RESTRICTED
WORLD TRADE WT/ACC/UKR/34
3April 1997
ORGANIZATION(97-1331)
Original: English
ACCESSION OFUKRAINE
Communication from Ukraine
Thefollowing information concerning theforeign tradeturnover ofUkraine in1996hasbeen
received from theMinistry forForeign Economic Relations andTrade ofUkraine.
_______________
Table ofContents
INTRODUCTION 2
1. OVERALL DESCRIPTION OFTHE FOREIGN TRADE TURNOVER
OFUKRAINE FOR 19962
1.1 Main Indices ofForeign Trade 2
1.2 Trade inGoods (inMaterial Form) 5
1.3 Barter (Exchangeable) Operations 7
2. GEOGRAPHICAL STRUCTURE OFFOREIGN TRADE 8
2.1 Main Tendencies intheStructure ofTrade 8
2.2 Trade withCISCountries andBaltic States 8
2.3 Trade withOther Foreign Countries 10
3. MEASURES ONRETURN OFCURRENCY RECEIPTS AND IMPORT
SHARE OFBARTER CONTRACTS (DIRECT AND INDIRECT)11
4. FULFILMENT AND PREPARATION OFREGULAR MEASURES ON
TRADE BALANCE DECREASE AND REDUCTION OFESSENTIAL
AND NON-ESSENTIAL IMPORTS, INCLUDING "SHUTTLE"
IMPORTS12
5. FORECAST OFTHE FOREIGN TRADE DEVELOPMENT IN1997 16WT/ACC/UKR/34
Page2
INTRODUCTION
In1996 social andeconomic situation Ukraine remained difficult. Negative processes
continued intheeconomy. They caused further decline inGDP (10percent), industrial (5.1percent)
andagricultural (9percent) production, reduction oftheinvestment activity.1
Along withthis,asaresult ofeconomic transformations thereduction ofinflation wasachieved
(thelevel ofinflation amounted to39.7percentagainst 182.0 percentfor1995), reduction ofthe
increase inwholesale prices forindustrial products (117.3 percentagainst 2.7times in1995), dynamic
growthoftheforeigntradevolume.1Generalstabilizationofthemainmacroeconomicindicescontributed
tothesuccessful carrying outmonetary reform inUkraine.
Consideredforeigntradepolicyinthecrisisconditionsprovidedrapidincreaseinexportsvolume
(21.5 percent), itspriority development rateincomparison withimport earnings (17.0 percent),
reduction oftheabsolute (by392.8 millions USDorby32.7percent)andcomparative (43.7 percent)
leveloftheunfavourable balance offoreign trade turnover. Foreign trade ofthecountry -isoneof
thefewfields ofactivity inwhich receipts oftheStatebudget for1996exceeded thedeveloped plan.
Taking intoaccount thatvolumes ofexport ofUkraine in1996 came approximately to40
percentofGDP, onecannotethatforeign trade actually plays aroleofthestabilizing factor forthe
economy ofthecountry ingeneral andfirstofallforitsdomestic sector.
1. OVERALL DESCRIPTION OFTHEFOREIGN TRADE TURNOVER OFUKRAINE FOR
1996
1.1 Main Indices ofForeign Trade
According tothecalculations oftheMinistry ofForeign Economic Relations andTrade of
Ukraine based onthedataoftheStateCustoms Service ofUkraine, Ministry ofStatistics andMinistry
ofEconomy andtaking intoaccount supply ofoilandgasthrough thepipelines andservices fortheir
transit viathecustoms territory ofUkraine foreign tradeturnover ofgoods inmaterial andnon-material
form(services) in1996amounted to37969million USD2which exceeds 1995by6188 million USD
orby19.5percent(production oftheindustrial products during thisperiod decreased by4.9percent
andconsumer goods -by20.4percent). Itisnecessary tomention thattotalvolumes offoreign trade
for1996 exceed by11.0billion USD (40.6 percent) annual volumes for1994.
Trade ingoods inmaterial form amounts to84.6percentoftotaltrade turnover andtrade
ingoods intheform ofservices -15.4percent.
Note: According tothecalculations, export amounts to40percentofthetotaldomestic product of
Ukraine. Itshows highleveloftheexport orientation ofthestateeconomy. Under theconditions
ofthetransition economy exports inGDPisconstantly increasing stabilizing toacertain extent
1According tothesummarized dataoftheMinistry ofEconomy, Ministry ofFinance, Ministry
ofStatistics andNational Bank ofUkraine.
2Costparameters inthetextaregiven inUSD.WT/ACC/UKR/34
Page3
economic situation when consumption inthedomestic market isdecreasing. Itshould be
mentioned thatexport orientation oftheGDPistheguaranty forincreasing production potential.
Forinstance, Republic ofKorea, whohadchosen export-oriented strategy inthe1970's,
experienced realboom inthedevelopment offoreign trade. Thus, therewerefollowing changes
intheforeign trade turnover inthiscountry during thelast20years: 1977 -12billion USD,
1987 -22billion USD, 1996 (according totheforecast) -155billion USD.
Export volumes forgoods andservices in1996 increased by3.3billion USD (21.5 percent)
incomparison with1995 andamounted to18580millions USD, which exceeds by5.7billion USD
(44.2 percent) respective figure for1994.
Along withthis,import increased by17.6percent(uptothevolumes of1995) andreached
19389million USD. Export growth ratesexceeded import growth ratesby3.9percentage points (in
1995 export growth ratesexceeded respective figure forimport earnings by1.6percentage points).
Note: Total imports in1994 amounted to14106billion USD, in1995 -16492billion USD.
Continuing exceeding ofexport development ratesovertheimport started in1995, became
themainfactor offurther balancing foreign tradedevelopment andgradual reduction oftheunfavourable
balance.
In1996 unfavourable balance offoreign trade balance amounted to809.4 million USD and
decreased inabsolute amount by392.8 million USD or32.7percentascompared with1995 with
simultaneous increase involumes offoreign trade turnover anditsexport component.
