rego revenue or confer any other benefit, under 
such programmes.  This commitment covers subsidi es granted at all levels of government which are 
contingent, in law or in fact, upon export performance and includes, but is not limited to, any such subsidies to the shipbuilding and automotive indus tries.  The Working Party took note of this 
commitment] 
C. INTERNAL POLICIES AFFECTING FOREIGN TRADE IN GOODS 
- Industrial policy, including subsidies 
Question 72 We support the commitment texts in paragra ph 248 and the second part of paragraph 249. 
Answer:
 
Ukraine has no objections to the second comm itment paragraph in  paragraph 249: 
[The representative of Ukraine confirmed that, fro m the date of accession, Ukraine will eliminate all 
export and import-substituti on subsidies, within the meaning of Ar ticle 3.1(a) and 3.1(b) of the SCM 
Agreement.  To this end, Ukraine will, by accessi on, cease to maintain all pre-existing export and 
import-substitution subsidy programmes and, upon accession, make no further payments or  WT/ACC/UKR/141 
 Page 31 
 
 
  disbursements, nor forego revenue or confer an y other benefit, under such programmes.  This 
commitment covers subsidies granted at all levels of government which are contingent, in law or in 
fact, upon export performance or the use of domesti c over imported goods, and includes, but is not 
limited to, any such subsidies to the shipbuilding and automotive indus tries.  The Working Party took 
note of this commitment.] 
Question 73 We also support inclusion in the commitm ent in paragraph 248 the commitments in 
paragraph 205(b) and (c) concerning use of alte rnative methodologies.  We will provide text in 
our written comments.  
Answer:
 
Ukraine is awaiting the aforementioned drafting suggestions in writing. 
- Technical barriers to trade, sa nitary and phytosanitary measures 
Question 74 [This section requires enactment of pending legisl ation; amendments to laws and regulations as 
described in document WT/ACC/UKR/129 to en sure that Ukraine's conformity assessment 
procedures reflected options for achieving conf idence in the technical competence of bodies 
located in the territory of other WTO membe rs to perform conformity assessment and have 
their results accepted by Ukrainian authorities.] 
The commitments in paragraph 267 and 268 should be reviewed to ensure that they do not 
overlap and that the commitment text is in the proper form. 
We will have detailed comments in writing. 
Answer:
 
At the recent Working Party meeting it was agreed to delete the commitment in paragraph 267 and to 
take as the basis for commitment in the TBT sphe re the text laid down in the paragraph 268. 
Ukraine is awaiting  the aforementioned drafting suggestions in writing. 
- Sanitary and phytosanitary measures 
Question 75 
[This section requires enactment of pending legi slation; draft Law on Veterinary Medicine; 
draft Law on Biotechnologies (GMOs).] 
We commend the Government of Ukraine for cont inuing to reduce the list of goods subject to 
mandatory certification and would encourage further reductions. 
Answer:  
Ukraine annually takes measures to shorten the list of products subject to mandatory certification by 
excluding from that list, the commodities with a low le vel of risk to consumers.  For example, in 
2005, over 50 product titles were excluded from the List. 
In 2006, the shortening of the List continues. WT/ACC/UKR/141 
Page 32  
 
  Beginning 2007, after the introduction of technica l regulations, product groups covered by these 
regulations will be excluded from the List. 
Question 76 
What is the status of the action/reform program that Ukraine envisages to bring its Sanitary 
and Phytosanitary (SPS) regime into complia nce with WTO obligations?  We seek to 
understand how Ukraine intends to be in full co nformity with all provisions of the SPS 
agreement with all aspects of the harmonization plan incomplete. 
Paragraph 282:  We support the commitment, but  need an explanation of what "national 
competent" bodies are. 
We are making a final technical review of the existing legislation, i.e.,  
− The Law of Ukraine on Safety and Quality of  Food Products No. 2809-IV was passed on 
6 September 2005 and entered into force on 26 October 2005; 
− The Law of Ukraine On Introduction of Ch anges to Some Laws of Ukraine No. 3078-IV 
was passed on 15 November 2005 and entered into force on 7 January 2006; and 
− The Draft Law on Plant Quarantine was adopted by the Rada on 19 January 2006. 
We await enactment of the Law on Veterinary Medicine and look forward to reviewing the 
draft Law on Biotechnologies. 
Answer:
 
