Strasbourg, 11/03/2014 (Agence Europe) - The European Commission has suggested an early reduction in EU tariff duty for Ukrainian products, which should save half a billion euros a year in customs duties for the country's exports.
While awaiting the signature over the next few months of an association agreement and a free trade deal between the EU and Ukraine, the European Commission unveiled plans on 11 March to introduce a regulation to give autonomous trade measures to Ukraine in the form of a temporary reduction in import duty on exports of Ukrainian goods. This early application of measures for the future free trade agreement for trade in goods is part of an €11 billion aid package for Ukraine unveiled by the Commission on 5 March and endorsed the next day by the European Council. “The European Commission is committed, and ready, to support Ukraine to stabilise its economic and financial situation”, said European Commission President José Manuel Barroso, who had come to unveil the measure on the fringes of the European Parliament plenary along with Trade Commissioner Karel De Gucht. Barroso added: “Last Thursday, the EU heads of state and government welcomed the €11 billion package of support to Ukraine presented by European Commission. The Commission is moving ahead fast with the implementation of this support package, and today has adopted the first of the foreseen measures - a set of trade provisions that will represent an economic benefit to Ukraine of around €500 million per year. This proposal is a concrete, tangible measure of EU support to Ukraine.”
If introduced under the co-decision procedure by the European Parliament and Council of Ministers before the European elections, then this measure might come into force by June. “These measures will be valid until 1 November 2014. We hope that in the meantime the deep and comprehensive free trade area (DCFTA) part of the agreement will be signed. If not, we could prolong the measure”, said De Gucht. The unilateral temporary measure would enable Ukraine to benefit from aspects of the future agreement ahead of the agreement's signature and provisional application. The deal would save Ukrainian exports a total of €500 million in export duties, €400 million of this for Ukrainian farmers.
The planned regulation foresees liberalisation for 82.3% of Ukrainian farm exports to the EU. For sensitive products like cereals (wheat, barley and corn), pork, beef and poultry, a partial liberalisation is achieved by the granting of duty-free tariff rate quotas (TRQs), which limit the amount of certain goods able to benefit from the trade preference. For processed food products, the EU would grant immediate preferences to 83.4 % of Ukraine's exports. The remaining 15.9% will be partially liberalised through TRQs. Existing EU tariffs for industrial goods exported from Ukraine will be removed immediately for 94.7% of products. For the remaining handful of products (including some chemical products) the tariffs will be reduced.
The plan includes safeguards to prevent Ukrainian products being exports fraudulently. The Commission explains: “In order to prevent any risk of fraud, the entitlement to benefit from autonomous trade preferences is conditional on the compliance by Ukraine with the relevant procedures linked to the rules of origin of products, as well as involvement in effective administrative cooperation with the EU. Moreover, Ukraine must abstain from introducing new duties or charges having equivalent effect or new quantitative restrictions or measures having equivalent effect or from increasing existing levels of duties or charges or from introducing any other restrictions.” (EH)