Note: Unfavourable balance ofthetradebalance ofUkraine in1994intotalamounted to1200 million
USD, for1995 -1200 million USD. Strained trade balance remains inBelarus where
unfavourable balance offoreign tradeamounted to1.1billion USDwhile foreign tradeturnover
during 11months of1996 came to11.2billion USD; intheCzech Republic -5.4and45.2
billion USD respectively; Poland -8.3and47.9billion USD; Slovakia -1.5and17.4billion
USD; Hungary -2.9and25.9billion USD; Romania -1.2and14.6billion USD.
Foreign tradeturnover (FTT), exports, imports anddeficit ofthebalance calculated percapita
amounts to(dollars):
FTT Exports Imports Balance
Ukraine (for1996) 730.2 357.3 372.9 -15.6
11months of1996
Belarus 1088 490 598 -108
Czech Republic 4388 1932 2456 -5244
Poland 1261 521 739 -218
Slovakia 3327 1519 1808 -288
Hungary 2512 1117 1398 -282
Romania 630 289 341 -52
Positive tendency towards reduction oftheinfluence oftheunfavourable balance onthegeneral
balance offoreign trade ofUkraine remains. Ifin1995 1billion USD offoreign trade turnover
corresponded to37.8million USD oftheunfavourable balance, in1996 thisfigure decreased upto
21.3mullionUSD.So,unfavourablebalanceofthetradebalanceinrelativefiguresdecreased1.8times.WT/ACC/UKR/34
Page4
Incomparison with1994 when 1billion USD oftheforeign trade turnover corresponded to
44.4million USD oftheunfavourable balance, in1996 itdecreased inrelative figures in2.1times.
Export/import coverage ratioongoods andservices in1996amounted to0.96vs.0.93in1995.
Structure oftheexport andimport ofgoods inmaterial andnon-material formin1996isgiven
below:
Value (million USD) Structure (%)
Total export from Ukraine
including:18579.7 100.0
Non-material goods (services) 4450.0 24.0
Material goods 14129.7 76.0
including:
Basemetals, including ferrous metals 4540.2 24.4
Products ofchemical andrelated industries 1674.1 9.0
Products offoodindustry 1386.3 7.5
Machinery, equipment andmechanisms 1379.5 7.4
Fuel, mineral products 1242.4 6.7
Vegetable products 856.3 4.6
Land, airandwater transport 621.7 3.3
Livestock, products ofcattle-breeding 540.5 2.9
Textile, shoes, head-dresses 443.8 2.4
Other 1444.9 7.8
Value (million USD) Structure (%)
Total import intoUkraine
including:19389.1 100.0
Non-material goods (services) 1400.0 7.2
Material goods
including17989.1 92.8
Fuel, mineral products 9631.3 49.7
Machinery, equipment andmechanisms 21.69.5 11.2
Products ofchemical andrelated industries 989.4 5.1
Products offoodindustry 823.1 4.2
Plastic, rubber products 758.6 3.9
Basemetals, including ferrous metals 740.5 3.8
Textile, shoes, head-dresses 561.5 2.9
Land, airandwater transport 553.9 2.9
Paper mass made from wood 389.4 2.0
Other 1371.9 7.1
Allabove mentioned gives anopportunity tomake thefollowing conclusion -assignment of
theGovernment "toachieve in1996 growth oftheforeign trade turnover upto34.6-34.8billion
USDvs.32.4billion USDin1995" (page 45oftheProgram oftheActivity oftheCabinet ofMinisters
ofUkraine) wasexceeded by3billion USD byincreasing itsexport component (in1996foreign tradeWT/ACC/UKR/34
Page5
turnover came to38.0billion USD) reducing trade balance deficit inabsolute figures by393million
USD andinrelative figures by32.7percentorbyonethird.
1.2 Trade inGoods (inMaterial Form)
Foreign trade turnover ofgoods inmaterial form in1996 amounted to32119million USD
andincreased by14.5percentascompared to1995.
Export ofgoods amounted to14130million USDexceeding by11.0percentrespective period
ofprevious year. Import amounted to17989million USD, itsvolumes increased by17.5percent.
Balance oftrade inmaterial goods amounted to3859million USD.
In1996import growing ratesfortheabove mentioned goods inmaterial formexceeded export
oftheses goods (by6.5percentage points).
Thefollowing reasons caused suchasituation:
i. existing conditions ofthecurrency control ofUkrainian karbovanetch andlaterhrivnia (setting
itsexchange rateincomparison withhardcurrencies toohighwithout economic reasons) didnotprovide
effective (financially) export activity (inmetallurgy export efficiency financially decreased more than
by220million hrivnias, inmechanical engineering -by110million hrivnias). Simultaneously, despite
strict tariff measures import volumes were increasing. Itisconnected with correlation between
large-tonnage exports andimports andrespective ratedifferences which tookplace atthebeginning
oftheexport andimport operation;
ii. unfavourablesituationintheforeignmarketsforthenumberofcommodityitemsoftheUkrainian
export andimport hadabadeffect onforeign trade balance ofUkraine. Inparticular, reduction of
prices onexport ofcastiron,sugar, certain typesofferro-alloys, milkandmilkproducts, sunflower-seed
oil,etc.Thus, castironprices intheinternational market decreased by10-12 percentcausing reduction
oftheexport price oftheUkrainian castironfrom 149USD pertonto127USD perton.Prices in
theenergy markets alsoincreased. Besides, itwasimpossible toprovide competitiveness ofnational
goods (because oftheimperfect structure oftheircostwhich consists mostly frommaterial- andenergy-
intensive components) which domestic prices were often higher thanprices intheUkrainian export
markets (castironprices atthedomestic enterprises amounts to150-160 USDperton,similar situation
withtherolled ferrous metals, intermediate products, etc.);
iii. influence ofbarter trade. Regulating barter contracts andperforming strict control overthem,
Government hasachieved exceeding by13.5percentage points therateofreturning import partover
therespective figure oftheexport component inbarter trade. Thisshould beunderstood asapositive
trend oftimely andfullreturn ofimport onbarter contracts. Thisfactor directly effected theincrease
inimport earnings ofUkraine resulted inincrease oftheunfavourable balance almost by
450million USD. Ingeneral, thistrend should beinterpreted mainly aspositive one.Itcanbenoted
especially intheagricultural sector where enterprises, firstofallonthebasisofforward or/and future
contracts, received import partinadvance (inthefirsthalfoftheyear) andobliged toexport goods
later(inthethirdquarter ofthisyearandinthefirstquarter of1997);
iv. imbalance inexport andimport operations withunfinished rawmaterials. In1996 there was
anincrease inamounts ofgiveandtakerawmaterials offoreign customers inthedomestic market.
