RESTRICTED
WORLD TRADE WT/ACC/UKR/5
10October 1995
ORGANIZATION(95-2972)
Original: English
ACCESSION OFUKRAINE
Questions andReplies
TheGovernmental Commission onUkraine 'sAccession totheWTO hasprovided thereplies
reproduced hereunder tothequestions submitted bytheEuropean Union. Theletter"n"afterthenumber
designates questions submitted aftertheWorking Party meeting heldon27-28 February 1995.
_______________
TABLE OFCONTENTS
Questions
ECONOMY 32n&260
Pricing System 46n&265-266
Industrial Policy 12n&25n-26n &31n&45n
Competition Policy 47n
Privatization 34n
Barter Trade 13n
Import Regulation 23n
Import Tariff 17n&35n
Import Taxation Régime 14n-15n &37n-39n &274
Customs Fees 16n
Transit Trade 18n
Rules ofOrigin 282
Certification 19n
Non-Tariff Measures, Quotas andLicences 32n&40n&287
Export Régime 20n-22n &315-316
Anti-Dumping 24n&36n&273
State Trading 298&313
Government Procurement 309-310
TRADE AGREEMENTS 44n
TRIMs 41n&261&268
SERVICES 1n-3n
TRIPS 4n-8n &27n-30n
&42n-43n &318
Civil Aircraft 9n-11n
Trade Data 33nWT/ACC/UKR/5
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Additional questions onL/7499 -Ukraine 'sForeign Trade Regime Memorandum
TheEUrepeats itsrequest foramemorandum onUkraine 'sIntellectual Property andServices
Regimes, given inparticular thestated intention oftheUkraine toseekaccession totheWTO. The
EUdoesnotconsider thattheresponses given indoc.WT/L/20 provide sufficient information onthese
issues. Interalia,theEUwould likethefollowing points addressed:
SERVICES
Question 1n.
Information onthegeneral framework governing tradeinservices andinformation onspecific
sectors ofactivity (e.g.financial services, telecommunications, transportation, distribution, construction
andenvironmental services)
Reply 1n.
TheMinistry ofStatistics ofUkraine processes thedatafromstatestatistics reports onforeign
trade.
According tothereports submitted byUkrainian enterprises, agencies andorganisations, the
totalvolume ofgoods exported,including rawmaterials fortheproduction ofexports andtheproducts
obtained from them, in1994, wasUS$19,304 mln., (inFOB terms) thevolume ofimports was
US$10,746.2 mln.(inCIFterms).
Thetotalvolume ofservices exported in1994 wasUS$1334.3 mln. andimports were
US$309.4 mln. Theabove figures include exports ofconstruction services (US$15.2 mln.), whereas
imports were US$33.6 mln.
Thetotalincrease inthevolume ofdirect foreign investment intoUkraine during 1994 was
US$147.5 mln. Analogously, theincrease inUkrainian investments directly intoforeign economies
during thatperiod wasUS$5.4 million.
TheMinistryofStatisticsmayprovidetheaboveinformationquarterly.Dataforthefirstquarter
of1995 shallbecompiled inMay1995.
Dataonthepurchases made in1994 onthenational, regional, andlocallevels, which were
financed fromthestatebudget, aswellasonthebudgetary planning forthesepurchases in1995, should
berequested from theMinistry ofEconomy andtheMinistry ofFinance ofUkraine.
Thepercentageofcommunicationservicesinthegrossdomesticproduct(GDP)was0.78percent
in1993, 1.43percentin1994, andnodatayetforthefirstquarter of1995.
Thepercentage ofpersons employed inthecommunications sector from thetotalnumber of
persons employed was0.61percentin1993, and0.65percentin1994.
Revenues from telecommunications services:
Revenues inbillion
karbovantsi: 1994 Firstquarter of1995
Long-distance calls 3,467 322.7WT/ACC/UKR/5
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International calls 2,236 160.2
Thebalance ofpayments:
_________________________________________________________________________________
Balance ofpayments 1994 1995
(inmillions of$) payments revenues +/- payments revenues +/-
communications services 111.48 145.03 +33.55 173.82 174.83 +1.01
_________________________________________________________________________________
Thevolumes andtypes offoreign investment inthetelecommunications sector:
- during 1993-1995 almost US$100 million were invested inthedevelopment ofthe
communications sector. (Fortheconstruction ofinternational communications stations,
longdistance digital relaystations for14oblasts inUkraine, cellular communications
for11Ukrainian oblasts).
- AUS$53.125 million loanwasreceived fromtheEuropean Bank forReconstruction
andDevelopment (ITUR Project).
AccordingtothedirectivesoftheComplexProgramfortheEstablishmentofaCommonNational
Communications System, theprivate sector inthecommunications industry should increase; licences
willbeissued fornewtypes ofcommunications services; foreign investment willbeencouraged; and
thestatesector willbereduced accordingly.
1. TheUkrainian Automobile Corporation renders thefollowing services:
- maintenance andrepair ofCIS-made automobiles aswellasToyota, Mercedes Benz,
andNissan automobiles;
- ensuring thesafety ofvehicles inparking lots;
- valuation ofvehicles withrespect tonatural depreciation andtechnical condition,
including collision damage;
- rendering assistance inthedelivery ofvehicles needing repairs toservice stations;
2. Thevolume ofservices rendered in1994was78,297million krb.in1993-5,944.7 million
krb.(VAT notincluded).
Addition to1):
(f)airport passenger service, cargo processing service, mail,andbaggage service; (g)involving aviation
inother branches ofeconomic activity.
Addition to2).Revenues from main operations in1994 were 4,618 billion krb. In1993,
revenues were -455billion krb. Nottaking price indexation andtariffs intoaccount, revenues for
1994 haveincreased tenfold incomparison torevenues for1993.
Addition to3).TheInternational Convention onCivilAviation (Chicago, 1994); Aviation Code
ofUkraine, Aviation Rules andStandards.
Addition to4).Notexpected inthenearfuture.WT/ACC/UKR/5
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Inouropinion, itwould beimportant toinclude arepresentative oftheStateAirTransportation
Department ofUkraine totheWorking Party ofWTO.
Theenterprises which arepartoftheCorporation provide services, basically, tosupply the
needs ofconsumers.
There areover100stores selling construction materials inthisbranch ministry andmany of
them organize deliveries forpurchased materials andalsotheirassembly andinstallation.
Withtheaimofsatisfying consumer needs, theproportion ofmassconsumer goods produced
wasincreased, suchasroofing tiles, thermal andsound insulating linoleum, vaised printwallpaper,
glassforvarious makes ofautomobiles including imported automobiles, setsofbathroom fixtures and
plumbing supplies.
Establishing limits onemissions anddumping ofpolluting substances andonthedisposal of
wastes according totheCabinet ofMinisters ofUkraine Decree No.18ofthe13January 1992 "On
ApprovingProceduresforDeterminingandLevyingPaymentsforEnvironmentalPollutionandProvisions
ontheRepublican Non-Budgetary Fund forEnvironmental Protection" andthetemporary instruction
"OnProcedures forDeveloping, Establishing andReviewing andalsoReporting oftheLimits on
Emission andDumping ofPolluting andtheDisposal ofWastes".
Carrying outanenvironmental assessment according totheLawofUkraine "OnEnvironmental
Assessment", which regulates theimplementation ofthestateenvironmental assessment ofallprojects
irrespective ofwhether theyaredeveloped andimplemented bydomestic orforeign firms.
Question 2n.
Shipping agencies: please provide information ontheprocedure andfeesinvolved inthe
procurement ofalicence tosetupashipping agency inUkraine. Doallshipping agencies -foreign
anddomestic (including agencies suchasInflot) -havetopaythesame fee?Isthelength ofvalidity
ofalicence thesame forprivate Ukrainian companies asforforeign invested companies. Wewould
appreciate detailed clarification.
Reply 2n.
Theorder ofissue ofspecial permits (licences) forcargo shipping tobusiness organizations
andstateenterprises, irrespective oftheform ofownership, shallbecarried outinaccordance with
theInstructions (seeAnnexes), which hasbeenapproved bytheMinistry ofTransport inconformity
withtheAnti-monopoly Committee andtheCommittee forState Enterprises andwhich isregistered
attheMinistry ofJustice.
ORDER
OntheApproval oftheInstructions onProcedures forIssuing Licences toBusiness Organisations
andState Enterprises fortheDomestic andInternational SeaandRiver Shipment ofCargo and
Passengers; Requirements andRules forDomestic andInternational SeaandRiver Shipment ofCargo
andPassengers andReview oftheirImplementation.
With aviewtoimproving safety forshipping, denying unqualified andunethical businesses
access tothetransport services market, providing anadequate levelandquality oftransport services,
andinaccordance withtheLawofUkraine "OnEntrepreneurial Activity", theDecree oftheCabinet
ofMinisters ofUkraine of17May1994, No.316,"OnProvisions concerning Procedures forIssuingWT/ACC/UKR/5
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SpecialPermits(Licences)toBusinessOrganisationsandStateEnterprisesforVariousKindsofActivity,"
Ihereby order:
1. Toapprove:
1.1 TheInstructions onProcedures forIssuing Licences toBusiness Organisations andState
EnterprisesforDomesticandInternationalSeaandRiverShipmentofCargoandPassengers(seeAnnex).
1.2 Requirements andRules forDomestic andInternational seaandRiver Shipment ofCargo and
Passengers andReview oftheirImplementation (seeAnnex).
2. Toappoint aCommission fortheissuance ofspecial permits (licences) asfollows:
Kruk, Y.V. Deputy Minister; Director oftheDepartment ofSeaandRiver Transport; Head ofthe
Commission
Nezavitin, S.Y. Deputy-Director oftheDepartment ofSeaandRiver Transport, Deputy-Head ofthe
Commission
Medvedev, S.D. Head oftheSeaandRiver Inspection Section
Tumanyan, P.H. Specialist, Category I,SeaandRiver Inspection Section
Kuprij, V.D. Head ofthePersonnel Section
Pesherov, L.C. Economist, Category I.
3. Department ofSeaandRiver Transport (Kostuchenko, V.M.)
3.1 Toinform ministries anddepartments, regional, KievandSevastopol cityadministrations of
theInstructions onProcedures fortheIssuance ofLicences toBusiness Organisations andState
Enterprises forDomestic andInternational SeaandRiver Shipment ofCargo andPassengers; the
RequirementsandRulesforDomesticandInternationalSeaandRiverShipmentofCargoandPassengers
andReview oftheirImplementation.
3.2 Toorganize thepublication oftheInstructions andoftheRequirements andRules intheMass
Media.
3.3 Toestablish asystem ofreview overtheimplementation oftheRequirements andRules and
therequirements oftheInstructions.
3.4 Toregister theabove-mentioned Instruments, Requirements andRules incooperation withthe
Department ofLicensing attheAdministration ofFreight Transport andLicensing (Mykolenko, D.G.)
according toestablished procedures attheMinistry ofJustice ofUkraine.
3.5 Toprepare, within amonth, theprinting offorms forlicences andprovide fortheirissue.
4. TheDeputy Minister, theDirector oftheDepartment ofSeaandRiver Transport,
Mr.Y.B. Kruk, shallbecharged withreviewing theimplementation oftheOrder.
FirstDeputy Minister O.M. ArtemenkoWT/ACC/UKR/5
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INSTRUCTIONS
OnProcedure forIssuing Licences toBusiness Organizations
andState Enterprises forDomestic andInternational Sea
andRiver Shipping ofCargo andPassengers
I.General Provisions
1.1 TheseInstructionshavebeendevelopedinaccordancewiththeLawofUkraine"OnInternational
Activity (with changes of15October 1992) andtheDecree oftheCabinet ifMinisters ofUkraine of
17May1994, No.316"OnProvisions ofProcedures forIssuing Special Permits (Licences) toBusiness
Organizations andState Enterprises forVarious Kinds ofActivity".
1.2 TheInstructions shalldetermine theprocedure forissuing, extending andcancelling licences
fordomestic andinternational seaandriver shipping ofcargo andpassengers.
1.3 TheDepartmentofSeaandRiverTransportoftheMinistryofTransportofUkraineshallconduct
theexamination ofissues connected withlicensing thistypeofactivity.
II.Procedures forSubmitting Licence Applications
2.1 Licence applications (Annex No.1) frombusinesses, whoareentities, orfrombusiness person,
whoarecitizens, shallbesubmitted totheDepartment ofSeaandRiver Transport oftheMinistry
ofTransport ofUkraine.
2.2 Thelicence application shallinclude:
- forbusinesses, which arelegalentities: copies offounding documents;
- forbusiness persons, whoarecitizens: copies ofdocuments, which certify thelevel
ofeducation andqualifications, required totakepartintheparticular typeofactivity.
2.3 Thefollowing payment forlicence issuance shallbeestablished pursuant tothelawinforce:
- forbusiness persons whoarecitizens -twotimes theminimal wage;
- forlegalentities -sixtimes theminimal wage.
Thepayment shallbemade totheaccount oftheMinistry ofTransport ofUkraine afterthe
adoption ofthedecision onlicence issuance.