The following is an updated status on the SPS action plan: 
All systemic laws to bring the legal framework into conformity with the WTO SPS Agreement have 
been adopted except for the Law on Veterinary Medi cine.  The Draft Law on Veterinary Medicine has 
been drafted.  This Draft law is part of the WT O package of laws proposed for enactment by the new 
Rada. 
Food Safety requirements:  since August 2005, Ukra ine has been conducting a comparative review of 
Ukrainian food safety requirements with Codex Alim entarius standards.  Around 85 per cent of Codex 
and Ukrainian food safety requirements have been co mpared.  The results of the comparison thus far 
indicate that around 20 per cent of Ukrainian food safety requirements are the same as Codex Alimentarius.  The remaining requirements will ha ve to be brought in conformity with the SPS 
Agreement.  Measures offering higher protection than the Codex would be replaced by Codex 
standards, or a risk assessment would be undertaken to justify them.  Measures that exist in Ukraine 
but are not in the Codex would be eliminated, or  a risk assessment would be undertaken to justify 
them. On 3 July 2006, Ukraine established the National Codex Alimentarius Commission.  The Commission will start to gradually adop t Codex Alimentarius standards.   
Animal Health:  greater compliance with the sta ndards of the OIE and the SPS Agreement had already 
been achieved pursuant to Order No. 36 of the St ate Department of Veterinary Medicine of 
25 April 2005.   Upon the adoption of the Law on Veterinary Medicine (expected in 2006), the Veterinary Department will take further measure s in accordance with the new law to achieve full 
compliance with OIE.  Recently, the rules for Sl aughtering have been harmonized with the EU 
legislation (99 per cent completed).   Further, he  Rules for Issuance of Veterinary Documents have 
been upgraded in accordance with the international requirements.  WT/ACC/UKR/141 
 Page 33 
 
 
  Plant Health:  In May 2006, Ukraine became a Memb er of the IPPC. Ukraine will base all of its plant 
health measures on IPPC standards, guidelines and re commendations.  In this regard, Ukraine recently 
adopted ICPM Standard No. 15 was adopted in the form of Phytosanitary rule.   
Question 77 
We seek confirmation that the import ban on ground beef (or offal) will be eliminated with 
enactment of a new Veterinary Medicine Law (paragraph 156). 
Answer:  
The import ban on ground beef will be eliminat ed soon after the enactment of the new Law on 
Veterinary Medicine which is expected in 2006. 
- Trade-related investment measures 
Question 78 
[This section requires enactment of pending legisl ation; draft amendments to the Law on State 
Regulation of Sugar Production and Sale.] 
While this section is shaping up, it needs a traditional commitment on TRIMs, and should 
receive the information from the Investment section on these measures. 
Answer:   
The commitment language in TRIMs sphere is pr esented in paragraph 286 of the Working Party 
report of Ukraine: 
"The representative of Ukraine confirmed that fro m the date of accession, Ukraine will apply its 
investment regime in compliance with the releva nt provisions of the WTO, including the Agreement 
on Trade-Related Investment Measures, and  in a non-discriminatory manner - to imports from all 
WTO Members and to domestically produced goods.  The Working Party took note of this 
commitment". 
- State-trading entities 
Question 79 As we noted earlier, it would be useful to inco rporate this section in the front portion of the 
Report with portions of the section on "State Ownership and Privatization".  Doing so would 
greatly improve the coherence of the discussion re lating to State-owned, State-controlled, and 
State trading enterprises. 
We support the commitment text in paragraph 294, with appropriate changes to reflect 
redrafting.  
We will provide drafting suggestions in writing. 
Answer:
  
Ukraine is awaiting the aforementioned drafting suggestions in writing. WT/ACC/UKR/141 
Page 34  
 
  - Free zones, special economic areas 
Question 80 [This section requires enactment of pending legislation; (per response to Question 92 of 
WT/ACC/UKR/137) draft law to regulate legal  and organization grounds for implementing 
export-oriented investment project s in Ukraine related to the processing of goods in the customs 
territory of Ukraine.] 
We believe this section is substantially completed.  However, there are a few loose ends that will 
need to be tied down. 
We will need more information on the prosp ective law, and its current progress towards 
enactment.  When can we see a text? 
Answer:
 