Itamounted approximately to1.6billion USD (increased by25percent). Atthesame timeproducts
manufactured from thegive-and-take rawmaterials andexported from Ukraine amounted to
1.5billionUSD.Ifwecalculatetheexpectedmanufacturingofproductsfromgive-and-takerawmaterialsWT/ACC/UKR/34
Page6
during thisperiod, atleast600-650 millions USDremain inthemarket ofUkraine intheformofforeign
customer ’sproducts.
Toimprove thestructure ofimports andexports Ministry ofForeign Economic Relations andTrade
submitted totheCabinet ofMinisters forconsideration Draft LawofUkraine "Onchanges and
amendments totheLawofUkraine", "Onoperations withgive-and-take rawmaterials inforeign
economic relations". Main amendments proposed bythisLawrefertotherights oftheGovernment
ofUkraine oncontrolling export andimport ofgive-and-take rawmaterials andmanufactured products.
Italsodealswithintroduction ofadditional norms which would allow tostopusing opportunities granted
bytheLawwiththepurpose ofevading restricting measures oftheGovernment.
Atthesame time, current situation requires immediate interference intotheintensity ofgoods flows
whenperformingoperationswithgive-and-takerawmaterials.ThatiswhyalongwiththeLawResolution
oftheCabinet ofMinisters No.1355 wasdeveloped andadopted on8November. Itestablished the
listofgoods which import totheterritory ofUkraine intheformofgive-and-take rawmaterial isbeing
temporarily restricted. Firstpositions ofthislistare"sugar reed" and"sugar rawmaterials".
Bytheproposal oftheMinistry ofForeign Economic Relations andTrade Cabinet ofMinisters adopted
Resolution of30November 96No.1429 which provides restrictions forimporting certain types of
rawmaterials(rawmaterialswhichareprocessedintotheproductssubjecttotheexcisedutyinUkraine).
Existing volumes ofusing imported mainly from Russian Federation andPoland energy coalcannot
berecognized expedient fromthepointofviewofeconomic interests. Itresults notonlyinimbalancing
bilateral foreign traderelations butalsoinsharp reduction offinancial results ofelectric power-stations
which areusing imported onthegive-and-take basis coaltoproduce electricity. Theresult ofthis-
decrease intaxation volumes withconsequent negative results forstatebudget. Besides, thisprocess
isstrengthened because ofthelowexport price oftheproduced according tothisscheme energy at
thedomestic electric power-stations (0.024 USD perKWT). Inconnection withthis,substitution of
theimported energy coalbythenational onebecomes especially validbothforequalizing foreign trade
balance ofthestateandforproviding further increase inbudget receipts.
v. Stimulation oftheimport ofgoods forcarrying outgovernmental credit lines. By1October 96
-237.6 million USD (though mentioned stimulation fromonehandcontributed tothediversification
oftheforeign economic relations ofUkraine andfromanother -totheincrease ofexport infuture).
Germany delivered goods inamount of70.2 million USD, Italy -14.6 million USD, France -
13.3million USD, USA -139.5 million USD (ontheEximbank credit line-100.9 million USD,
International Development Agency -28.5million USD, under theguarantees oftheMinistry of
Agriculture oftheUSA -10.1million USD).
vi. Foreign investments (intheformofproperty) made bynonresidents intotheauthorized funds
ofjointventures (within theindicated limits). According totheexisting methodology, customs statistics
calculates suchinvestments intotalimport volumes. According tothelatest data, import volume for
1996includes over3000million USDofforeign investments intheformofmovables andimmoveables.
Ifabove indicated factors (except credit andinvestment) adjusted export growing rateswill
exceed import growth according tothecalculations atleastby5-8percentage points. Along withthis,
strain oftheforeign trade turnover decreased almost by1.1-1.5 billion USD.
Thebiggest percentage ofthetotalexport occupy, asearlier, basemetals, including ferrous
metals -24.4percent(4540.2 million USD), products ofchemical andrelated industries -9.0perWT/ACC/UKR/34
Page7
cent(1674.1 million USD), products offoodindustry -7.5percent(1386.3 million USD), machinery,
equipment andmechanisms -7.4percent(1379.5 million USD), etc.
In1996 export ofvegetable products increased including seeds andfruits -in6.5times,
grain-crops -in3.2times, flour products -in1.8times.
Structure oftheexport ofUkrainian goods isconstantly changing. There isatendency towards
increase ofimport ofcertain typesofhightechnological products andproducts ofnational foodindustry,
namely:
products from ferrous metals by 41.3percent;
equipment andmechanical devices by 9.9percent;
electric machinery andequipment by 6.3percent;
meatandfoodsub-products by 23.4percent;
grain-crops in 3.2times.
Note: 80percentoftheexport oftheRussian Federation consists ofrawmaterial goods andgoods
withthelowprocessing level. Thus, percentage ofthemain types ofenergy resources (oil,
oilproducts, natural gas,coal) intotal export volume ofRussian Federation (without
non-organized trade) in1996 came to46percent, metals (ferrous metals, copper, nickel,
aluminum) -15percent, machinery andequipment -9.4percent.
Quick reconstruction oftheproduction structure, highcostofthemajority ofexport products
andimpossibility oftheagents offoreign economic activity toprovide more effective terms ofdelivery
totheforeign markets (CIF, CIP,DDP, etc.)hasabadeffect onthetrade efficiency.