III.Procedures forExamining Licence from
Business Organizations andState Enterprises
3.1 TheMinistry ofTransport ofUkraine, towhich thelicence application issubmitted, shalltake
itintoitsconsideration andexamine itastowhether theApplicant meets therequirements pursuant
totheRequirements andRules forDomestic andInternational SeaandRiver Shipment ofCargo and
Passengers andReview oftheirImplementation, approved byOrder oftheMinistry ofTransport of
Ukraine on5August 1994, No.424,information about theappropriateness ofqualifications heldby
thebusiness person without thecreation ofaentity, andshallprepare adecision withrespect tolicence
issuance orrefusal forthwith.WT/ACC/UKR/5
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3.2 Thedecision onlicence issue orrefusal shallbeadopted nolaterthan30daysfrom thedate
ofsubmission oftheapplication andthenecessary documents.
Thelicence shallbesigned bytheDeputy Minister ofTransport ofUkraine, theDirector of
theDepartment ofSeaandRiver Transport andshallbecertified bythesealoftheMinistry ofTransport
ofUkraine.
Alicence refusal shallindicate thegrounds forrefusal.
3.3 Theapplicant 'sbeing inpossession ofacontract oragreement, signed before thedecision about
licence issue wasmade, shallnotbesufficient reason forlicence issue.
3.4 Allthedecisions oftheCommission shallberecorded intheminutes ofitsmeeting.
IV.Licences
4.1 Thelicence (seeAnnex No.2) shallinclude thename oftheissuing organization, thesurname,
firstname andpatronymic andtheresidential address ofthecitizen orname andaddress ofthelegal
entity, typeofactivity, forwhich thelicence isissued, place ofactivity, special requirements andrules
forengaging thisform ofactivity, registration number ofthelicence, thedateofissue, thedateof
expiry.
Thelicence shallbeissued foratermofthree years. Inthecaseofthebusiness organization
orstateenterprise being restructured, having itslicence revoked, extending newlicence shallbeissued
according totheprocedures specified inthese questions.
4.2 Thelicence shallberegistered according totherelevant members inthelicence register, issued
tobusiness organizations andstateenterprises (Annex No.3), which iskeptbytheDepartment ofSea
andRiver Transport.
After registration, thelicence shallbeissued tothebusiness organization orstateenterprise.
TheMinistry record ofthelicence (Annex No.4), which included thesignature ofperson, shallbe
keptintheDepartment ofSeaandRiver Transport oftheMinistry ofTransport ofUkraine forcontrol
purposes.
4.3 After thebusiness organization orstateenterprise ceases toengage initsactivity, thelicence
shallbecome invalid.
4.4 Thelicence form shallbeadocument forstrict accountability, which isprinted aspartofa
registered series andnumbered.
V.Suspension (Cancellation) ofaLicence
5.1 Ifthebusiness organization orstateenterprise hascommitted aviolation oftherequirements
andrulesforengaging inthegiven typeofbusiness activity indicated inthelicence oronasubmission
from theAnti-monopoly Committee ofUkraine, theMinistry ofTransport ofUkraine mayimpose
requirements, which mustbeadhered to,concerning theceasement ofviolations anditmaysuspend
thevalidity ofthelicence forafixed period ortosuchatimeastheviolations cease.WT/ACC/UKR/5
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5.2 Inthecased ofrepeat orgross violations oftherequirements andrulesforengaging inactivity
onthepartofthebusiness organizations orstateenterprises, thelicence maybecancelled bydecision
oftheMinistry ofTransport ofUkraine before itsexpiry dateandthelicence issueshallnotberefunded.
VI.TheRight oftheBusiness Organizations
orState Enterprises toAppeal theDecision
oftheMinistry ofTransport ofUkraine,
which Issues Licences
6.1 Decisions torefuse licence issue (extend itsvalidity) ortosuspend orcancel alicence may
beappealed bythebusiness organization orstateenterprise before acourt orarbitration court.
VII. Registration ofBusiness Organizations and
State Enterprises
7.1 Business Organizations andStateEnterprises, which received theabove-mentioned licences,
shallberegistered bytheDepartment ofSeaandRiver Transport oftheMinistry ofTransport ofUkraine
intheLicence Register.
7.2 Theadministrative records withrespect tolicensing shallbekeptinseparate numbering files
foreachbusiness organization andstateenterprise bytheDepartment ofSeaandRiver Transport of
theMinistry ofTransport ofUkraine. Each fileshallhaveatwo-part number, which shallconsist of
theindex number andthenumber ofthelicence issued.
7.3 Thenumbered fileshallinclude thedocuments onthebasis ofwhich alicence wasissued,
information onreports ofviolations, andlistoftransport vessels.
7.4 Incases where abusiness organization orstateenterprise hasceased toengage initsactivities,
thetermofvalidity ofalicence hasexpired (ifithasnotbeenextended), alicence hasbeencancelled
(after theendoftheperiod allowed toappeal thedecision inacourt), thedocuments inthenumbered
filesshallbeputintostorage.WT/ACC/UKR/5
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Annex 1
TotheInstructions onProcedures for
Issuing Licences toBusiness
Organizations andState Enterprises
fortheDomesticandInternationalSea
andRiver Shipment ofCargo and
Passengers
To: Deputy Minister forTransport ofUkraine
Director oftheDepartment ofSeaand
River Transport
From:_________________________________________
(surname, name andpatronymic)
APPLICATION FORM
Iwould request thatalicence beissued forthepurpose of______________
_________________________________________________________________
(form ofbusiness activity, place ofactivity)
fortheperiod of____________________________________________________
Applicant___________________________________________________________
(surname, firstname andpatronymic ofacitizen
_________________________________________________________________
orname oflegalentity)
Address ofindividual oraddress oflegalentity_____________________________
_________________________________________________________________
Tel._______________ Teletype_________________ Telex______________
Documents, required inorder toobtain alicence areenclosed:
1._______________________
2._______________________
3._______________________
4._______________________
5._______________________
" "__________________19_______ ____________________
(signature oftheapplicant)
Registration No.__________WT/ACC/UKR/5
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Annex 2
TotheInstruction onProcedures for
Issuing Licences toBusiness
Organizations andState Enterprises
fortheDomesticandInternationalSea
andRiver Shipment ofCargo and
Passengers
LICENCE
series__________ No.___________
forthepurpose of_______________
_____________________________
Issued to__________________________________________________________________________
(official name oflegalentity orsurname, name and
_________________________________________________________________________________
patronymic ofthebusiness person, ie.-theowner
_________________________________________________________________________________
oflicence)
Postal Address_____________________________________________________________________
Tel._______________ Teletype_______________ Telex______________
Thislicence ispermit forthepurpose of_________________________________
(form ofactivity)
Specialrequirementsandrulesforthistypeof
activity___________________________________________________________________________
_________________________________________________________________________________
Place ofactivity____________________________________________________________________
_________________________________________________________________
Registration No._____________________
Period ofvalidity from_______________199 to_______________199
Validity extended from_______________199 to_______________199
Dateofissue ______________________199
Deputy Minister for
Transport ofUkraine SignatureWT/ACC/UKR/5
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Annex 3
totheInstructions ontheProducers forIssuing Licences toBusiness Organizations andStateEnterprises
fortheDomestic andInternational SeaandRiver Shipment ofCargo andPassengers
LICENCE REGISTER
Register oflicences issued tobusiness organizations
andstateenterprises
Registration
NumberSeries and
No.of
licenceSurname,
name and
patronymic
ofindividual
orname of
legalentityAddress andtel.
number of
business
organization or
stateenterpriseType of
activity for
which a
licence has
beenissued,
place of
activityPeriod
for
which
licence is
validNotes on
Extension of
validity,
suspension
and
cancellation
oflicence
Annex 4
TotheInstructions ontheProcedures for
Issuing Licences toBusiness Organization and
State Enterprises fortheDomestic and
InternationalSeaandRiverShipmentofCargo
andPassengers
MINISTER 'SCOPY OFLICENCE
(thesame asAnnex 2-Licence)
Requirements andRules forDomestic andInternational
SeaandRiver Shipping ofCargo andPassengers
1. General Provisions
1.1 Requirements andRules fortheactivity ofbusiness organizations andstateenterprises been
developed inaccordance withtheLawofUkraine "OnBusinesses", Decree oftheCabinet ofMinisters
ofUkraine of17May1994, No.316,"OnProvisions ontheProcedures forIssuing Special Permits
(Licences) toBusiness Organizations andState Enterprises forSeparate Forms ofActivity".WT/ACC/UKR/5
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1.2 Theactivities ofbusiness organizations andstateenterprises, which takepartinthedomestic
andinternational seaandriver shipment ofpassengers andcargo, shallbesubject tolicensing.
2. Requirements fortheInternational SeaandRiver Shipping ofCargo andPassengers
2.1 Upon receiving alicence application forshipping theMinistry ofTransport ofUkraine shall
review thefollowing requirements, thefulfilment ofwhich isobligatory inorder toengage inthis
activity:
2.1.1 Thebusiness organization orstateenterprise shallbelegalentity ornatural person, who
manages thevessel inhisoritsownnames, irrespective ofwhether heisanowner oftheship,
ormanages itonthebasis onalegalunderstanding.
2.1.2 Thebusiness organization orstateenterprise shall possess effective means ofland
communication (telephone, telex, fax,radio) insuchquantity andwiththedegree ofaccess,
which would guarantee twenty-four houremergency communication access.
3. Rules forDomestic andInternational SeaandRiver Shipping ofCargo andPassengers
3.1 While engaging inactivity asstated inthelicence issued, business organizations andstate
enterprises shalladhere tothefollowing:
3.1.1 engage intheiractivity according tothespecial requirements andrules, indicated inthe
licence;
3.1.2 tofollow therequirements ofthelawinforce withrespect toqualification ofspecialists,
andalsothecondition oftransport vessels andequipment inrelation tostandards andtechnical
requirements, safety requirements fornavigation, sanitary andenvironmental regulations;
3.1.3 tofulfil therequirements ofinternational conventions inthesphere ofinternational
transportation ofthelaws inforce withrespect toseaandriver shipment ofcargo and
passengers, given rules andother provisions andrule,which regulate thelicensed activity,
regulations oftheMinistry ofTransport ofUkraine, related tothelicensed activity.
3.2 Thelicence owner doesnothavetheright totransfer ittoanyother legal entity ornatural
person.
4. Special Requirements forEngaging intheLicensed Activity
4.1 Businessorganizationsandstateenterprises,whileengagingininternationalseaandrivershipping
ofcargo andpassengers, shallhavethefollowing documents onboard thevessels:
(i) Asystem ofinspection foradherence torules ofnavigation, withaclear assignment of
responsibilities during watch dutyonthebridge andintheengine room.
(ii) Procedures forverifying seaworthiness andsoundness ofhullverifying thattheshipisnot
overloaded andthatpoints ofstress initsconstruction arenotoverburdened.WT/ACC/UKR/5
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(iii) Rules ofinspection forcompliance withtheoperating rulesforvessels through regular reports
andinformation.
(iv) Emergency plans forthecoastguard, withprovision made forcases, which could poseathreat
tothelifeandhealth ofpersons onboard, tovessels safety, orcould significantly pollute the
waters.
(v) Administrative regulations forvessels, which provide drills anduseofemergency plans in
suchsituations.
4.2 Business organizations andstateenterprises mayengage ininternational seaandrivershipping
onlyifinpossession theappropriate documents required fortravel abroad.
Question 3n.
Weunderstand thatnewRegulation onshipping agencies wereintroduced on26January 1995,
inwhich theprocedures andfeesforforeign agents areconsiderably different tothose applying to
domestic agents. Does Ukraine intend toeliminate thisdiscrimination? When?
Reply 3n.
Theabove-mentionedRegulationonshippingagencies(DecreeofCabinetofMinistersofUkraine
No.27of26January 1994"OntheFeeofLicence Issue forSeaTrade Shipping") hasbeencancelled
byDecree ofCabinet ofMinisters ofUkraine "OntheFeeforIssue ofSpecial Permits (Licences) for
SeaTrade Shipping" No.351adopted on19May1995which provides equal treatment forfeesamounts
tobecollected forallparticipants independently ofthecountry oftheirorigin.
Inaccordance withtheDecree, thefeeforcitizens andlegal entities -participants ofthe
entrepreneurial activities toreceive special permits (licences) tocarry outseatrade shipping from
theMinistry ofTransportation ofUkraine amounts 35thousand EQU aspertherateofTheNational
Bank ofUkraine asofthedateofthelicence issue. Thetermofvalidity ofthelicence forseatrade
shipping activities is3years.
Intellectual property
Question 4n.
What arethecivilandadministrative procedures andremedies available toenforce intellectual
property rights? Doforeigners enjoy thesame treatment asUkrainian nationals inthisrespect? Please
clarify ifandhowthese remedies andprocedures areinconformity withArticles 42and49ofthe
Agreement onTrade Related Aspects ofIntellectual Property Rights (TRIPs).
Reply 4n.