Ukraine will provide the abovementioned draft law in due course. 
Question 81 
We are concerned about information in the Rules of  Origin section of the report indicating that 
goods processed in special economic zones could acquire status as domestic goods based on 
domestic content.  This would appear to allow them to be sold in the rest of Ukraine duty free 
based on local content—a prohibited subsidy.  
Paragraph 304, dealing with the moratori um on SEZs will need to be updated. 
Answer:  
A moratorium on the creation of new special (free)  economic zones imposed by the 2005 Budget Law 
(Article 9) is still in effect and there are no plan s or draft legislation to cancel this Moratorium. 
- Government procurement Question 82 [This section requires enactment of pending legislation; Draft amendments to the law "On 
Government procurement" regarding State enterprises] 
We would like to see a copy of the new legislation on Government Procurement.  We 
understand that it blurs the distinction betw een purchases by state entities for possible 
commercial use and government pu rchases for its own consumption. 
We will want the text to reflect that Ukraine has separated the two issues, and that its 
commitment in this section refers only to procurement by the government for its own 
consumption. 
Answer:
 
Ukraine will provide the new law on Gove rnment Procurement in due course.  WT/ACC/UKR/141 
 Page 35 
 
 
  Question 83 
We note the commitment language on joining the Government Procurement Agreement.  We 
look forward to the earliest possible initiation  of negotiations for Ukraine's membership in the 
Agreement. 
Answer:  
Ukraine looks forward for initiation of negotiations of membership in the Government Procurement 
Agreement as stated in the Wo rking Party Report Commitment. 
- Agricultural policies 
Question 84 [This section requires enactment of pending legisl ation; draft Amendments to the Law on Milk 
and Dairy Products; amendments as appropriate to the Law on State Support for Agriculture 
and the Law on VAT to eliminate WTO-inconsiste nt measures applied to support agriculture.]  
It is clear that this section of the report will need review based on the repeal of WTO-
inconsistent legislation on support of agriculture.  The section will also need to be redrafted to 
receive the material moved from the Pricing Policies section. 
Answer:
 
Ukraine has no objection to redrafting of this section. 
Question 85 
We urge Ukraine to address the fo llowing concerns prior to the next Working Party meeting, so 
we may finalize this section of the report. 
The WTO incompatible provisions (production  quotas, minimal prices and maximum trade 
margins) of the Law on Milk and Dairy Pro ducts must be changed prior to accession.   
Answer:   
The draft law on Amendments to the Law on Milk and Dairy Products is part of the WTO package of 
laws proposed for enactment by the new Rada. 
Question 86 
The Cabinet of Ministers of Ukraine and th e Rada should amend the current VAT Law 
(Article 8-1) to provide for national treatment fo r imported food products, e.g., to  equalize the 
VAT tax burden with that applied to domestic products.   
Answer:  
The Law of Ukraine "On Introducing Changes to Some Laws of Ukraine on Taxing Agricultural 
Enterprises and Supporting Social Standards of Th eir Employees" introduced changes to the main 
laws on taxation, in particular, the Law of Ukrain e "On Value Added Tax" by supplementing it with a 
new Article 8-1 "Special Regime for Taxing Activ ities in the Field of Agriculture, Forestry and 
Fishery." Therefore, in the future Article 8-1 of the Law of Ukraine "On Value Added Tax" should be 
discussed. WT/ACC/UKR/141 
Page 36  
 
  In the current year, the said issue is regulated by the Law of Ukraine No. 2987 of 18 October 2005, 
"On Introducing Changes to the Law of Ukraine "On Value Added Tax" Regarding Taxation of 
Agricultural Enterprises" that suspends Article 8-1. 
To finally regulate the said issue, the draft la w of Ukraine on introducing changes to the Law of 
Ukraine "On Value Added Tax" has been developed regarding special regimes of taxing agricultural 
producers. It proposes to abrogate Article 8-1, wh ich would allow avoiding a discriminatory approach 
to the imposition of the value added tax on transac tions carried out by agricultural enterprises and 
agricultural import transactions. 
This Draft Law is part of the WTO package of  laws proposed for enactment by the new Rada. 
Question 87 
Ukrainian Customs Service must cease using internal orders to change international 
Harmonized Trade classification without notice and without regard to Ukraine's international 
obligations to the WCO and the WTO.  (We und erstand that the Customs Service last year 
changed the HS classification for salm on contrary to international norms). 
Ukraine is entitled to assist its farmers, and to protect its markets, but must use WTO-
consistent methods to do so. 
To verify our information, we ask Ukraine to provide copies of the following laws:  
− "On meat and meat products" (No. 8060),  
− "On Consumer Protection" (No. 8207),  
− "On Milk and Dairy Products" (part of Omnibus package No. 8322), and  
− "On State Regulation of Sugar Production and Sale. 
Answer:
 