Importconsistsofenergyproducts(51.4percentoftotalimportvolumes),machinery,equipment
andmechanisms (12.1 percent), andother production andindustrial products. Products intended for
meeting demands ofthenational production andmaintaining itsfunctioning amounts tomore than
80percentofthetotalimports.
Non-industrial products, namely consumer goods (food andnon-food products including goods
liable totheexcise duty) donorexceed 10percentofimports; 4.8percent-foodproducts, 5.1percent
-non-food products.
Note: 58percentoftheconsumers ’market ofRussian Federation consist ofimports.
1.3 Barter (Exchangeable) Operations
Positive tendencies remain inbarter (exchangeable) operations. Barter isconstantly decreasing
intheexport ofgoods. In1996, ascompared with1995, percentage ofbarter inforeign tradeturnover
decreased from31.0percentto20.1percent(including export -from33.7percentto22.1percent).
Absolute volumes ofbarter trade decreased while general figures offoreign trade increased.
Relative levelofbarter operations approaches thelevelcharacteristic forworld trade.
In1996 there were positive tendencies inthestructure ofbarter operations oncertain types
ofgoods, firstofall,Ukrainian export goods withhighliquidity.
Percentage ofbarter operations intheexport ofproducts made fromferrous metals decreased
in1996 upto19.1percentvs.30.1percentoftheprevious year; sugar -32.9percentand
48.0percentrespectively; inorganic chemistry products -upto18.2percentvs.35.6percent.WT/ACC/UKR/34
Page8
Substantial changes tookplaceinreturns ofimport partofbarter contracts. Ifin1995theamount
ofnottimely (upto90days) returned intoUkraine products came to1044.4 million USD, in1996
itreduced to328.8 million USD. So,volumes oftheproducts which werereturned nottimely reduced
by715.6 million USD orin3.2times.
2. GEOGRAPHICAL STRUCTURE OFFOREIGN TRADE
2.2 Main Tendencies intheStructure ofTrade
In1996 orientation oftheUkrainian trade towards CISandBaltic markets remained despite
thetendency ofpriority development oftrade withother countries oftheworld which tookplace in
1995.
ThiscanbeexplainedbytheconsequentstepsonintroducingfreetraderegimewithCIScountries
andBaltic states.
Itshould bementioned thatpositive influence ofthisfactor attheforeign trade balance ofthe
country could bemore effective ifRussian Federation havenotbeenunilaterally violating freetrade
regime provided bythebilateral agreement.
Atthesame time, structure ofthetrade ingoods andservices onCIS,Baltic states andother
countries oftheworld hadundergone some changes. Ifin1995 percentage offoreign trade turnover
withCIScountries andBaltic states amounted to60.9percentofthetotaltrade turnover, in1996
itincreased to62.6percent; export percentage -from 55.8percentto59.6percentrespectively;
imports reduced from 65.7percentto65.5percent. Foreign trade turnover withother countries of
theworld decreased from39.1percentto37.4percent,export -from 44.2percentto40.4percent,
import increased from 34.3percentto34.5percent.
2.2 Trade withCISCountries andBaltic States
High rateswereobserved intrade ingoods andservices withCIScountries andBaltic states.
Foreign trade turnover withthecountries ofthisregion amounted to23777million USD (increased
by22.8percentascompared with1995).
Export volume increased by30.0percentandamounted to11082 million USD. Import from
thiscountries exceeded figures of1995 by17.2percentandamounted to12695 million USD.
Unfavourable balance during thisperiod came to1614 million USD while in1995 itamounted to
2308 million USD.
Themain trade partner ofUkraine remains Russian Federation (46.3 percentoftotaltrade
volumes).
Thus, in1996according tothepreliminary calculations totalcommodity exchange withRussian
Federation ofmaterial goods andservices amounted to17572 million USD. Itincreased by
2737 million USD (by18.5percent) ascompared tothesame period oftheprevious year.
Along withthis:
- totalexport ofgoods andservices increased by24.7percentandamounted to8727 million
USD;
- totalimport ofgoods andservices increased by12.8percentandamounted to8845 million
USD;WT/ACC/UKR/34
Page9
- unfavourable balance in1996 amounted to117.9 million USD ascompared to842.6 million
USD in1995.
Trade inservices (non-material goods) amounts to20.4percentofthetotaltrade turnover.
Inthetotalexports services amounts to37.6percent.
Total export totheRussian Federation 100.0 percent
Services (non-material goods)
including: Transport services37.6percent
34.0percent
(pipeline transport) 31.0percent
Food products 18.6percent
Products ofmechanical engineering 15.0percent
Products ofmetallurgy 14.6percent
Products ofchemical industry 8.6percent
Light industry products 1.3percent
Metal ores 1.1percent
Energy 0.9percent
Wood andwood products 0.7percent
Other goods 1.6percent
In1996 foreign trade turnover with Russian Federation inmaterial goods amounted to
13979 million USD andincreased incomparison with thesame period ofprevious year by
780million USD (by5.9percent).
Inaddition:
- total export ofgoods (inmaterial form) decreased by0.4percentandamounted to
5448 million USD;3
- total import ofgoods (inmaterial form) increased by10.4percentandamounted to
8530 million USD;
- totalunfavourable balance amounted to3082 million USD (vs.2259 million USD in1995).
70percentofthetotalimport fromRussian Federation -energy (gas,oil,oilproducts, etc.),
12.0percent-mechanical engineering products, 7.0percent-mining andmetallurgy, 2.3percent
-wood andwood products, 6.2percent-products ofchemical industry; import ofservices amounted
to3.5percent.