Main Principles
Ukrainian Government policy onIntellectual Property Rights (IPR) inUkraine isaimed atthe
establishment andimprovement ofthelegislatory, regulatory, andinstitutional framework forthelegal
protection ofcopyright andrelated rights, andindustrial property rights according totheinternational
agreements inforce andthemodel lawselaborated bytheWorld Intellectual Property Organization
(WIPO).WT/ACC/UKR/5
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Ukraine hasanenormous scientific, technical, andcreative potential. Ofthetotalamount of
claims forinvention rights intheformer USSR, Ukraine 'sclaims were 23-24 percentofthetotal.
TheareaofIPRprotection hasbeeninfluenced mainly bythechange oftheinternational legal
status ofUkraine, namely, bythetransformation oftheUkrainian Soviet Socialist Republic, amember
Republic oftheformer USSR, intotheindependent Ukrainian state, aparticipant ininternational legal
relations.
Theestablishment anddevelopment ofthesystem ofIPRprotection inUkraine isanintegral
partofthestate-building process taking place inUkraine.
State Bodies ofExecutive Power
inIPRProtection
TheStatebodies ofExecutive power inthefieldofintellectual property protection aretheState
Patent Agency ofUkraine, established bytheDecree oftheCabinet ofMinisters ofUkraine on
27January 1992, No.29,andtheStateAgency ofUkraine onCopyright andRelated Rights, which
isfunctioning according totheResolution oftheCabinet ofMinisters ofUkraine of25March 1992,
No.154.
KeyLegislative ActsonIPRProtection
IPRprotection inUkraine isbased onthefollowing legislative acts:
TheLawofUkraine "OntheProtection ofRights toInventions andUtility Models" of
15December 1993, No.3687-XII introduced on1July1994bytheResolution oftheSupreme Rada
ofUkraine of20December 1993, No.3769 -XII.
TheLaw ofUkraine "OntheProtection ofIndustrial Samples" of15December 1993,
No.3788-XII, introduced on1July1994, bytheResolution oftheSupreme Rada ofUkraine of
23December 1993, No.3770-XII.
TheLawofUkraine "OntheProtection ofRights toMarks forGoods andServices" of
15December 1993, No.3689-XII, introduced on1July1994bytheResolution oftheSupreme Rada
ofUkraine on23December 1993, No.3771-XII.
TheLawofUkraine "OntheProtection ofRights toPlant Varieties" on21April 1993,
No.3116-XII introduced on1November 1993 bytheResolution oftheSupreme Rada ofUkraine on
21April 1993, No.3117-XII.
TheLawofUkraine "OnCopyright andRelated Rights" on23December 1993, No.3793-XII,
introduced bytheResolution oftheSupreme Rada ofUkraine on23December 1994, No.3794-XII.
Interim Provision ontheProtection ofIndustrial Property andRationalization Proposals in
Ukraine (Items 54,59,60,61,62,68and70),confirmed bytheDecree ofthePresident ofUkraine
on18September 1992, No.479/92.
Theprotection ofIPRinthemain legislative actsofUkraine:
TheCivil Code oftheUkrainian Soviet Socialist Republic;
TheCivil Procedural Code ofUkraine;
TheAdministrative Code ofUkraine;WT/ACC/UKR/5
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TheLabour Code ofUkraine;
TheCustoms Code ofUkraine;
TheLawofUkraine "OnProperty";
TheLawoftheUkrainian Soviet Socialist Republic "OnForeign Economic Activity";
TheLawofUkraine "OntheBasis ofState Policy inScience andScientific andTechnical
Activity";
TheLawofUkraine"OnRestrictingMonopoliesandPreventingUnfairCompetitioninBusiness
Activity";
TheLawofUkraine "OnEnterprises inUkraine".
Ukrainian International Policy ontheProtection ofIPR.
Ukraine isaspiring tobecome afullmember oftheworld community ontheprotection of
intellectual property. Asamember oftheoftheWIPO since1970, Ukraine hascontinued toparticipate
intheParis Convention fortheProtection ofIndustrial Property, inthePatent Cooperation Treaty
(PCT), andintheMadrid Union ontheRegistration ofInternational Marks.
In1995 -1996, Ukraine isintending tojoin:
TheBernConvention ontheProtection ofLiterature andArtWorks (1886). On31May1995,
theSupreme RadaofUkraine adopted theLawofUkraine "OnUkraine 'sJoining theBernConvention
ontheProtection ofLiterature andArtWorks (Paris Act,1971);
TheInternational Convention ontheProtection ofPlant Varieties (1978);
TheBudapest Treaty onInternational Acknowledgement ofMicroorganism Deposits forthe
Purpose ofPatenting (1980).
andtoratify:
TheEurasian Patent Convention, signed on9September 1994 bytheheads ofstateofCIS
countries.
Thepossibility ofUkraine joining allinternational agreements administered bytheWorld
Intellectual Property Organization isnowunder consideration.
ThelawsofUkraine ontheprotection ofIPRinclude articles oninternational treaties according
towhich, ifaninternational treaty, inwhich Ukraine isaparticipant, provides regulations other than
those provided bythelegislation ofUkraine, thentheregulations oftheinternational treaty shallbe
inforce.
TheRights ofForeigners andother Persons
Inaccordance withtheUkrainian lawsontheprotection ofIPR,foreigners andstateless persons
shallhaverights, equal tothose ofthecitizens ofUkraine, according totheinternational agreements
ofUkraine, onthebasis ofreciprocity.
ThepolicyoftheGovernmentofUkraineonintellectualpropertyprotectioninUkraineisdirected
totheimprovement oflegislative andinstitutional baseforlawful protection ofcopyright andrelated
rights onobjects ofeconomic property inaccordance withinternational agreements which areinforce
inthisbranch.WT/ACC/UKR/5
Page16
TheState Patent Department ofUkraine founded on27January 1992 andtheState Agency
ofUkraine oncopyright andrelated rights which functions from25March 1992aretheStateorgans
ofexecutive authority intheareaofintellectual property rights protection.
Thebasis fortheprotection ofintellectual property rights objects inUkraine isestablished
bythefollowing legislative acts:
TheLaw ofUkraine "On protection ofrights oninventions andutility models" of
15December 1993No.3687-XII putintoeffect on1July1994bytheresolution oftheSupreme Rada
ofUkraine of23December 1993 No.3769 -XII.
TheLawofUkraine "Onprotection ofrights oneconomic samples" of15December 1993
No.3688-XII putintoeffect on1July1994 bytheresolution oftheSupreme Rada ofUkraine of
23December 1993 No.3770 -XII.
TheLawonUkraine "Onprotection ofrights ontrade marks forgoods andservices" of
15December 1993 No.3689 -XIIputintoeffect on1July1994 bytheresolution oftheSupreme
Rada ofUkraine of23December, No.3117 -XII.
TheLawofUkraine "Onprotection ofrights onplant species" of21April 1993 No.3116 -
XIIputintoeffect on1July1993bytheresolution oftheSupreme Rada ofUkraine of21April 1993
No.3117 -XII.
TheLawofUkraine "Onbringing ofchanges andexpansions tosome legislative actsofUkraine
onprotection ofcopyright" of28February 1995No.75/95-VR putintoeffect on11April 1995that
wasthedateofitspublication.
Safeguarding andprotection ofintellectual property objects isalsocarried outinaccordance
withanumber ofmajor legislative actsofUkraine:
TheCivil Code ofUkrainian SSR;
TheCivil Process Code ofUkraine;
TheCriminal Code ofUkraine;
TheCode ofUkraine onAdministrative violations;
TheCode oflabour lawsofUkraine;
TheCustoms Code ofUkraine;
TheLawofUkraine "OnProperty";
TheLawofUkrainian SSR"Onforeign trade activity";
TheLawofUkraine "Ontheframeworks ofthestatepolicy intheareaofscience andscientific
andtechnical activity";
TheLawofUkraine "Ontherestriction ofmonopolism andprevention ofunfair competition
inentrepreneurial activity";
TheLawofUkraine "Onforeign investments";
TheDecree oftheCabinet ofMinisters ofUkraine "Ontheregime offoreign investment" and
others.
Sofar,Ukraine doesnothaveaspecialized patent court.
According totheLaws ofUkraine "Ontheprotection ofrights oninventions andutility models"
(Article 30),"Ontheprotection ofrights onindustrial samples" (Article 27),and"Ontheprotection
ofrights onsamples ofgoods andservices" (Article 21),disputes connected withimplementation ofWT/ACC/UKR/5
Page17
these lawsaresettled bythecourt, arbitral court, orathird court intheorder established bythe
functioning legislature ofUkraine.
Ukraine isstriving toprovide rightful protection ofintellectual property ontheinternational level.
Asamember oftheWorld Intellectual Property Organization (WIPO) since 1970, Ukraine prolonged
itsparticipation intheParisUnion inquestions oftheprotection ofindustrial property, intheAgreement
onPatent Cooperation (APC), andintheMadrid Union inquestions ofinternational registration of
trademarks.
There arebilateral agreements setintheareaoftheprotection ofindustrial property between
theGovernments ofUkraine andtheRussian Federation andbetween theGovernments ofUkraine
andtheRepublic ofBelarus. Thetextofthebilateral agreement intheareaofindustrial property
protection between Ukraine andPoland isbeing prepared.
In1995-1996 Ukraine hasintentions toaccede to:
TheBernConvention ontheprotection ofliterary andartistic works (1886);
TheInternational Convention ontheprotection ofnewplant species (1978);
TheEurasian Patent Convention (1994);
TheAgreement ontrademark laws(1994);
Question 5n.
What arethecriminal procedures andpenalties available against theinfringements ofintellectual
property rights? Doforeigners enjoy thesame treatment asUkrainian nationals inthisrespect? Please
clarify ifandhowthese procedures andpenalties areinconformity withArticle 61oftheTRIPs
Agreement.
Reply 5n.
Civil, Criminal, andAdministrative Procedures
ontheProtection ofIPR
Activities connected withtheprotection ofIPRareregulated bytheappropriate clauses ofthe
Criminal Code oftheUkrainian Soviet Socialist Republic, theCivil Procedural Code ofUkraine, the
Administrative Code ofUkraine, theLawofUkraine "OnRestricting Monopolies andPreventing Unfair
Competition inBusiness Activity", andtheCustoms Code ofUkraine.
Todate, there isnospecialised Patent Court inUkraine. According totheabove-mentioned
mainUkrainianlawsontheprotectionofintellectualproperty,disputesconnectedwiththeimplementation
oftheselawsaretoberesolved bytheCourt, orArbitration Court, according toprocedures established
bythelegislation ofUkraine.
TheRights ofForeigners andother Persons
Inaccordance withtheUkrainian lawsontheprotection ofIPR,foreigners andstateless persons
shallhaverights, equal tothose ofthecitizens ofUkraine, according totheinternational agreements
ofUkraine, onthebasis ofreciprocity.
Incompliance withArticle 136oftheCriminal Code ofUkraine, attributing another 'sscientific
work, workofliterature, orarttooneself ortoanother, ortheunauthorized reproduction ordistributionWT/ACC/UKR/5
Page18
ofsuchawork ispunishable bycorrective labour forthetermofoneyearorafineintheamount
ofupto15times theminimum wage.
According toArticle 43Section 5,ofthelawofUkraine "OnCopyright andRelated Rights",
incases where there isusage ofanother person 'swork without theconsent oftheperson owning the
copyright ortherelated rights, ornon-adherence toconditions fortheusage ofthecopyright, or
infringement ofpersonal andproperty rights oftheowner ofcopyright andrelated rights, aclaim
canbefiledincourt fortherestitution ofinfringed rights through making theappropriate corrections
andpublishing information inthepress concerning theinfringements. Thecourt hastherighttobring
down adecision banning publication ofthework, itsperformance, phonogram, wireandwireless
broadcasting, prohibiting itsdistribution, theconfiscation ofallcopies ofthework orphonogram and
oftheequipment andmaterials foritsreproduction anddistribution, andalsothedestruction orremoval
ofallcopies ofthework orphonogram forwhich ithasbeenestablished thattheirproduction or
distribution isaninfringement ofcopyright orrelated rights. Thisconcerns allcliches, matrixes, original
forms, magnetic tapes, photographic negatives, andother objects withthehelpofwhich copies of
thework, phonogram, broadcast programs aremade, andthematerials andequipment thatareused
thatareusedtoproduce them.
Procedures forthereimbursement oflosses duetotheinfringement ofcopyright orrelated
rights hasbeenestablished inArticle 44oftheaforementioned law.Inparticular, theowners ofcopyright
andrelated rights mayrequire:
(i) thereimbursement oflosses caused asaresult ofaninfringement ofcopyright orrelated rights
including lostprofit;
(ii) repayment ofprofits received asaresult oftheinfringement ofcopyright orrelated rights to
theowner ofthecopyright orrelated rights;
(iii) orpayment ofasumofcompensation which isdetermined bythecourt from 10to50,000
times theminimum salary asestablished byUkrainian legislation.
Apart from thecompensation oflosses andreimbursement ofrevenues, thecourt mayalso
finetheinfringer 10percentofthesumappointed bythecourt infavour oftheplaintiff.
Theinfringer ofcopyright orrelated rights isobliged topaytheowner ofcopyright andrelated
rights punitive damages intheamount setbythecourt. Asindicated inPart1,Article 8,theprotection
provided bythislawisgiven toauthors regardless oftheircitizenship andforworks which arepublished
forthefirsttimeorremain unpublished although theyexistontheterritory ofUkraine.