Ukraine will provide the aforementi oned legislation in due course. 
Question 88 
WTO inconsistencies in application of VAT betwee n domestic and imported products need to be 
addressed. 
Answer:  
Please see answers to Question 38 above. 
Question 89 
Article 8 of Law On State Support to Agricultu re in Ukraine needs to be addressed to repeal 
rights to impose import quotas (paragraph 334) and minimum import prices. 
Answer:  
The Draft law "On Amendments to the Law of Ukraine "On State Support for Agriculture", which 
amend Article 8 to repeal the rights for imposing quotas on import or export of a specific object of state regulation, will be submitted to the Supr eme Rada of Ukraine for consideration.    WT/ACC/UKR/141 
 Page 37 
 
 
  Question 90 
We will need to finalise agricultural support commitments on the basis of a recent and 
representative base period. 
Answer:   
We understand the importance of this issue and asp ire to agree upon the commitment regarding the 
AMS for agriculture as soon as possible.  This is why Ukraine prepared and provided its alternative 
proposal regarding State support on the basis of th e period of 2000 – 2002 for review, and we expect 
active cooperation on the part of this Member in respect of this issue. 
- Trade in civil aircraft 
Question 91 
Ukraine has stated its commitment to join the Ag reement on Trade in Civil Aircraft.  Standard 
commitment language should be added.   
Answer:  
Ukraine proposes the following new wording for the commitment in paragraph 320: 
320. A Member sought a commitment from Ukraine to join the Agreement on Trade in Civil 
Aircraft upon accession to the WTO.  The repr esentative of Ukraine replied that his Gov ernment 
intended to join the Agreement on Trade in Civil Aircraft in 2010.   The representative of Ukraine 
confirmed that Ukraine would become a signatory to the Agreement on Trade in Civil Aircraft 
in 2010.  The Working Party took note of this commitment. " 
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME 
- GENERAL 
Question 92 
[This section requires enactment of pending legislation; draft law that amends: Law on 
Medicines (data exclusivity), legislation on agricu ltural chemicals; the Law on GIs to take into 
consideration WTO rulings; draft Resolution of th e CM on amending of item 2 of Procedure of 
payment of the charge for actions related to ac quiring, implementation and protection of rights 
for plant varieties; and "Draft amendments to the Customs Code" to provide Customs 
inspectors with "ex officio" authority.] 
Our priority in this area is legislat ive implementation and enforcement.   
The text is shaping up, and we will have a few ad ditional comments on the text, in writing.   
Answer:  
Ukraine is awaiting the aforementioned drafting suggestions in writing. WT/ACC/UKR/141 
Page 38  
 
  VI. POLICIES AFFECTING TRADE IN SERVICES 
Question 93 [This section requires enactment of pending legisl ation; draft law on the Bar;  draft law On 
Introduction of Changes to the Law of Ukrain e "On Banks and Banking Activity" (with regard 
to setting up branches of foreign banks in the t erritory of Ukraine); draft Law on Changes to 
the Law of Ukraine "On Publication Activity"] 
The text of this section will require work to in corporate material supporting the commitments 
in the  consolidated schedule. 
In this regard, we have specific material on in surance and transparency that we will provide in 
writing for the next revision.   
Answer:
 
Ukraine is awaiting the afore-mentioned drafting suggestions in writing. 
VIII. TRADE AGREEMENTS 
Question 94 We note the bracketed commitment language and urge adoption of the second text in 
paragraph 452. 
Answer:
 
At the recent Working Party meeting it was agre ed to adopt the second text in paragraph 452: 
[The representative Ukraine confirmed that Ukra ine would observe all WTO provisions including 
Article XXIV of GATT 1994 and Article V of the GA TS in its participation in preferential the trade 
agreements, and would ensure that the provisi ons of these WTO Agreements for notification, 
consultation and other requirements concerning free trade areas and customs unions of which Ukraine 
was a member were met from the date of accession.  He confirmed that Ukraine would, upon accession, submit notifications and copies of its Free  Trade Areas and Custom Union Agreements to 
the Committee on Regional Trade Agreements (CRTA).  He further confirmed that any legislation or 
regulations required to be altered under its Trade Agreements would remain consistent with the 
provision of the WTO and would, in any case, be notified to the CRTA during its examination of the 
same.  The Working Party took note of these commitments.]  
   WT/ACC/UKR/141
 Page 39ANNEX 1 
Special VAT regime for agricultural producers of milk and meat  
 