Structure ofgeneral imports from theRussian Federation:
Total 100.0 percent
Energy 66.3percent
Machine-Building produce 10.9percent
Services 3.5percent
3Decrease inexport volumes isexplained bytheintroduction fromthe1ofSeptember bytheRussian
Federation ofthevalue-added taxfortheproducts imported from Ukraine. Only during
September-December period of1996export ofgoods toRussia decreased in1.5times incomparison
withrespective period of1995. Along withthis,theincrease ofexport totheBelarus by34.3percent,
Moldova -in1.6times, Georgia -in10.5times, Uzbekistan -in1.6times andother countries ofCIS
forecasted bytheMinistry ofForeign Economic Relations andTrade attheendofAugust ofthecurrent
yearcompensated thistrend.WT/ACC/UKR/34
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Metallurgy produce 6.2percent
Oresofmetals 2.1percent
Timber andtimber-processing produce 2.4percent
Chemical products 5.8percent
Others 12.5percent
Exports ofgoods toBelarus (inmaterial form) made upUSD 711.4 million (5.0percentof
overall exports from Ukraine), toTurkmenistan -USD 263.2 million (1.9percent, toMoldova -
USD 232.5 million (1.7percent), toGeorgia -USD 181.2 million (1.2percent).
Imports ofgoods (inmaterial form) from Turkmenistan made upUSD 1647.8 million
(9.2percentofoverall imports toUkraine)4fromBelarus -USD 375.3 million (2.1percent), from
Kazakstan -USD 157.9 million (0.9percent).
2.3 Trade withOther Foreign Countries
Theturnover oftrade ingoods andservices withother countries oftheworld in1996totalled
USD 14.192 billion, which exceeds the1995 level by14.3percent, withexports amounting to
USD 7.498 billion (showing a10.9percentgrowth), andimports -USD 6.694 million (showing a
18.3percentgrowth against 1995). Apositive tradebalance intheamount ofUSD804.3 million was
observed, which represents acompensatory factor against thebackground ofasubstantial negative
balance observed intrade withRussia andTurkmenistan.
Note: Incomparison with1994, turnover ofUkraine ’sforeign trade withother foreign countries
increased more than1.5times (byUSD 4.9billion), withexports growing 1.4times (by
USD 2.1billion), andimports -1.7times (byUSD 2.7billion).
European countries (21.2 percentoftotalUkrainian exports) andAsian countries (18.4 per
cent), aswellascountries oftheAmerica (4.1percent) andAfrica (1.3percent) were themajor
recipients ofUkrainian exports ofgoods.
WithintheEuropeancontinent,tradewiththecountriesoftheEuropeanUnionprevails(including
Turkey, asamember oftheECCustoms Union, andanECassociated member), withshare ofthese
countries constituting 12.8percentoftheforeign trade turnover ofUkraine. In1996, theturnover
offoreign trade ingoods withthese countries totalled USD 4.1billion, andincreased byUSD 578.0
million, 16.4percent.Exports wereUSD 1.529 billion, andimports -USD 2.572 billion. Thetrade
balance wasnegative, andamounted toUSD 1.043 billion. Suchasituation intrade, andespecially
within rapidly growing imports, areconnected withtheuseofloans granted toUkraine byGermany,
Italy, France, EBRD andtheECforthepurchase ofvarious goods. Inaddition, anumber oftrade
restrictions remained inplace andUkrainian enterprises failed totakefulladvantage ofECtrade
preferences.5
4There isdatanon-compliance ongoods andpayments balances intradewithTurkmenistan because
onthebasisofagreement Ukraine conducts export operations withthirdcountries forsupplied Turkmen
gas.AndTurkmenistan receives appropriate payments from those countries incurrency.
5There isdatanon-compliance ongoods andpayments balances intradewithTurkmenistan because
onthebasisofagreement Ukraine conducts export operations withthirdcountries forsupplied Turkmen
gas. AndTurkmenistan receives appropriate payments from those countries incurrency.WT/ACC/UKR/34
Page11
Thedevelopment oftrade withtheCEFTA countries wasrather dynamic. Theturnover of
foreign trade ingoods withthisregion in1996 increased from USD 1744.3 million toUSD 2096.6
million (by20.2percent), withtheincrease inexports fromUSD799.7 million toUSD1012.4 million
(by26.6percent), andtheincrease inimports from USD 944.6 million toUSD 084.2 million (by
14.8percent).
Thenegative balance remains intrade withPoland (USD 163.6 million), theCzech Republic
(USD 62.0million), Slovenia (USD 23.1million), which toaconsiderable extent iscompensated by
thepositive balance intrade withHungary (USD 139.9 million) andSlovakia (USD 37.0million).
Theturnover offoreign trade withtheNAFTA countries increased from USD 700.3 million
toUSD 963.8 million (by37.6 percent), with exports growing from USD 273.6 million to
USD 376.8 million (by37.7 percent), andimports growing from USD 426.7 million to
USD 587.0 million (by37.6percent).
Among themajor export recipients wereChina (USD 759.0 million, which makes up5.4per
centofoverall exports from Ukraine), Turkey (USD 401.5 million, 2.8percent), Germany
(USD 405.4 million), aswellasPoland (USD 331.8 million, 2.4percent).
Among themajor importers toUkraine remained Germany (USD 1004.0 million, which makes
up5.6percentofoverall imports toUkraine), Poland (USD 495.4 million, 2.8percent), USA
(USD 540.5 million, 3.0percent), andItaly(USD 325.3 million, 1.8percent).
3. MEASURESONRETURNOFCURRENCYRECEIPTSANDIMPORTSHAREOFBARTER
CONTRACTS (DIRECT AND INDIRECT)
In1995 theMinistry ofForeign Economic Relations andTrade ofUkraine hassubstantially
improved thesystems ofcontrol andprevention ofcurrency legislation violations inthesector offoreign
economic activity. Thiscontrol isbeing conducted incooperation, firstofall,withtheState Tax
Administration through active implementation ofspecial administrative sanctions toforeign economic
activity agents which violate current legislation. These sanctions areprovided forbytheUkrainian
Law"OnForeign Economic Activity".