Question 6n.
Dojudicial authorities havetheright toorder injunctions orprovisional measures against
infringements ofintellectual property rights, asprovided forinArticles 44and50oftheTRIPs
Agreement? What exact measures arepossible andwhat istheprocedure tobefollowed? Do
administrative authorities enjoy thesame rights?
Reply 6n.
INDUSTRIAL PROPERTY
Relations thatariseinconnection withtheacquisition andsaleofownership rights toinventions
andutility models, industrial samples, andtrademarks forgoods andservices (andalsoimprovement
patents andplantvarieties) areregulated bythepatent, criminal, civil, civilprocedure, administrative,
customs, andlabour codes ofUkraine.WT/ACC/UKR/5
Page19
Theabove-mentioned legislation ensures accountability fortheinfringement ofrights andlawful
interests oftheauthors orowners ofintellectual property.
Patent legislation:
Anyencroachment ontherights oftheowner ofaprotective document forindustrial property
isconsidered tobeaninfringement oftherights oftheprotective document owner forwhich theinfringer
isheldaccountable according tothelegislation ofUkraine.
Upon submission ofaclaim bytheowner oftheprotective document, suchaninfringement
shallcease andtheinfringer shallcompensate thepatent owner forthelosses caused.[Relevant laws:
"OntheProtection ofRights toInventions andUtility Models" (Article 29),"OntheProtection of
Rights toIndustrial Samples" (Article 26),and"OntheProtection ofRights toTrade Marks forGoods
andServices" (Article 20)].
TheCriminal Code ofUkraine:
"Article 137.Infringement ofintellectual property rights.
Claiming authorship ofanother person 'sdiscovery, invention, utility model, industrial sample, or
improvement patent orbroadcasting information about theinvention, utility model, orindustrial sample
prior toitspublication, without theconsent oftheauthor, shallbepunished bycorrective labour with
asentence ofuptotwoyears orbyafineofuptothirty times theminimum wage."
Legislation oftheprotection andregistration ofInventions according tocurrent Ukrainian
legislation isnotthesame asinformer USSR legislation.
TheUkrainian Administrative Violations Code:
Article 163,Paragraph 1,Part1
Theillegal useofabrand name, trade mark forgoods andservices, oranykindofproduct
marking, illegal copying oftheshape, packaging, external design, andalsoimitation, copying, and
direct reproduction ofanother entrepreneur 'sproduct, unauthorized useofhisname shallincur afine
ofuptofiftytimes theminimum wage, withorwithout confiscation ofproducts, themeans ofproduction
andrawmaterials."
References tomeasures ontheprotection ofintellectual property rights arelocated intheCivil
Code ofUkraine (Articles 514-523), intheCivil Procedure Code ofUkraine (Article 70,126,218,
374), intheAdministrative Code ofUkraine (Article 255), intheLawofUkraine "OntheRestriction
ofMonopolies andthePrevention ofUnfair Competition inBusiness Activity" (Articles 2,7),inthe
Customs Code ofUkraine (Article 74),andintheLabour Code ofUkraine (Articles 70,91,126).
AccordingtotheLawsofUkraine"OntheProtectionofRightstoInventionsandUtilityModels"
(Article 5),"OnProtection ofRights toIndustrial Samples" (Article 4),and"OntheProtection of
Rights toTrade Marks forGoods andServices" (Article 4),foreigners andstateless persons haverights
equal toresidents ofUkraine inaccordance withtheinternational agreements ofUkraine andonthe
basis ofreciprocity.WT/ACC/UKR/5
Page20
COPYRIGHT AND RELATED RIGHTS
According toArticle 136oftheCriminal Code ofUkraine, falsely attributing authorship of
awork ofscience, literature orartorillegally reproducing ordistributing suchawork shallbepunished
withcorrective labour withasentence ofuptooneyearorwithafineofupto15times theminimum
wage.
According toArticle 43,Section VoftheLawofUkraine "OnCopyright andRelated Rights,"
inacasewhere thereisunauthorized usage ofthecopyright orrelated rights toawork, non-observance
oftheconditions fortheuseofworks andrelated objects, andinfringement ofpersonal andproperty
rights oftheperson owning copyright andrelated rights, theowner canfileaclaim withthecourt
witharequest torestore theinfringed rights through making theappropriate corrections andpublishing
information inthepress regarding theinfringements. Thecourt hastheright tomake adecision
prohibiting publication, itsproduction, theproduction ofaphonogram, broadcasting ontheairand
overthewire, prohibiting itsdistribution, theseizure andconfiscation ofallcopies ofthework or
phonogram andthematerials andequipment intended fortheirproduction andreproduction; alsoon
theremoval oralienation ofallcopies ofthework orphonogram identified asproduced ordistributed
byaninfringement ofthepersonal rights oftheowner ofcopyright orrelated rights. Itconcerns all
typographic plates, matrixes, original forms, magnetic tapes, photo negatives, andotherobjects through
which copies ofworks, phonograms, broadcast programs, andmaterials andequipment which areused
fortheirreproduction.
Article44oftheabove-mentionedLawestablishestheproceduresforcompensatinglossescaused
byinfringement ofcopyright andrelated rights. Inparticular, itprovides thatowners ofcopyright
andrelated rights canclaim:
1. compensation forlosses incurred asaresult ofinfringement ofcopyright andrelated rights,
including lostrevenues;
2. theseizure ofrevenues received bytheinfringer asaresult ofcopyright andrelated rights
infringement andpaidtotheowner;
3. orpayment ofcompensation inanamount determined bythecourt from 10to50,000 times
theminimum wage assetbythelegislation ofUkraine.
Besides compensation forlosses andcompensation ofrevenues fortheinfringement ofcopyright
andrelated rights, thecourt shalllevyafineintheamount of10percent oftheamount ofcompensation
paidtotheplaintiff.
Theinfringer ofcopyright andrelated rights isobliged tocompensate persons owning copyright
andrelated rights fordamages intheamount determined bythecourt.
Asisindicated inSection 1,Article 8,theprotection provided forbythisLawapplies toauthors
irrespective oftheircitizenship, works which havebeenpublished forthefirsttimeorhavenotbeen
published atallbutexistonUkrainian territory.
Question 7n.
Does Ukraine already haveinplace asystem ofenforcement attheborder against intellectual
property rights infringements inaccordance withArticle 51to60oftheTRIPs Agreement? Ifso,what
exactrights arecovered bysuchasystem? Doesitalsocover goods forexportation andgoods intransit?
Ifnosuchsystem isinplace, arethere anyplans toadopt it?WT/ACC/UKR/5
Page21
Reply 7n.
Theabove-mentioned TRIPS articles concern special requirements related toborder measures.
TheCustomsCodeofUkrainecontainsonlyonearticleonintellectualpropertyrights(Article74.
Goods andother Objects which cannot betaken through Ukrainian Customs).
According tothisArticle, "The following goods andother objects cannot betaken through
Ukrainian customs:
1. Goods, which maynotbetaken through Ukrainian customs:
(a) theimport ofwhich isprohibited inUkraine, including:
...-goods, theimport ofwhich isaninfringement ofintellectual property rights;
(b) theexport ofwhich isprohibited inUkraine, including:
...-goods, theexport ofwhich isaninfringement ofintellectual property rights...
Goods intransit, according toArticle 74oftheCustoms Code:
"thetransit ofgoods, which canbeofdanger tohuman andanimal lifeandhealth ormayharm
theenvironment, isprohibited through theterritory ofUkraine.
Thelistofgoods towhich thisArticle applies shallbeapproved bytheSupreme RadaofUkraine
upon asubmission from theCabinet ofMinisters ofUkraine."
TheCustoms Legislation ofUkraine, inouropinion, requires modifications andadditions in
accordance withtherequirements ofTRIPS.
Question 8n.
What areUkraine 'sintentions withregard totheTRIPs Agreement?
Reply 8n.
Current legislation ofUkraine onIPRdonotcomply withallTRIPs provisions. ButUkraine
hasanintention tobring itslegislation onprotection ofIPRintoconformity withTRIPs provisions.
According toArticle 65clause 3TRIPs Ukraine. asacountry withtheeconomy intransition,
canuse4years transitional period tobring itslegislation onTRIPs intotheconformity withthe
provisions ofAgreement onTRIPs. Weconsider thatduring thisperiod Ukraine willbring itslegislation
onIPRintoconformity withTRIPs provisions.
Civil Aircraft
Receipt ofthefollowing information would alsobemuch appreciated, inorder toenable contracting
parties tohaveabetter picture ofthestateofthecivilaircraft industry inUkraine:WT/ACC/UKR/5
Page22
Question 9n.
Please stateinspecific terms thestructure andpresent stateoftheUkrainian civilaircraft
industry.
Reply 9n.
Thedatatobepresented bytherequest hasnotbeenavailable forconsideration bythemoment
forthereason thattheinformation onthisissue willbeprovided additionally foritscomplexity to
beanalyzed asatthepresent theaircraft industry suffers dramatic structural changes.
Question 10n.
Please provide information onthespecific sub-sectors oftheaircraft industry (Large aircraft;
Small/medium sizedaircraft, Helicopters, Aero-engines, Equipment etc.)andwithaparticular emphasis
onturnover, order backlog etc.
Reply 10n.
SeeReply 9n.
Question 11n.
Please provide dataontradeincivilaircraft, bysub-sectors, aswellasinformation oncustoms
duties.
Reply 11n.
SeeReply 9n.
Question 12n.
Please statewhatkindofindustrial policy andwhatforms ofgovernment support havebeen
adopted bytheGovernment ofUkraine. Areoffset transactions inpractice inyourcountry?
Reply 12n.
SeeReply 9n.
Question 13n.
Wewould appreciate detailed information ontheextent ofbarter tradeinUkraine andtherules
governing suchtrade, inparticular ontheDecree toRegulate Barter Operations of27January 1995.
Reply 13n.
According totheState Customs Committee Report, thevolume ofbarter operations during
1994 wasUS$4.8 bln.or46.3percentofthetotalamount ofexports (22.4 percentin1993). The
considerableamountofbarteroperationsdecreasedhardcurrencyrevenueswhicharecrucialforUkraine
andheightened thecrisis intheUkrainian financial system.WT/ACC/UKR/5
Page23
Thesituation canbeexplained, firstly, bythefactthatafixed rateofexchange forthe
Karbovanets toforeign currencies hasbeen usedinforeign trade, which made conducting export
operations unprofitable, andbythegeneral illiquidity ofmost branches ofthenational economy.
Thetendency tocarry outexchanges ofequivalent amounts ofgoods according tobarter
agreements wasunexpected. Although thetotalamount ofexports through barter operations was
US$4.8 bln.,Ukraine onlyreceived goods tothevalue ofUS$3 bln.Thedifference ofUS$1.8 bln.,
afterhaving taken intoaccount factors suchasthedelay inreturning theimport partofthebarter
agreement, wasinfactahidden formofcapital export, andrevenue fortheeconomies ofothercountries.
Oneshould not,thatduring theperiod inquestion, theconditions fortheconclusion ofbarter
arrangements were notsubject toregulation.
Thesignificant increase inbarter operations hasattracted special attention tothisformoftrade.
Without prejudice totheright oftransactors toengage inbarter operations, theproblem arose of
providing incentives toexport goods forhardcurrency through economic instruments.
Ananalysis conducted bytheMinistry ofForeign Economic Relations atthebeginning of1995,
ofthemonitored registration offoreign trade agreements (andcontracts) hasconfirmed thatthere is
agrowing tendency tomove towards barter operations inforeign trade. Ofthetotalamount offoreign
economic agreements (orcontracts) tothevalue ofUS$5 bln.registered by1February 1995, barter
operations werevalued atUS$2.8 bln.,or56percent.Thefactthatthemainproducts exported through
barter operations were highly liquid products, ie.products thatcanbesoldforhardcurrency by
transactors, wasofgreatconcern. Itispredicted thatapproximately 75-85 percentofthetotalamount
ofhighly liquid products would beexported through barter.
Duetothesefactors, byrequest oftheMinistry ofForeign Economic Relations, theUkrainian
Presidential Decree "OntheRegularization ofBarter Operations inForeign Economic Activity" was
adopted on27January 1995. Themain purpose ofthedocument inquestion wastoreverse negative
trends andtoreturn foreign trade toconventional methods.
Thekeyprovisions ofthePresidential Decree specify procedures foropening import deposits
andatimeforthereturn oftheimport partofabarter contract (aperiod of90days).
Theintroduction ofthe90dayrequirement metwithnoopposition. Asimilar procedure has
beenapplied tomonitor thereturn ofhardcurrency revenues from export operations. Limiting the
period forcompleting thebarter agreement should curtail theunjustified crediting ofother countries
withcommodities, ashashappened previously inother periods.
Inourpoint ofview, thesystem ofopening advance import deposit accounts isalsojustified.
Firstly, thisisinaccordance withdomestic legislation (Article 19oftheUkrainian Law"OnForeign
Economic Activity"). Secondly, thisprocedure provides aneconomic leverwhich would forceproducers
tosellproducts which aremarketable onexport markets, thatis,highly liquid types ofagricultural
products, metallurgical andchemical products, rather thanselling themthrough barter arrangements.