The mechanism for paying subsidies to agricu ltural producers for milk and meat produced by them in live weight and sold to proc essing enterprises  
    
 
    
 
    
 
   
  
 
 
  
 
 
  TL – tax liability (amount of VAT paid by the pu rchaser of the products to their seller);  
TCm – tax credit resulting from the purchase of milk, meat or products of their processing;  and TCo – tax credit resulting from the purchase of other cost components 
SUBSIDY VAT paid to 
the seller by 
end consumer The supplier of inputs (cost components)  consumed during the production of milk , meat and products of their processing 
STATE BUDGET End consumer of products 
TCoTCmTCo 
TL- TCm 
TL-TCo-TCm TCm
TL-TCo-TCm TCoTL
TLTL VAT rate 20% VAT rate 20%  VAT rate 20% Agricultural producer of 
milk or meat Processing enterprises Purchaser of processed 
products 
VAT rate 0%  
  WT/ACC/UKR/141 
Page 40 
 
 
Assumptions:  
X – the price of agricultural products produced in Ukraine (withou t VAT) equals the price of imported agricultural products (wi thout VAT); 
∆- added value created by a pro cessing/non-processing company. 
 DOMESTICALLY PRODUCED agricultura l products (milk and meat 
in live weight) IMPORTED a gricultural products (milk and meat in live wei ght)Agricultural producer of milk 
and meat in live weight NON-processing 
enterprise
End consumerProcess ing enterpriseNON-processing 
enterprise
Processing enterprise 
End consumerAgricultural producer of milk 
and meat in live weight Agricultural producer of milk 
and meat in live weight Agricultural producer of milk 
and meat in live weight End consumer
XX+0.2*X(X+∆)+0.2*(X+∆)
X
X+0*X
(X+∆)+0.2*(X+∆)X X+0.2*X
X 
X+0.2*X
(X+∆)+0.2*(X+∆) !!
! End consumer
(X+∆)+0.2*(X+∆) Sales schemes for domestically produced  and imported agricultural products  
   WT/ACC/UKR/141
 Page 41Special VAT regime for agricultural enterprises  
The mechanism for accumulation of VAT by agricu ltural enterprises received from the sale of  
agricultural products produced by them (except for milk and meat in live weight sold to processing enterprises)  
 
 
 
TL – tax liability (amount of VAT paid by the pu rchaser of the products to their seller;   
TC – tax credit resulting from the purchase of cost components VAT ACCUMULATION 
STATE BUDGET TC 
TL - TC TC 
TL - TC TC End consumer of agricultural 
products 
VAT paid to the 
seller 
 TL TL 
VAT rate 20% VAT rate 20%The supplier of inputs (cost com ponents) consumed during the pro duction of agricultural products 
Agricultural producer Purchaser of agricultural products  
  WT/ACC/UKR/141 
Page 42 
 
 Assumptions:   
  XX  – the price of agricultural products produced in Ukraine (withou t VAT) equals the price of imported agricultural products (wit hout VAT); 
  ∆∆- added value created by a pro cessing/non-processing company. Domestically produced agricultural prod ucts (except for milk and meat in 
live weight)Imported agricultural products (except for milk and meat in live weight) Agricultural producer NON-processing 
enterprise 
End consumer Processing enterprise NON-processing 
enterprise 
Processing enterprise 
End consumer Agricultural producer Agricultural producer Agricultural producer End consumer 
X X+0.2*X (X+∆)+0.2*(X+ ∆) 
X 
X+0.2*X 
(X+∆)+0.2*(X+ ∆) X X+0.2*X 
X 
X+0.2*X 
(X+∆)+0.2*(X+ ∆) Sales schemes for domestically produ ced and imported agricultural products  
End consumer 
(X+∆)+0.2*(X+ ∆)  WT/ACC/UKR/141 
 Page 43 
 