Forexample, ifduring 1994 special sanctions were applied onlyto40enterprises fortheir
overdue debtreceivable USD 2970 thousand, thenin1995 -to490enterprises fortheirdebtmore
thanUSD 204million, andin1996 -to3450 enterprises andorganizations withtheir debtabout
USD 444million. Increase ofdebtreceivable isexplained byfactthattheMinistry ofForeign Economic
Relations andTrade ofUkraine incooperation withtheStateTaxAdministration ofUkraine andlegal
bodies intensified theactivity onimplementation ofspecial sanctions toenterprises-debtors.
Theobservanceofdebtreceivablerepaymentprocessbyinfringerenterprisesonforeigneconomic
operations hasbeeninitiated together withtheapplication ofsanctions. Theissue ofsome decrees of
theMinistry ofForeign Economic Relations andTrade ofUkraine (registered intheMinistry ofJustice
ofUkraine) improving theexisting control mechanism andincluding local departments offoreign
economic activity intothismechanism facilitated thatprocess.
Activity conducted inthisdirection demonstrates thatactive implementation ofspecial
administrativesanctionsinfluencesthetempoofdebtreceivablerepaymentbyenterprises.162enterprises
andorganizations hascompletely repaid debtreceivable by1January 1997. Asaconsequence, amount
ofreturned currency andmaterial values (import share ofbarter contracts) toUkraine constituted about
USD 112million.WT/ACC/UKR/34
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Atthesame timetheState Budget additionally received 500thousands ofHryvnia during
August-December 1996withanewmechanism ofindividual licensing thatprovides payment ofstate
taxintroduced bytheDecree No.411oftheMinistry ofForeign Economic Relations andTrade of
Ukraine dated 23June1996.
TheStateTaxAdministration ofUkraine considers work conducted bytheMinistry ofForeign
Economic Relations andTrade ofUkraine onreturn ofcurrency values from other countries asone
ofthemosteffective directions intheirjointactivity. Itisconsidered thatthisfurther activity ispressing
andperspective forproviding economic interests oftheState.
Thevolume andintensiveness inactivity oftheMinistry onreturn ofcurrency values from
othercountries, andwhich areillegally outofUkraine increased substantially. More than3400residents
andnon-residents areunder various control regimes. Requirements oftheDecree N348aoftheMinistry
ofForeign Economic Activity andTrade ofUkraine dated June23,1996areimplemented. ThisDecree
provides constant operative contact withregional departments oftheMinistry onobservance ofdebt
repayment process byeconomic agents.
Reference: Currency incomes onadjusted contract terms forUkrainian Party were increased in
theamount ofUSD 100million in1995, andbyUSD 80million during
January-September 1996 intheprocess offoreign economic contracts registration in
theMinistry ofForeign Economic Activity andTrade ofUkraine. Itincludes reviewing
ofcontracts ontheircompliance withcurrent market situation andgives apossibility
tosubmit some proposals oftheMinistry specialists toexporters 'consideration on
optimization ofcontract terms unprofitable fortheUkrainian Party.
4. FULFILMENTANDPREPARATIONOFREGULARMEASURESONTRADEBALANCE
DECREASE AND REDUCTION OFESSENTIAL AND NON-ESSENTIAL IMPORTS,
INCLUDING "SHUTTLE" IMPORTS
In1995, withtheaimofregulating thetaxation system byimport dutyandexcise dutyfor
some kinds ofgoods; andwithaviewtoimprove it,aseries ofUkrainian Laws wasadopted through
theCabinet ofMinisters ofUkraine presentation. Those Laws established theratesofimport duties
andexcise duties ongoods determined through codes ofGoods Nomenclature ofForeign Economic
Activity. Separate ratesaredetermined asspecific, andit,ingeneral, substantially decreased thequantity
ofabuses while importing suchgoods, andfacilitated thecompleteness ofappropriate duties payment
intheprocess ofimport. TheLaws areasfollows:
TheLawofUkraine No.30/96-SR “OnExcise andImport Duty Rates forTobacco Products ”dated
6February 1996.
TheLawofUkraine No.178/96-SR “OnExcise andImport DutyRates forEthyl Alcohol andAlcoholic
Beverages ”dated 7May1996.
TheLawofUkraine No.216/96-SR “OnExcise andImport Duty Rates forSome Transport Means
andTyres tothem”dated 24May1996.
TheLawofUkraine No.313/96-SR “OnExcise andImport DutyRates forSome Goods (Products) ”.
TheLawofUkraine No.180/96-SR “OnExport Duties forLivestock andLeather Raw
Materials ”dated 7May1996andDecree ofthePresident ofUkraine No.393/96 “OnExport Duties
forWastes andScarp ofFerrous andNon-Ferrous Metals ”dated 31May1996 were adopted withWT/ACC/UKR/34
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theaimofsaving rawmaterial baseofsome industries ofeconomy. Theaimwastoreduce exports
ofthose goods.
Decree ofthePresident ofUkraine No.478/96 “OntheImplementation Procedure for
Elimination ofImports ofGoods inAccordance withGATT/WTO Principles andDisciplines ”dated
26June1996 wasadopted inorder tocreate thelegalbasewhich gaveapossibility toeliminate the
amounts ofimports, thatwould damage therespective industries ofthenational economy.
Theimprovement oftheUniform Customs Tariff ofUkraine wasandstillisoneofthemost
important directions intheactivity related todomestic producer support. Taking intoaccount that
mechanism ofimport duties isoneofthemostoperative levels ofregulation, attention oftheGovernment
tothisissue isunderstandable. Activity onchanges ofimport duties ratesaccording totheeconomic
situation inUkraine andoutofitsterritory isconducted constantly.
Theaimofsuchchanges, andinparticular introduction ofincreased import duties wasthe
protection ofdomestic producer incases when appropriate goods wereproduced orcould beproduced
inUkraine insufficient quantity.
TheResolution No.94oftheCabinet ofMinisters ofUkraine “OnIntroduction ofChanges
toImport DutyRates onSome Kinds ofGoods andtoSome Decisions oftheUkrainian Government ”
dated 16January 1996established anincreased composite import dutyratesforawiderange ofgoods
items ofagriculture products.