Once acontract, through which there isaninflow ofcritical imports, isfulfilled, theminimal rate
ofimport deposits isapplied. Also, theabove-mentioned procedure fulfils therequirements ofatimely
return ontheimport partofcontracts.
Wewould liketoemphasize, thatimport deposits apply onlytospecific types ofthemosthighly
liquid Ukrainian products. Thegreater partofproducts doesnotrequire theopening ofanimport deposit
inorder toengage inabarter operation. Ifthemechanism ofimport isunduly criticized (asmayhappen
onthepartofindividual experts), thenthedomestic entrepreneurs shallnotlearntotradeinacivilized
way, andthecorrection ofthemonetary andfinancial system shallremain problematic also.WT/ACC/UKR/5
Page24
Atthepresenttime,theUkrainianPresidentialDecree"OntheRegulationofBarter(Commodity
Exchange) Operations inForeign Economic Activity" iseffective onlyinreference totheperiods
allocated forthereturn ofimport during barter operations. Thepotential means ofapplying import
deposits arebeing carefully examined atvarious levels ofthestateadministration andthepossibilities
oftheircompatibility withthebanking system arebeing examined.
Onecannot notice, thatunder theinfluence ofthepacket ofmeasures introduced toliberalize
foreign activity, there isagradual improvement intheforeign trade situation, including thesituation
withbarter operations. Thus, inJanuary-February (according totheState Customs Committee) the
volume ofbarter inthetotalvolume ofexports was35percentascompared to45percentforthe
previous year.
Taking thefactors ofliberalizing foreign trade andtheapplication oftherequirements ofthe
Ukrainian Presidential Decree ontheregulation ofbarter (commodity exchange) operations intoaccount,
itispossible thatbarter operations mayrealistically come close to20-25 percentofthetotalvolume
ofexports, which isconsistent withthetrends atthepresent timeinworld trade.
Atthepresent timetheclassification ofbarter agreements isreviewed. According tothisthe
PresidentialDecreeNo.660of26July1995,"OnAdditionalMeasuresonRegulatingBarter(Commodity
Exchange) Operations inForeign Economic Activity" wasadopted.
TheRegulation No.699of30August 1995, wasadopted withtheaimtoregulate traderelations
inbarter andtoreduce thepartofbarter operations, which compile more than50percentofforeign
economic activity.
Question 14n.
Weunderstand thatthe1994StateBudget provided forthelevying ofanewtaxonlegalentities
owning foreign carswhich havebeenpurchased withhardcurrency. Thelevelofthetaxis2.4minimal
salaries perhorsepower perannum (equivalent atApril 1994 exchange ratestoUS$900 perannum
fora250horsepower car).What isthepurpose ofthistax?When doesUkraine intend toeliminate
it?
Reply 14n.
Thelevying ofsuchtaxisnotprovided bythe1995 State Budget. Thetaxisnotlevied on
cars, which hadtechnical examination from 21April 1995 andlorries -from 2May1995.
Question 15n.
Onpage8,point II.1.boftheForeign Trade Regime Memorandum mention ismade ofthe
influence ofprogressive taxation onprices restriction. Could youplease explain howthisinfluence
willbeexerted.
Reply 15n.
Much attention ispaidtotheinfluence ofprogressive taxation onprice restrictions mentioned
onpage8,point II.1.boftheForeign Trade Regime Memorandum. Alsoitwillbeveryuseful to
introduce thissystem assoonaspossible. Thissystem should assist instabilizing Ukrainian domestic
market, inreducing prices sufficiently, instemming thetendency ofnon-declaring income and,tosome
extent, insuspending hardcurrency flowabroad.WT/ACC/UKR/5
Page25
Question 16n.
Please confirm thattheResolution oftheCabinet ofMinisters N133of2April 1994 "On
changing theCustoms Fees" contains theratesapplied atthisdate?
Reply 16n.
Yes,theResolution oftheCabinet ofMinisters No.133of2April 1994 "Onchanging the
Customs Fees" contains theratesapplied atthisdate.
Question 17n.
Does Ukraine grant theGeneral System ofPreferences tosome ofitstrading partners? Ifyes,
could youplease provide thelistofcountries andlistofgoods (bytariff code) concerned.
Reply 17n.
TheListofcountries withrespect towhich Ukraine isgranting thetariff preferences within
thelimits oftheGeneral System ofPreferences, isadopted bytheDecree oftheCabinet ofMinisters
ofUkraine No.4-93dated 11January 1993 "OnUnified Customs Tariff ofUkraine" (enclosure 1
totheDecree). Theabove mentioned listnumbers 145developing countries (thislistwassenttoyou
withtheletter oftheState Customs Committee ofUkraine No.7/2-119 dated 31March 1995). The
preferential ratesareapplied totheproducts ofthegroups 1-24oftheProducts Nomenclature ofForeign
Economic Activity (Harmonized System).
Fullratesofimport duties oftheUnified Customs Tariff ofUkraine areapplied withrespect
totheproducts, originated fromabout 40countries (including Israel andSouth Africa). These arethe
countries, which where notincluded totheenclosure No.1andNo.2totheDecree oftheCabinet
ofMinisters "OntheGeneral Customs Tariff" No.4-93dated 11January 1993, i.e.,tothelistof
countries, which havethemostfavourable andpreferential regime inUkraine within thelimits ofthe
General system ofpreferences.
Thepreferential rates oftheGeneral Customs Tariff ofUkraine areapplied tothegoods,
originated from thecountries, which havethemost favourable regime inUkraine (enclosure No.2
totheDecree oftheCabinet ofMinisters ofUkraine "OntheGeneral Customs Tariff" No.4-93dated
11January 1993. TheCroatian Republic andthecountries -republics oftheformer USSR).
Question 18n.
Onpage23,pointIII.2itisexplained thatthegoods transiting through theUkraine mustremain
under customs control. What istheprocedure applied?
Reply 18n.
According tocurrent legislation ofUkraine (Article 24oftheCustoms Code ofUkraine) the
goods andother articles areunder thecustoms control during theirtransit through theterritory of
Ukraine, beginning from themoment ofimport toUkraine andtothemoment ofexport.
Thetransport register, which contain allnecessary information ontheowner ofgoods, means
oftransportation andtermofstayontheterritory ofUkraine areusedwhen transferring thegoods
from/to thecountries ofCIS.WT/ACC/UKR/5
Page26
Thetransit goods, which aretransported from theterritory ofother countries areregistered
bymeans offilling inthecargo-customs declaration ontransit. When filling inthedeclaration, the
customs duties, which areadopted bytheDecree oftheCabinet ofMinisters ofUkraine No.133dated
2March 1994 "OnMaking Changes oftheRates ofCustoms Duties" arelevied.
When transporting ofgoods bymeans ofmotor transport withMÄÏbook (CARNET -TIR),
thecargo-customs declarations isnotfilled in,andthecustoms control isconducted bymeans offilling
inbythecustoms officer theproper pages ofthenote-book when importing andexporting ofgoods.
Question 19n.
Inrelation tocertification, could theUkraine please saywhether itintends tojointheUN-ECE
1958Agreement concerning theadoption ofuniform approval andreciprocal recognition ofapproval
formotor vehicle equipment andparts.
Reply 19n.
Ukraine didnotsigntheUN-ECE 1958 Agreement. After joining thisAgreement Ukraine
willintroduce certification andapproval formotor vehicles andmotor vehicle equipment andparts
inthree months.
Comments onL/7588
Question 20n.
Themoves towards liberalizing theexport regime (asreferred toonpage2,fourth indent from
thebottom) aretobewelcomed. DoesUkraine intend alsotoabolish export restrictions ongrain, wastes
offerrous andnon-ferrous metals, castiron, coalandwastes ofnoble metals andmetals inlaid with
noble metals? What time-table iscurrently envisaged forphasing outthese restrictions? Itshould be
noted inthisrespect thattheconditions setoutintheGATT under which trade restrictive measures
canbetaken arelimited.
Reply 20n.
Non-tariff restrictions oncoalandpig-iron wereeliminated bytheResolution oftheCabinet
ofMinisters ofUkraine No.35of18January 1995.
Quotas andlicensing regime onwastes andscrap offerrous, non-ferrous andprecious metals
waseliminated bytheResolution oftheCabinet ofMinisters ofUkraine No.222of31March 1995.
Atthepresent moment non-tariff restrictions areexisting onlyforgrains. These restrictions
willbeeliminated before 15September 1995.
Question 21n.
Inthethirdindent fromthebottom, theCommunication mentions the"application ofasystem
ofencouragement ofproducers toexport goods byapplying adifferential taxation depending upon
thelevelofprocessing ofthegoods".WT/ACC/UKR/5
Page27
Reply 21n.
Taxation willbeintroduced onlyonthebasis oftheLaw"OnTaxation". Itwilldepend on
different criterion. Thelevelofprocessing ofthegoods should beoneofthemaincriterion: thehighest
taxshould beapplied tothegoods withthelowest levelofprocessing. Thisdoesnotapply tosubsidies.
Discriminatory measures, inanycase, should notbeapplied toimports.
Question 22n.
TheEUwould liketounderstand howthis"system ofencouragement" willwork. Which kind
oftaxes willvaryandwillthisbedecided bylaworbyadministrative discretion? Along which criteria
willtheUkrainian authorities create these differences? Inthisrespect, theEUdraws theattention of
theUkrainian authorities toArticle 3.1oftheWTO agreement onsubsidies andcountervailing measures:
thisprovisions prohibits export subsidies (point a)aswellassubsidies contingent upon theuseof
domestic overimported goods (point b).
TheEUisalsoconcerned thatUkraine mayintroduce asystem ofdouble pricing forraw
materials. Such aprice system mayleadtoartificially lowprices ofinput products forUkraine 's
processing industry tothedetriment ofprocessing industries inthirdcountries. Therefore, please clarify
theintention behind thedifferential taxation system.
Reply 22n.
Ukraine doesnotintend tointroduce asystem ofdouble pricing forrawmaterials. Viceversa,
bythepresent moment alltheparticipants oftrade activity wererecommended touseworld indicative
prices and,insome cases, rawmaterials 'priceondomestic market ofUkraine exceeds theworld price
fortheappropriate material.
Question 23n.
Thesecondindentfrombottomreferstothe"applicationofthesystemofeconomicsubstantiation
oftariff regulation ofimports anditsusefortheregulation oftheaccess tothedomestic market only
ofthose goods thataremanufactured inUkraine ininsufficient, sufficient orexcess levels". Could
Ukraine please clarify thisstatement.
Reply 23n.
Application ofthesystem ofeconomic substantiation oftariff regulation ofimports andits
usefortheregulation oftheaccess tothedomestic market onlyofthose goods thataremanufactured
inUkraine ininsufficient levelmeans thatzerotariff rateorlowtariff ratewillbeapplied tothese
goods;
- goods thataremanufactured insufficient level-theratewillbecalculated according tothe
usefulness ofthegoods;
- goods thataremanufactured inexcess level-hightariff ratewillbeapplied withtheaimof
assess restriction.
Page6-Decree ofthePresident ofUkraine
TheEUwelcomestheeffortsbytheUkrainianauthoritiestopreventcompaniesbasedinUkraine
engaging ininjurious dumping practices. However, anyassessment ofwhether dumping hastaken placeWT/ACC/UKR/5
Page28
ornot,should beestablished bytheauthorities oftheimporting country onthebasis oftheGATT
1994 Anti-dumping Agreement.
Specific comments onWT/L/20
NB: These comments aremostly limited tothespecific questions putbytheEU,andthereplies
thereto, following bycomments onother responses.
Question 24n.
Inresponse torequest forfurther information inanumber ofareas (eg.application ofanti-
dumping, countervailing, special andseasonal customs duties; rulesgoverning special/free economic
zones), Ukraine hasresponded that,although provision ismade indomestic lawforthese types of
duties, these arenot(yet)applied practice. Notwithstanding this,information onUkraine 'sdomestic
lawinthese areas isstillrequired.
Reply 24n.
Current legislation ofUkraine isconsistent withtheWTO provisions onanti-dumping duty,
which isbased onadetermined amount ofpenalty equal tothedumping margin. Inaccordance with
theLawofUkraine "OnUnified Customs Tariff" (Article 13)theanti-dumping dutyratemaynotexceed
thedifference between thecompetitive wholesale price ofthegood inquestion inthecountry from
which itisexported atthetimeofexport, andthedeclared priceatthetimeofimport intothecustoms
territory ofthecountry, orthedifference inpricebetween thedumped goods inUkraine andtheaverage
price oftheUkrainian export ofsimilar ordirectly competing goods atthetimeinquestion.
Theapplication ofanti-dumping, countervailing, special andseasonal duties, rulesgoverning
special/free economic zones isnotregulated bynational legislation.
Question 25n.
Wenotealsothat,onanumber ofoccasions, Ukraine hasstated thatitslawsorpolicies are
compatible withGATT/WTO rules (e.g.question 286,297,312). However, noexplanation ofthe
basis fororjustification ofthisassertion isgiven: these areherewith requested.
Reply 25n.