 
  ANNEX 2 
Observations by Ukraine on the comments raised by a  
Member of the Working Party on the Customs Code of Ukraine  
Ukraine is thankful for these informal comments on those parts of the Customs Code of Ukraine 
dealing with customs valuation.  
Ukraine intends to bring itself into compliance with WTO rules on customs valuation through two 
normative acts: the Customs Code of Ukraine, as amended, and the Executive Order of the State 
Customs Service of Ukraine "Methodological reco mmendations for using certain provisions of the 
Customs Code of Ukraine relating to the determinatio n of the customs value of goods brought into the 
customs territory of Ukraine" (h ereafter: "Executive Order").  
Transaction Value for Related Parties: first paragraph 
Paragraph 3.8.1 of the draft Executive Order reads as follows: "Paragraph 7) of part three of Article 267 stipulates that where the purchaser and the seller are 
interdependent, that is, are related persons, the circ umstances of sale must be studied and the value of 
the transaction shall be accepted as the customs va le provided such relations had no impact on the 
price.  It is not stipulated that circumstances mu st be studied in all cases where the seller and the 
purchaser are related to each other.  Such inquiry  would be needed only where there are reasonable 
doubts regarding the acceptability of the price.  If the customs body does not have any doubts 
regarding the acceptability of the price it must be  accepted without requesting further information 
from the declarant.  For example, the customs body had studied the relations before or already has 
detailed information on the purchaser and the seller a nd may be convinced as a result of studying this 
information that these relations had no impact on the price of the goods brought into the customs 
territory of Ukraine." 
Transaction Value for Related Parties:  second paragraph 
There appears to have been a translation or typogr aphical error. Article 267 of the Customs Code does 
not contain the language "expenses listed in Part 5 of  this Article" referred to in the comments. 
Article 267 does contain the language "expenses listed in  Part 2 of this Article". Part 2 contains 
paragraphs 1 through 7, which, as noted in comments,  correspond to the expenses listed in Article 8 of 
the Customs Valuation Agreement. 
Transactions Value for Relate d Parties: third paragraph 
Paragraph 3.9 of the draft Executive Order reads as follows: "A number of factors shall be taken into considera tion in determining that any value is "approximated 
as much as possible" to some other value. These fact ors include the nature of the imported goods, the 
nature of the industry, the season during which the goods are imported and whether or not the 
difference between values is commercially significan t. Since these factors may differ in each specific 
case, it would be impossible in each case to apply a uniform standard like a fixed percentage. For 
example, a small difference in values in a case concerning certain types of goods may be 
unacceptable, while a big difference in a case concer ning another type of goods may be acceptable in 
determining whether or not the value of the transaction is approximated as much as possible to "benchmark" values mentioned in paragra ph 7) of part three of Article 267." WT/ACC/UKR/141 
Page 44  
 
  Computed Value 
Paragraph 7.4 of the draft Executive Order reads as follows: "Profits and general costs mentione d in paragraphs 20 and 30 of Artic le 272 shall be determined based 
on information provided by the manufacturer or on its behalf, unless the manufacturer's figures are 
incompatible with the figures usually recorded in c onnection with sales of goods of the same class or 
type as the valuated goods that are manufactured by manufacturers in the exporting country for export 
to Ukraine." 
Paragraph 7.5 of the draft Executive Order contains the following language: "In this connection it should be noted that 'profits and general costs' must be taken in their entirety. It 
means that if in a certain specific case manufacturer's profits are low and general cost of the 
manufacturer are high, manufacturer's profits and gene ral costs, taken together, still can be compatible 
with those recorded in connection with sales of goods of the same class or type." 
Paragraph 7.6 of the draft Executive Order contains the following language: "If information used for the purposes of calculating the value is other than that provided by the 
manufacturer or on its behalf, customs bodies must inform the importer…." 
Right to Appeal without Penalty 
Paragraph 1.8 of the draft Executive Order reads: "In accordance with Article 264, the declarant shall be entitled to challenge decisions concerning the 
determination of the customs value of goods appr oved by the customs body.  Initially, a complaint 
may be lodged with a higher-ranking customs body, but the declarant shall be entitled to ultimately 
challenge such decision in court." 
Paragraph 1.9 of the draft Executive Order reads: 
"The declarant shall not be subject to a penalty or  threatened with a penalty only because he decided 
to avail himself of the right to challenge the deci sion. Payment of ordinary legal costs shall not be 
considered a fine."
 
 
 
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