TheResolution N192oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toImport Duties Rates onSome Kinds ofGoods which arenotproduced inUkraine" dated
12February 1996 established decreased import duties ratesforgoods items ofchemical industry.
TheResolution N212oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toImport Duties Rates onSome Kinds ofGoods" dated 19February 1996regulated composite import
duties ratesforwiderange ofgoods under excise.
TheResolution N360oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toImport Duties Rates onSome Kinds ofGoods andtoSome Decisions oftheUkrainian Government"
dated 23March 1996 changed import duties ratesforsome goods ofagricultural feeding, metallurgy
andmachine-building.
TheResolution N438oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toResolutions N285dated 3May1994andN212dated 19February 1996oftheCabinet ofMinisters
ofUkraine".
TheResolution N566oftheCabinet ofMinisters ofUkraine "OnImport Duties Rates for
Potatoes (Fresh andCooled)" dated 29May1996.
TheResolution N583oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toFullImport Duties Rates forSome Kinds ofGoods" dated 30May1996established composite rates
formorethan90goodsitems.Theaimwascreationofequalcompetitionconditionsforfurtherlimitation
of"shuttle" trade.
TheResolution N770oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toImport Duties Rates forSome Kinds ofGoods" dated 20July1996changed import duties ratesfor
pharmaceutical products withtaking intoaccount existing possibilities ofdomestic production.WT/ACC/UKR/34
Page14
TheResolution N925oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toImport Duties Rates onSome Kinds ofGoods andtoSome Decisions oftheUkrainian Government"
dated 7August 1996changed import duties ratesforindustrial produce andestablished composite rates
forplumbic batteries.
TheResolution N977oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toImport Duties Rates forSome Kinds ofGoods" dated 19August 1996established composite duties
ratesforsoftdrinks.
TheResolution N1221 oftheCabinet ofMinisters ofUkraine “OnIntroduction ofChanges
toImport Duties Rates forPotatoes ”dated 5October 1996.
TheResolution N1143oftheCabinet ofMinisters ofUkraine “OnIntroduction ofChanges
toImport Duties Rates forSome Kinds ofGoods ”dated 17September 1996.
InNovember ofcurrent yeartheGovernment approved range ofresolutions which:
i. introduced import duties increase notonlyforindividual goods, butforthewhole goods groups
andevensections (forexample, section 1-24-allagricultural andfoodproduce);
ii. applied “transparent ”composite ratesforgroups inthewhole withtheaimofpreventing of
customs value lowing.
Therefore, activity onprincipal improvement ofexisted Uniform Customs Tariff withtheaim
ofitscompletecompliancewithrealstructureoftheUkrainianeconomyandeffectivesupportofnational
producer hasbeeninitiated.
TheResolution N1353 oftheCabinet ofMinisters ofUkraine “OnIntroduction ofChanges
toPreferential Import Duties forSome Kinds ofGoods ”dated 8November 1996.
TheResolution N1376 oftheCabinet ofMinisters ofUkraine “OnIntroduction ofChanges
toImport Duties Rates forSome Kinds ofGoods ”dated 8November 1996 established measures of
tariff regulation (increase ofimport duties rateslevel) forgoods which hadsufficient baseontheir
production inUkraine (perfumery andcosmetic goods, lightindustry goods, fancy goods). More than
160goods items ofGoods Nomenclature ofForeign Economic Activity havebeenreviewed.
TheResolution N1378 oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
andSupplements toImport Duties Rates forSome Kinds ofGoods" dated 8November 1996reviews
thefirsttimealmost all24goods groups ofagricultural produce andfoodindustry. 169goods items
ofGoods Nomenclature ofForeign Economic Activity havebeenreviewed.
TheResolution N1379 oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toImport Duties Rates forSome Kinds ofGoods andtoSome Decisions oftheUkrainian Government"
dated 8November 1996 reviewed import duties ratesforsome kinds ofmachine-building, furniture
andvegetable goods.
TheResolution N1429oftheCabinet ofMinisters ofUkraine "OnTemporary Limitation of
Given andTaken RawMaterials Export forProduction ofSome Kinds ofFinished Products" dated
30November 1996. Itsaimistolimitabuses informgiven andtaken operations onimport ofgoods
which areunder excise without import duties payments.
TheDecreeN392/96ofthePresidentofUkraine"OnRegulationofValueAddedTaxCollection
onImportGoods"dated21May1996wasadoptedwiththeaimcreatingconditionsonabusespreventionWT/ACC/UKR/34
Page15
intheprocess ofgoods import forindividual needs, andreduction ofthose goods import incases when
analogous onesareproduced inUkraine.
Tofulfil theabove-mentioned Decree thefollowing resolutions oftheCabinet ofMinisters
ofUkraine thatapproved listsofgoods where advantages established bytheArticle 1oftheDecree
N499ofthePresident ofUkraine dated 30June1995 arenotapplied havebeenadopted.
TheResolution N602oftheCabinet ofMinisters ofUkraine "OnApproval ofGoods Lists
where Advantages established bytheArticle 1oftheDecree N499ofthePresident ofUkraine dated
30June1995 arenotapplied" of31May1996.
TheResolution N907oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
andSupplements totheResolution N602oftheCabinet ofMinisters ofUkraine dated 31May1996"
of2August 1996.
TheResolution N967oftheCabinet ofMinisters ofUkraine "OnExtension ofGoods Lists
where Advantages established bytheArticle 1oftheDecree N499ofthePresident ofUkraine dated
30June1995 arenotapplied of14August 1996.
Non-tariff method ofregulation plays acertain roleinlimitation ofimports. Itsaimisnotonly
toprevent import toUkraine ofsome important goods withincreased prices, butalsotoprovide their
proper quality from sanitary, phytosanitary andpharmaceutical point ofview.