Concerning Answer 286
Inaccordance withtheLawofUkraine "OnForeign Economic Activity:
- individual quota isaquota fixedforgoods which indicates animporter- country andexporter-
country;
- group quota isaquota fixed forgoods which indicates agroup ofcountries towhich goods
areexported orimported.
Atthepresent timethelegislation ofUkraine doesnothaveadesignated procedure onthe
allocation ofimport quotas among interested countries. However, theLawofUkraine "OnImport
Safeguard Measures Procedures inaccordance withthenorms andprinciples oftheGeneral Agreement
onTariffs andTrade (GATT)/World Trade Organisation (WTO)" which isbased ontheUruguay Round
Agreement "OnSafeguard Measures" andinwhich theallocation quota mechanism isconsistent withWT/ACC/UKR/5
Page29
thenon-discrimination principles according toArticles IandXIIIGATT when some quantitative
reductions onimport areestablished.
Concerning Answer 297.
Inaccordance withtheLawofUkraine "OntheUnified Customs Tariff" thetermspecial duty
shallbeunderstood tomean:
- protective measure thatshallbeapplied ifthegoods arebeing imported intothecustoms territory
ofUkraine insuchquantities orunder suchconditions astocause orthreaten tocause injury
tothedomestic industry thatproduces likeorcompetitive products;
- preventive measure thatshallbeapplied inrelation toforeign economic agents which violate
thestateinterests inthisfieldandalsoasameasure tostoptheunfair competition incases
thatarenotprovided bylawsofUkraine;
- measure thatshallbeapplied inresponse tothediscriminatory and\or unfriendly actions on
thepartoftheforeign countries against Ukraine orinresponse totheactions taken bycertain
countries andtheirunions thatprejudice thelawful rights andinterests offoreign economic
agents ofUkraine.
Special customs tariff shallbedetermined ineachseparate case.
TheDecree ofthePresident ofUkraine "OnImport Safeguard Measures onAgricultural
Products,withaviewtoprotecttheinterestsofdomesticproducersofagriculturalproductsinaccordance
withthenorms andprinciples oftheGeneral Agreement onTariffs andTrade (GATT)/World Trade
Organisation (WTO)" isbeing worked outinaccordance withArticle 5oftheAgreement onAgriculture
oftheUruguay Round.
TheGovernment ofUkraine ishoping thatapplication ofthespecial tariffwillbeharmonised
withthenorms andprinciples ofGATT/WTO.
Concerning Answer 312.
Atthepresent timethere isnolegislation ontheprocurement infreetrade zones. The
Government ofUkraine isexamining thequestions ongovernment procurement andisgoing tostart
thenegotiating process withregard totheAgreement onGovernment Procurement.
Thequestions ongovernment procurement infreetrade zones should betaken intoaccount
inlegislation.
Question 26n.
Onquestion 290,theEUrequests clarification fromUkraine astothebasisforseeking GATT
exemptions totheirexclusive/special trading rulesfornoble metals andalloys, precious stones, coals,
spirits,non-ferrousmetals,rare-earthmetalsincludingpowders,noblemetaloresandpetroleumproducts.
Inourview, these goods arenotgenerally covered bytheexceptions inArticles XXandXXIofthe
GATT.WT/ACC/UKR/5
Page30
Reply 26n.
Thetrade ingoods mentioned inthequestion isactually carried outonthebasisofthespecial
trade regime. Itisnecessary toobtain theappropriate licence fromtheGovernment fortrade inthese
types ofproducts.
These exclusive/specific trade rulesareapplied inUkraine because products suchasprecious
metals andalloys, precious stones, non-ferrous metals, raremetals, precious metals oreandoilproducts
aremainly being imported intoUkraine duetothelackofdomestic production. Trade insuchproducts
asethyl alcohol andcoal, onthecontrary, provides themain input intothestaterevenues.
Actually, ethylalcohol, oilproducts andcoalarenotincluded inthelistofexceptions toGATT
(Articles XX,XXI). However, under certain circumstances these products areinhighdemand and
theyaffect thestatus oftheeconomy ofUkraine. Theproblem ofthesupply offuelproducts intoUkraine
hasbecome oneofthemostimportant problems oflate.And, therefore, theGovernment ofUkraine
temporarily, during thistransitional period, licences trade inthese types ofproducts.
Inquestion 300,canUkraine confirm thattheexchange hasnowbeenunified, asindicated
inreply 64.
Yes. Ukraine canconfirm thattheexchange hasnowbeenunified.
With aview toensuring favourable conditions forthedevelopment ofacurrency market in
Ukraine, toencourage export increase theinflow offoreign currency toUkraine, in1994, theNational
BankofUkraine unified theexchange rateoftheUkrainian Karbovanets inrelation toforeign currency,
i.e.theofficial ratewasunified withthemarket rate.
TheNationalBankofUkrainedeterminestheofficialrateoftheUkrainiannon-cashKarbovanets
inrelation totheUSdollar, theGerman mark, theRussian rouble andtheByelorussian rouble onthe
basis oftheauction ofUkrainian Interbank Currency Exchange.
TheofficialrateofUkrainianKarbovanetsinrelationtoallothercurrenciesisdeterminedthrough
thecross-rates ofFrankfurt Currency Exchange andMoscow Interbank Currency Exchange andthrough
thecross-rates thatarepublished bythenewspaper Financial Times.
TherateoftheUkrainian Karbovanets incashinrelation toallcurrencies indetermined by
Ukrainian commercial banks onthebasis ofdemand-and-supply existing between thesellers and
purchasers ofthese currencies.
Question 27n.
Initsreply 320,Ukraine states thatitprotects geographical indications incompliance with
theLawofUkraine on"Copyright andRelated Rights". Since thenature ofcopyright andrelated rights
iscompletely different tothatofgeographical indications, canUkraine explain inmore detail how
thelatter areprotected, particularly inviewofArticles 22-24oftheTRIPs Agreement?
Reply 27n.
TheAnswer provided toQuestion 320wasincorrect.WT/ACC/UKR/5
Page31
Atpresent,thelegislationofUkrainedoesnotprovideforprotectionofgeographicalindications.
However, itisexpected thatlegislative actsontheprotection ofgeographical indications willbe
developed andimplemented in1995-97.
Question 28n.
Article23para.2oftheTRIPsAgreementcontainsannon-qualifiedprohibitionoftheregistration
oftrademarks which contain orconsist ofgeographical indications forwines andspirits. Article 6of
Ukraine 'sTrademark Law(Grounds forRefusal) doesnotappear tocover thiscase, since itsthird
paragraph requires theexistence ofconfusion (seereplies 100and102). CanUkraine comment on
thispoint.
Reply 28n.
Aswasalready explained inanswer totheprevious question, protection isnotprovided for
geographical indications, including names forwines andalcoholic beverages.
Article 6(Paragraph 3)oftheLawofUkraine "OntheProtection ofRights toTrade Marks
forGoods andServices" listspossible reasons forrefusal toregister amark. Inparticular, indications,
which arelikeorsufficiently similar thattheycanbeconfused with"appellations oforigin, except
when theyareincluded inthemark asanelement which isprotected andisregistered inthenames
ofthepersons having therighttousesuchappellations," cannot beregistered.
Question 29n.
Inquestion 324,Ukraine wasasked about rental rights forworks. Itsanswer refers toreply
96,which appears tobebased onamisunderstanding ofthequestion. Thequestion concerned rental
rights inrelation toawork (egfilms orcomputer programs -cfArticle 11ofTRIPs), andnottothe
copyright itself. CanUkraine explain howitslegislation provides fortherights contained inArticles 11
and14para.4 oftheTRIPs Agreement?
Reply 29n.
Theanswer toquestion 96iscorrect. Theconcept of"rental rights" isnotusedintheLaw
ofUkraine "OnCopyright andRelated Rights." However, theterm"rent", which means atransfer
oftherighttouseanoriginal orcopyofawork orphonogram foracertain period withthepurpose
ofreceiving direct orindirect commercial benefits" isused. InthesameArticle, theterm"person owning
copyright orrelated rights" isusedwhich means "theauthor orperformer incases where theproperty
rights areowned bytheauthor orperformer, andalsoaphysical orlegalentity towhom ownership
rights havebeentransferred."
Article 27oftheLawofUkraine concerns thetransfer (oryielding) ofcopyright: "Ownership
rights canbetransferred (oryielded) byanauthor orother entity owning copyright, toanother entity.
Theauthor orotherentity owning copyright (licensor) canalsoissuealicence toanother entity (licencee)
fortheuseofawork according tothelicence. Copyright transfer (oryielding) andlicence issueshall
takeplace bysigning ofanauthorship agreement."
Question 30n.
Reply 325states thatcomputer programs arenotprotected literary works. Nevertheless, reply
95-initslastparagraph-statesthatUkrainianlegislationisincompliancewiththeEuropeanCommunity
Directive ontheLegal Protection ofComputer Programs. ThisDirective expressly states, inconformityWT/ACC/UKR/5
Page32
withArticle 10para.1 oftheTRIPs Agreement, thatcomputer programs shallbeprotected asliterary
works. Ukraine isrequested toexplain thisapparent contradiction.
Reply 30n.
Anincorrect answer wasgiven toquestion 325.Thecorrect answer istheanswer toquestion 95.
Thefollowing explanation isprovided:
InArticle 4,Section 1,oftheLawofUkraine "OnCopyright andRelated Rights" itisindicated
thatacomputer program isasetofinstructions inwords, numbers, codes, charts, symbols, orinany
other formwhich ismachine-readable andwhich activates aprocess inorder toachieve acertain goal
orresult. Thisconcept includes operational systems aswellasapplied programs expressed infinal
orobjective code, including preparatory materials andaudio andvisual representations received as
aresult ofdeveloping acomputer program.
InArticle 5itisindicated thatworks intheareaofscience, literature, andartareprotected
bythisLaw, inparticular:
1.written works: belles letters, scientific, technical, orinstructional works (books, pamphlets,
articles, computer programs, etc.);
Thus, computer programs areprotected tothesame extent asworks ofliterature, science, and
art,which complies withtheEuropean Union Directive.
Question 31n.
Reply l:Please confirm thattheonlydirect subsidies granted areforthecoalandgasindustry.
Subsidies toother sectors aremade through statemeasures supporting production andexport. More
specific details onthenature ofthese measures andtheirWTO compatibility would beappreciated.
Reply 31n.
Under theUkrainian Law"Onthe1995 State Budget ofUkraine" thecoalandgasindustry
shallreceive direct subsidies only, directed at:
-capital investments
-restructuring ofthecoalandgasindustry
-maintenance ofmine rescue services
-geological survey work
Theissueofestablishing acoalindustry stabilization fundisunder consideration aswellastheproblem
ofsources offinancing forthisfund.
Question 32n.
Reply 2indicates thatthereduction ofthenegative trade balance willbefacilitated amongst
othersthroughtheintroductionofatemporarylimitationonnon-essentialimports.Wouldthisbeachieved
bymeans ofquotas? Hasthelistofnon-essential imports forparticular sectors ofthenational economy
beencompiled ?Ifyeswewould appreciate acopy. Ifnot.could wehaveafirstindication astothe
sectors thatcould beconcerned.WT/ACC/UKR/5
Page33
Reply 32n.
TheGovernmental Commission onUkraine 'saccession toGATT made theanalysis ofthe
Agreement onSubsidies andCountervailing Measures itcame totheconclusion thatanumber of
problemssolvedbytheGovernmentalCommissiononImportRegulationneededfurtherdeepanddetailed
work inaccordance withtherules andprinciples oftheAgreement onSubsidies andCountervailing
Measures. Suchanalysis willbetaken intoaccount inelaborating ofUkraine 'sLawonSubsidies and
Domestic Support. Theappropriate changes willbealsomade inthelegislative actswithaviewto
bring theGovernmental Commission 'swork onimport regulation inrespect oftheabove-mentioned
questions toconformity withtherulesandprinciples oftheAgreement onSubsidies andCountervailing
Measures.
Examples ofnon-essential import where theCommission could recommend restrictions:
-tobacco goods;
-alcohol products;
-coal;
-cars;
-luxury goods;
-agricultural products.
Themain criterion fordetermining which goods aretobeincluded onthelistshallbeinjury
caused todomestic producers during theselastyears ofthemarket opening process andimplementation
oftrade freedom.
Similar restrictions shallnotbeapplied togoods which Ukraine canproduce itself ifimport
ofthese goods doesnotcause asubstantial injury tonational producers ofanalogous goods.
Alltheserestrictions shallbeintroduced orchanged onthebasisoftheAgreement onSafeguards
oftheUruguay Round ofmultilateral negotiations, onthebasis iftheAgreement onSubsidies and
Countervailing Measures ofUruguay Round andalsoonthebasisoftheAgreement onInterpretation
ofArticle VIGATT 1994.
Question 33n.
Reply 4:Canyougiveanindication astowhen theforeign tradedatasystem willbeoperational?
Reply 33n.
1. TheMinistry ofStatistics ofUkraine receives Statistics Reports from enterprises andother
export andimport organizations.
Statistics arecollected atthepoint ofchange inownership ofcommodities tosatisfy theneeds
ofthebalance ofpayment ofUkraine. Information onthenumber ofexport andimport transactions
isavailable from theState Customs Committee, which complies statistics onexports animports on
thebasis ofcustoms declarations without taking intoaccount thechange inownership ofgoods.WT/ACC/UKR/5
Page34
2. Theforms "Report ontheExport (andImport) ofGoods" No.8-ZEZ*,which isfiledmonthly,
andthe"Report ontheImport (andExport) ofServices" No.9-ZEZ**,which isfiledquarterly, have
beenusedsince1January 1994forthecompilation ofstatistical dataontheexport andimport ofgoods
andservices.
3. TheStatistics Report forms arefilled byenterprises, organizations andotherentities ofUkraine
thatareengaged inforeign economic operations according totheinstructions concerning thefilling
inofthereports, approved bytheMinistry ofStatistics ofUkraine.
4. Allenterprises, organizations andother entities, engaged inExport andImport operations,
irrespective ofthesystem ofownership andorganizational subordination, arerequired tosubmit reports.
Thestatistical minimum value ofgoods andservices exported andimported hasnotyetbeen
established.
5. Thetrade statistics coverall types ofgoods andservices (without exclusions).
6. Theexporters orimporters ofgoods andservices compile reports onthebasis ofgoods or
services actually exported orimported. Thevalue ofgoods delivered ashumanitarian assistance is
estimated according tocontract prices forsimilar goods andisindicated inthereport inUSDollars,
ifthevalue ofthecontract isnotdetermined inforeign currency. Prices arereviewed onthebasis
ofindicative prices, which areconcluded bytheMinistry ofForeign Economic Relations. TheMinistry
ofStatistics ispreparing aprogram ofdataverification onthebasisoftheaverage world market prices
forparticular goods.
7. Thevalue ofgoods exchange orbarter operations inforeign economic activity iscalculated
according totheinformation provided inthecontract. Thedataissubmitted bytheexporters orimporters
ifthedocument, certifying thatthegoods havepassed through thecustoms border ofUkraine isavailable
andonthebasis ofthecontract (inthecurrency ofthecontract).
8. CIFiscalculated onthebasisofthesubmitted reports asthesumofitems 2and3(where item
2isthevalue inFOBterms, and3isamount ofinsurance andfreight). Thevolumes ofexports are
published inFOBterms, andimports arepublished inCIFterms.
Thedataontrade ingoods andservices received from theoblast department ofstatistics, is
aggregated intheMain Computer Centre oftheMinistry ofStatistics ofUkraine.
Thedatainaggregate form isutilized bygovernment bodies, international organizations,
ministries anddepartments ,scientific andresearch organizations, embassies andrepresentative offices
offoreign countries inUkraine, other clients (firms, enterprises, students andsoon).There are
restrictions ontheutilization oftheaggregated data.
9. Thearithmetical andlogical control ofinformation onexport andimport ofgoods andservices
isconducted bytheMinistry ofStatistics. Theverifications areconducted byrequest ofthevarious
ministries andorganizations ofUkraine, which usetheabove-mentioned information fortheirneeds.
Some preparatory work hasbeenstarted onutilizing dataontradewithtrading partners forcomparison
*ZEZ(Zovnishni Economichni Zviasky) -Ukrainian abbreviation forForeign Economic Relations
(Translator 'sNote)
**ZEZ=Foreign Economic Relations (Translator 'sNote)WT/ACC/UKR/5
Page35
withnational statistics. Thecomparison dataiscomplicated bythefactthattheMinistry ofStatistics
doesnotreceive information ontradeingoods withforeign countries fromtheStateCustoms Committee
ofUkraine andisobliged tocollect dataaccording tothecountries, which areowners ofthegoods
(inorder todraw upthebalance ofpayments) rather thanthecountry oforigin orcountries importing
thegoods.
10. Atthepresent timetheMinistry ofStatistics doesnotproduce theadditional calculation because
there isnoappropriate databasetowork with. There isasurrey ofborder oblasts onforeign trade
being planned fortheendofthecurrent year. Thisiscomplicated bythefactthattheState Customs
Committee ofUkraine doesnotprovide theMinistry ofStatistics withdataonentities participating
inforeign trade andwhich obliges theMinistry toindependently locate above-mentioned entities.
Question 34n.
Reply 7:Arecertain steelproducing entities included inthe"List ofentities notsubject to
privatization"? Ifyes,which ones?
Reply 34n.
TheDecree oftheCabinet ofMinisters ofUkraine No.6-92of31December 1992, approved
aschedule oftheproperty ofpublic enterprises, organizations andtheirstructural subdivisions engaged
inthemain form ofproduction, which maynotbeprivatized.
TheSupreme Rada ofUkraine hasalsoapproved, byResolution No.88of3March 1995,
thescheduleofenterpriseswhichmaynotbeprivatizedduetotheirnationalimportance.Thislistconsists
of6104 enterprises. Twoenterprises which canbeclassified as"steel processing enterprises" are
included inthisschedule:
-Svitlovodsk Hard-Alloy andRefractory Metals Plant (Kirovohrad oblast);
-Dzerzhinsky Steel-rolling Production Association inOdessa.
There arenoparticular restrictions ontheparticipation offoreign investors inprivatization inanyof
theeconomic sectors.
Question 35n.
Reply 10:Does Ukraine intend tofollow thereduction oftariff tozeroforsteelproducts and
inparticular doesitintend toparticipate intheMultilateral Steel Agreement (MSA) discussion?
Reply 35n.
With theaimtoprotect domestic producers ofsteelUkraine doesnotintend toreduce tariffs
forsteelproducts, taking intoaccount thatbycategories 72ofCombined Nomenclature privilege tariff
is5percentandfulltariff is10percent.
Ukraine intends toparticipate intheMultilateral SteelAgreement (MSA) discussion withthe
purpose tooptimize theEUexport quotas forsteelproducts from Ukraine.
Question 36n.
Reply17:The"GovernmentalCommissiononAntidumpingInvestigationsinRelationtoExport
oftheUkrainian-origin Goods" isentrusted withcarrying outinvestigations ofdumping cases. CouldWT/ACC/UKR/5
Page36
youplease giveanindication ofthesectors thathavebeenconcerned untilnowbysuchinvestigations,
andinparticular whether steelproducts havebeenconcerned?
Reply 36n.
TheGovernmental Commission onAntidumping Investigations inRelation toExport ofthe
Ukrainian-origin Goods isentrusted withcarrying outinvestigations ofdumping cases. Untilthepresent
timenoinvestigations were initiated.
TheCommission takespartinantidumping investigations, which areinitiated bytheappropriate
bodies ofother countries (European Union, United States ofAmerica, Canada, Mexico).
Steel istheobject forinvestigation inCanadian andMexican markets.
IntheEUmarket theobject forinvestigation isfertilizers, ferrous metal, non-organic chemistry
products, non-precious metals.
Question 37n.
Reply 28:Weunderstand thatVAT already paidongoods cannot berefunded upon export
orre-export ofthegood. Isitcorrect? Ifso,when doesUkraine intend tointroduce thepossibility
ofrefunds?
Reply 37n.
VAT doesnotapply andwillnotberefunded upon exported orre-exported goods.
Question 38n.
Reply 29:Arecertain steelproducts included intheexemption from VAT?
Reply 38n.
No,certain steelproducts arenotincluded intheexemption from VAT. (VAT compiles
20percent).
Question 39n.
Referring toreplies 30and61,canUkraine confirm thatexcise duties arenowapplied atthe
same rateforbothdomestic andimported goods (asindicated inreply 30)?What arethenewexcise
dutylevels foreachindividual tarifflinewhere thedutyisapplied? Specific information andpractical
examples would beappreciated.
Reply 39n.
Theexcise onimported anddomestic products iscalculated differently inconformity withthe
current legislation ofUkraine. When calculating theamount ofexcise, thetaxed turnover onimported
products isdetermined according tothecustoms value ofproducts, calculated inUkrainian currency
according totheexchange ratesetbytheNational Bank ofUkraine, taking intoaccount thetotalof
taxandcustoms duties. Thetaxed turnover ondomestic products iscalculated onthewhole-sale price
ofproducts, taking intoconsideration theexcise.WT/ACC/UKR/5
Page37
Takingtheabove-mentionedintoaccounttheamountsoftaxonanalogousdomesticandimported
products areapproximately equal, when current ratesofexcise areapplied.
ThenewUkrainian Law"OntheUnification ofExcise DutyRates forImported andDomestic
Products" willbeadopted shortly.
Question 40n.
Reply 50:Quotas andlicences onexport havebeenpreserved forfouritems. Could youplease
indicate thelevelofthequotas andwhether export duties arealsobeing imposed onthese products.
When doesUkraine intend toeliminate these quotas?
Reply 40n.
SeeReply 20n.
Question 41n.
Reply 67:TheLaw"OntheStateProgram ofProtection ofForeign Investments inUkraine"
provides forincentives being granted toenterprises withforeign investments iftheyparticipate ina
high-priority industry ormeet thecriteria established bytheProgram. What arethese criteria, and
inthecaseofsteel, dotheyinclude thereduction oftheexisting capacity insteelproduction?
Reply 41n.
TheState Program ofProtection ofForeign Investments inUkraine inthepartofincentives
beinggrantedtoenterprises,whichparticipateinparticularbranchesofUkraine'seconomy,issuspended
byClause 39ofUkrainian Law"OntheState Budget ofUkraine for1995".
Concerning steelindustry theState Program didnotstipulate granting ofincentives tothe
enterprises taking intoaccount thedecrease orincrease ofproduction.
Question 42n.
Inreplies 83and98,Ukraine states thatinternational ruleshavelegalprimacy overnational
rulesunder itspatent lawanditstrademark law.Canthisclause beusedbyaprivate party todefend
itsinterest before theadministration andthecourts inUkraine? Does thesame ruleexistinrespect
ofcopyright, related rights, geographical indications, industrial designs, topographies orsemiconductor
products andtrade secrets?
Reply 42n.
TheLaws ofUkraine "OntheProtection ofRights toInventions andUtility Models," "On
theProtection ofRights toIndustrial Samples," "OntheProtection ofRights toTrademarks forGoods
andServices," and"OnCopyrights andRelated Rights" contain articles oninternational agreements
according towhich, iftherulesofaninternational agreement towhich Ukraine isparty, differs from
therulesprovided forbythelegislation ofUkraine, therulesoftheinternational agreements shallapply.
Anyperson mayapply theprovisions ofthisarticle todefend hisorherinterests before the
administrative orjudicial bodies ofUkraine.
Theabove-mentioned lawsapply tocopyright andrelated rights andindustrial samples.WT/ACC/UKR/5
Page38
Thepresent legislation ofUkraine doesnotprovide anyprotection forgeographical indications
andlayout designs forintegrated circuits.
There arenolegislative actsconcerning theprotection oftradesecrets, theprovision ofwhich
would fullycomply withtherequirements ofTRIPs (Article 39).
Question 43n.
Reply 110states thatUkraine 'slegislation onindustrial designs complies withtheTRIPs
Agreement andthatnoamendments aretherefore expected. CanUkraine explain howitcomplies with
Article 25para.2 TRIPs concerning special protection fortextile designs, particularly inview that
Article 5para.9 ofUkraine 'scopyright lawexcludes fromprotection works ofapplied artwhich are
"protected byaspecial lawonindustrial property" (seealsoreply 91).
Reply 43n.
InArticle 4,Section 1oftheLawofUkraine "OnCopyright andRelated Rights" awork of
applied artisdefined asawork ofart,including works ofartistic trades, which ishandmade or
industrially manufactured, intended forpractical useorisapplied asanobject ofpractical use.Itis
indicated inArticle 5,thatscientific, literary, andartistic works areprotected bythisLaw, particularly:
...9.applied artworks iftheyarenotprotected byaspecial lawonindustrial property.
According toSection 1,Annex 3totheResolution oftheCabinet ofMinisters ofUkraine of
18November 1994, No.784,"OnMinimum Rates ofRoyalties fortheUsage ofLiterary andArtistic
Works" decorative andapplied artworks include: ceramics, works inwood, horn, bone, stone, works
inglass, metal, plastic, knitted goods, lacework, decorative weaving, cloth, handmade andmachine
made knitted goods, carpets andcarpet works, embroidery, beadwork, haberdashery, toys,ornaments
including jewellery, footwear andclothing designs, wallpaper, oilcloth, weave, ceramic tiles,andartistic
moulding.
According toParagraph 2,Article 6(Conditions forLegal Protection) oftheLawofUkraine
"OntheProtection ofRights toIndustrial Samples":
"2.AnIndustrial Sample canbeaform, sketch, orpainting oranycombination oftheabove,
indicating theexternal design ofanindustrial product which hasbeen developed foraesthetic or
ergonomic purposes."
Thus, ifasample isreproduced industrially, thedesigner ofadrawing oracloth texture can
protect hisorherrights bypatenting theindustrial sample.
Question 44n.
With regard toresponses 23and118,further information isrequested onthecontent of,and
implementation oftheFreeTrade Agreements withRussia andBelarus. DotheAgreements establish
FreeTrade Areas inthesense ofArticle XXIV oftheGATT? How arethese Agreements affected
bythecustoms unions which existbetween Russia, Belarus andKazakhstan ontheonehand, and
Uzbekistan, Kyrgyzstan andKazakhstan ontheother hand? Similar information isalsorequested on
theproposedFreeTradeAgreementwithUzbekistan,whereweunderstandthatnegotiationshaverecently
beenconcluded.WT/ACC/UKR/5
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Reply 44n.