Thismain principle wasusedintheResolution N41(dated 10January 1996) "OnLists of
Goods which areunder Quotas andLicensing in1996intheProcess ofImport andExport" prepared
andadopted bytheCabinet ofMinisters ofUkraine. Inaccordance withAnnex 2ofthatResolution
issueoflicences toimport goods byforeign economic activity agents isconducted onlyafteragreement
withtheMinistryofAgricultureandFoodofUkraine(Minsil'gospprod),theStateCommitteeonMedical
andBiological Industries (Derzhcommedbioprom), theMain Department ofVeterinary Medicine of
Minsil 'gospprod; andtheState Veterinary Inspectorate depending ongoods use.
TheDecree N368/127 oftheMinistry ofForeign Economic Relations andTrade ofUkraine
"OnProcedure toConduct Registration ofAgreements (Contracts) onExport ofWastes andScrape
ofFerrous andNon-Ferrous Metals" dated 8July1996; andregistered bytheMinistry ofJustice of
Ukraine on19July1996.
Obligatory written conclusion oftheMinistry ofIndustry ofUkraine onexport ofwastes and
scrape offerrous andnon-ferrous metals hasbeenintroduced.
JointDecree N254oftheMinistry ofForeign Economic Relations andTrade ofUkraine and
theMinistry ofCoalIndustry ofUkraine "OnProcedure toSaleSome CoalProducts Originated in
Ukraine byForeign Contractors" dated 7May1996.
Tosubmit totheCabinet ofMinisters ofUkraine thefollowing Drafts Laws:
Draft LawofUkraine "OnIntroduction ofChanges andSupplements totheLawofUkraine
"OnOperations withGiven andTaken RawMaterials inForeign Economic Relations".
Draft Resolution oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges and
Supplements totheResolution N602oftheCabinet ofMinisters ofUkraine dated 31May1996".WT/ACC/UKR/34
Page16
ThisDraft made onthebasisofgoods items forwhich rateshavebeenreviewed recently. And,
inparticular:
- TheResolution N1376 oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toImport Duties Rates forSome Kinds ofGoods" dated 8November 1996;
- TheResolution N1378 oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toImport Duties Rates forSome Kind ofGoods" dated 8November 1996;
- TheResolution N1379 oftheCabinet ofMinisters ofUkraine "OnIntroduction ofChanges
toImport Duties Rates forSome Kinds ofGoods andtoSome Decisions oftheUkrainian
Government" dated 8November 1996;
Currently thisDraft vised andsubmitted totheCabinet ofMinisters ofUkraine.
ThisDraft covers listofgoods with344goods items. Andadvantages established bytheDecree N
499ofthePresident ofUkraine dated 30June1995 arenotapplied tothose items.
Draft Resolution oftheCabinet ofMinisters ofUkraine "OnProcedure ofImport toUkraine
ofFood Product ofVegetable andAnimal Origin byIndividuals whoarenotAgents ofEntrepreneurial
Activity".
Draft Resolution oftheCabinet ofMinisters ofUkraine "OnFurther Regulation ofActivity
Related toImport, Export, Transportation andTransit ofGoods which areunder Excise Through
Ukraine".
Draft Resolution oftheCabinet ofMinisters ofUkraine onintroduction ofchanges tothe
Resolution N1282 (dated 24October 1996) oftheCabinet ofMinisters ofUkraine "OnMinimum
Customs Value ofImport CarsandTyres forThem" (ofAmerican production).
Currently theMinistry completes thefollowing activity:
- analysis ofimport duties rates sizeforgroup ofbuilding materials withtheaimoftheir
reviewing;
- research ofmeasures onstrengthening ofregulation toimport foreign audio andvideo materials
andinformation carriers.
5. FORECAST FOR FOREIGN TRADE DEVELOPMENT IN1997.
Taking intoaccount analyses 'results ofcurrent situation ineconomy, tendencies indevelopment
offoreign tradeduring previous years, andalsoexpected changes inconjuncture ofworld andregional
markets, thegoods turnover offoreign tradeinmaterial andnon-material (services) forms isforecasted
intheamount USD 40.5-41.5 billion (in1997) withgrowth byUSD 2.5-3.5 billion (by6.5-9.0 per
cent)incomparison withexpected fulfilment oflastyear. therefore, increase offoreign tradevolumes
more than1.5times willbeachieved onlywithin three years (1995-1997). Itshould beconsidered
asnon-precedented rapid increase offoreign trade operations volume inUkraine.
Reference: Republic ofKorea required more than10years todouble theturnover offoreign trade
atthestage ofconducting economic transformations.
Export ofgoods andservices isforecasted withgrowth by7.6-10.3 percentandwillamount
USD 20.0-20.5 billion. Export activity ofentrepreneurship agents willbeconducted under influence
ofpositive improvements inincrease ofgoods production byexport-competitive industries ofeconomy.
Extenuation ofdomestic products export 'spossibilities inconditions ofdemand decrease onthemwithin
home market willstrengthen importance ofexport operations forstabilization ofproduction volumes
inmainkinds ofproducts oftraditional Ukrainian saleandincrease ofcurrency incomes fromexport
ofproducts.WT/ACC/UKR/34
Page17
Volumes ofimport incomes areexpected atthelevelofUSD 20.5-21.0 billion, withgrowth
by5.7-8.2 percentincomparison with1996. Atthesame timepurchase offuelandenergy sources
isforecasted atthelevelof1996 (natural gas-70milliard cubic meters, oil-13.3million tons, coal
-22.4million tons).
Asaresult, tempo ofexports growth willexceed tempo ofimports growth by1.9-2.1 percent.
Keeping ofthispositive tendency willbeprovided through implementation ofsome effective measures
onhome market protection bytariffmethods ofregulation provided fordeveloped in1996appropriate
normative base.
Proceeding from forecasted indexes offoreign trade development, totalnegative balance on
goods andservices willamount USD0.5billion andwillbedecreased byUSD0.3billion incomparison
with1996. Tendency toimprove balance offoreign tradeturnover willbesaved. Itwillmeetstrategy
lineoftheGovernment ondevelopment offoreign economic activity thatprovides gradual balancing
offoreign tradeoperations volumes anddecrease ofnegative balance inforeign trade, bothingeneral
planandregional aspect.