TheFreeTrade Agreement between Ukraine andRussia came intoeffect on21February 1994.
According tothisAgreement theParties donotapply duties oranyequivalent charges ortaxes,
withtheexception ofgoods, towhich thenational legislation onquotas andlicensing aswellasexport
tariff regulations apply.
During theperiod thathaspassed since theAgreement came intoforce, Ukraine andRussia
havesubstantially liberalized theirlegislation asfarastheforeign trade isconcerned.
Russia hasabolished non-tariff export regulations andinUkraine there areonlythree groups
ofgoods subject toquotas andlicensing.
RussiahasnotyetabolisheddutyonexporttoUkrainebuttheAgreementontheImplementation
ofFreeTrade signed on8February 1995 between theGovernment ofUkraine andtheGovernment
ofRussian Federation, provides fortheabolition ofexceptions which existatthepresent time, instages
(quotas andlicensing onthepartofUkraine andtariff export regulation onthepartofRussia).
Neither party applies import duties togoods produced ororiginating fromtheterritory ofthe
other Party.
Ingeneral,theFreeTradeZone,establishedwithinthecustomsterritoriesofUkraineandRussia,
isincompliance withtheprovisions ofArticle XXIV ofGATT.
AsfarastheAgreement onFreeTrade between Ukraine andBelarus isconcerned ithasnot
come intoeffect since ithasnotbeenratified bythelegislative organs ofbothParties.
TheAgreement onEstablishing theRussia-Belarus-Kazakhstan Customs Union hasnotbeen
ratified byanyMember tothisAgreement.
UponthisAgreementcomingintoeffectandbeingimplemented,thenegotiationprocessbetween
Ukraine, ontheonehand, andtheCustoms Union, ontheother hand, ontheAgreement onFreeTrade
willcommence andtheAgreement withRussia willbeannulled.
Uzbekistan, Kirgizstan andKazakhstan havesigned anAgreement onEstablishing anEconomic
Union, which foresees theestablishment instages ofaFreeTrade Zone, Customs Union etc.Sofar
ithasdealtonlywiththeimplementation ofthefirststageoffreetrade. Therefore therearenoobstacles
forfreetrade between Ukraine andUzbekistan atthepresent time.
Intergovernmental agreements onfreetrade between theGovernment ofUkraine andthe
governmentsoftheRepublicsofUzbekistan,Kazakhstanweresignedon29December1994,inTashkent
andon17September 1994 inAlma-Ata respectively.
These agreements constitute along-term strategic course inthepromotion oftradeandeconomic
relations between Ukraine andtheRepublics ofUzbekistan andKazakhstan. Their foundation waslaid
bytheMultilateral Agreement onEstablishing FreeTrade Zone, which wassigned bytheHeads of
theState ofCIScountries.
Inaccordance withUkrainian legislative procedures theabove-mentioned agreements aresubject
toratification bytheSupreme Rada ofUkraine.WT/ACC/UKR/5
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TheDepartment ofTerritorial Economic Relations withCentral Asian countries andthe
Transcaucasus hasprepared andsubmitted thedocuments (explanatory notes andtheletters of
concordance withrelevant Ukrainian ministries anddepartments) concerning further ratification of
theAgreement onFreeTrade between theGovernment ofUkraine andtheGovernment oftheRepublic
ofUzbekistanandtheAgreementonFreeTradebetweentheGovernmentofUkraineandtheGovernment
oftheRepublic ofKazakhstan, on18January 1995.
Inouropinion thesigning oftheTrilateral Agreement ontheJointCustoms Union between
theRussian Federation, theRepublic ofKazakhstan andtheRepublic ofBelarus, maycause the
introduction ofsupplementary material andchanges totheAgreement onFreeTrade between the
Government ofUkraine andtheGovernment oftheRepublic ofKazakhstan.
Note: TextoftheAgreements onFreeTrade between theGovernment ofUkraine andthe
Governments oftheRepublics ofKazakhstan andUzbekistan areenclosed.
Question 45n.
Reply 145indicates thatstateregulation islimited tosome natural andartificial monopolies.
Weassume thatnatural monopolies arethose concerning thepublic utilities sector. What sectors do
theartificial monopolies cover?
Reply 45n.
Inaccordance withtheCabinet ofMinisters ofUkraine Resolution No.135of22February 1995
"OnProvisions onState Regulation ofPrices/Tariffs Manufacturing Equipment, Consumer Goods,
Works andServices byMonopolies" thefollowing aresubject tostateregulation:
- natural monopolies;
- economic operators from among those included intheListofenterprises thathavea
monopoly position innational orregional markets;
- enterprises which violate therequirements ofUkraine 'sAnti-monopoly legislation by
setting monopolistic ordiscriminatory prices;
- artificial monopolies include enterprises, which havemore than35percentofshare
foraparticular good. Economic operators fromamong those included intheListof
enterprises thathaveamonopoly position innational orregional markets;
- enterprises which violate therequirements ofUkraine 'sAnti-monopoly legislation
bysetting monopolistic ordiscriminatory prices;
- artificial monopolies include enterprises, which havemore than35percentofshare
foraparticular good.
Question 46n.
Reply 150:Please confirm thatthesystem ofprior declaration toprice alterations nolonger
exists foranysector.
Reply 46n.
Weconfirm thatthesystem ofprior declaration toprice alterations nolonger exists forany
sector.WT/ACC/UKR/5
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Question 47n.
Inquestion 189Ukraine isbeing asked todescribe thedevelopment ofitscompetition policy.
Could Ukraine further expand onitsresponse byproviding detailed information onthefollowing: how
theAnti-Monopoly Committee oftheGovernment oftheUkraine functions, whatexperience ithas
gained, howthemost important items ofcompetition were tackled?
Reply 47n.
TheLawprovides fortheestablishment oftheAnti-Monopoly Committee ofUkraine inorder
toimplement government control overadherence toanti-monopoly legislation. Intheearlystages, the
efforts ofthesmall buthard-working staffoftheCommittee, whoImanaged toorganize afterIwas
appointed Chairman on1October 1992, were mainly focused onpreparing thelegislative and
methodological framework, coordinating thework oftheCommittee withother government bodies,
developing andimplementing procedures toimplement theLaw"OnRestricting Monopolies andthe
Prevention ofUnfair Competition inEntrepreneurial Activity." Themainresult wasthedevelopment
ofadraft law"OntheAnti-Monopoly Committee ofUkraine," which defines itsstatus, structure,
authorization, andterms ofreference.
ThisLawwasadopted inFebruary 1993, andbytheendofthatyear, theSupreme Rada of
Ukraine approved themembers oftheCommittee. These developments enabled theCommittee tofully
takeupitsresponsibilities, withwhich ithadbeencharged.
However, intheinitial stages, theworkoftheCommittee tookplaceatatimewhen government
policy toward economic reforms underwent. Thefirstphase drafting anti-monopoly legislation inour
country hasbeencompleted inFebruary 1992withtheadoption oftheLawofUkraine "OnRestricting
Monopolies andthePrevention ofUnfair Competition inEntrepreneurial Activity" bytheSupreme
Rada ofUkraine, which, withnoexaggeration, canberegarded asaminiconstitution forthemarket
economy. Theanti-monopoly legislation itself establishes rules ofbehaviour inthemarket, protects
thebusinessman fromanti-competitive actsofotherparticipants inthemarket, andfacilitates thecreation
ofacompetitive environment inwhich theprinciple roleshould beplayed bytheconsumer.
Inthefirsthalfof1994, administrative methods ofeconomic regulation wereapplied, direct
government regulation became more stringent andwasapplied topricing andlending policy most
particularly. Thevolumes ofstateorders andstatecontracts increased andthedistribution ofgoods
becamemorecentralized.Indirectgovernmentsubsidiesbecamemorewidespread,asdiddirectsubsidies,
grants, softcredits toenterprises andassociations, mostparticularly tothemonopolies. Thiscreated
theconditions formonopolies abusing theirposition inthemarket, forcorruption andforgrowth in
economic crimes. Thepaceofprivatization slowed andthere wasnorealrestructuring ofthesectors
oftheeconomy. Enterprises were losing incentive tocompete andministries lostmomentum in
implementing measures tode-monopolize theeconomy.
Thus, conditions in1994 forcreating acompetitive environment intheeconomy andforthe
Anti-monopoly Committee were, ingeneral, unfavourable.
InOctober thecountry 'sleadership declared thenecessity ofimplementing radical reforms
toprovide realmarket transformations inallsectors oftheeconomy. Thenextsteptowards the
implementation ofthepolicy declared bythePresident ofUkraine, L.Kuchma, involved amore active
roleforthemarket-oriented institutions, including theAnti-monopoly Committee. Thelastthreemonths
were themost active period inthehistory oftheCommittee duetothefactthatthenumber of
declarations, reviews, cases ofanti-monopoly legislation violations andother issues examined bythe
Committee hadconsiderably increased.WT/ACC/UKR/5
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Thespecificnatureoftheeconomicsituationinthecountryandalsoanumberofotherconditions
connected, mostimportantly, withtheestablishing oftheAnti-monopoly Committee andtheneedto
develop innewareas anddirections, created discernable trends initsactivity. Some ofthem havea
more enduring character andwilldevelop further, others areconnected withthespecific activities of
theCommittee in1994.
Among thecharacteristic trends, Iwould liketomention theprevailingly active approach of
theAnti-monopoly Committee, necessitated bythefactthattheUkrainian economy isdominated by
monopolies. Thepassive approach, which consists ofreviewing business activity inthemarket, may
prevail inthework ofanti-monopoly bodies incountries withadeveloped market economy, butin
ourconditions, facilitating thedevelopment ofacompetitive market should beapriority.
Theactive approach hasmanifested itself intheintensified attention oftheCommittee tothe
issues ofthelegislative framework forreforms, stateregulation oftheeconomy, restructuring ofthe
system ofownership, andliberalization offoreign economic activity, thattogether should provide
conditions fortheestablishment ofacompetitive environment. TheCommittee hasattempted toutilize
allpossibilities, including participation ininterdepartmental commissions andother advisory organs,
inorder toinfluence thedevelopment ofanti-monopoly policy.
Aconsiderable number ofreviews toensure theadherence toanti-monopoly legislation were
heldontheinitiative oftheCommittee, which isanother example oftheactive approach taken by
Committee towards theexecution ofitstasks. During thisprocess, procedures forcooperation with
thepublic prosecutor 'sdepartment, thecourts, andother lawenforcement andcontrol bodies were
developed. Iwould liketomention thatthenumber ofreviews initiated bytheCommittee hasincreased
considerably duetotheadoption ofthedecree onliberalization oftheprice determination system by
theGovernment.
Theapplicationoftheanti-monopolylegislation,whichhadonlybeguntobedeveloped,ensuring
adherence tolegislative principles andtransparency. Duetothis,theactivities oftheAnti-monopoly
Committee in1994werecharacterized byapro-active approach torefining thelegislative, normative,
andmethodological framework. Overthecourse ofayear,5draftUkrainian laws, 10draftPresidential
Decrees anddecisions oftheCabinet ofMinisters ofUkraine weredeveloped bytheCommittee and
submitted totheappropriate bodies. Fourteen normative andmethodological documents wereapproved.
Among themost important legislative andnormative actsdeveloped bytheCommittee, are
theUkrainian Presidential Decree "OnMeasures Related tothePrevention ofUnfair Advertising and
ItsElimination," theResolution oftheCabinet ofMinisters ofUkraine "OntheIntroduction of
Procedures toPrevent Monopolies onCommodity Markets," Provisional Rules forInvestigating Cases
ofViolation ofAnti-monopoly legislation, Procedures fordefining Monopoly Enterprises intheMarket,
andalsoother documents which regulate, inparticular, issues relating tothecontrol oftheprivatization
process, theestablishment ofholding companies, thedivision ofenterprises, andtheseparation of
structural subdivisions andsoforth.
TheCommittee continues todirect itsefforts attheimprovement ofanti-monopoly legislation.
ThedraftLaws "OnNatural Monopolies," andtheAnti-monopoly Code ofLegal Procedures arebeing
developed. ThedraftoftheLaw"OnUnfair Competition" hasbeencompleted.
Asaresult oftheadoption oftheappropriate normative acts,in1994, theCommittee began
toinvestigate cases andimplemented anumber ofother measures related totheelimination ofanti-
monopoly legislation violations in1994. Over thecourse ofayear, theCommittee anditsregional
departments reviewed 174cases ofabuse ofmonopoly positions inthemarket, illegal agreements,
unfaircompetition,anddiscriminationagainsteconomicagentsbygovernmentandadministrativebodies.WT/ACC/UKR/5
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Markedly more attention hasbeenpaidtoinforming thepublic about theactivities ofthe
Committee. Inparticular, more than90articles onvarious aspects ofanti-monopoly legislation were
published inthemedia. Thatpromoted theestablishment andstrengthening oftheCommittee 'slinks
withthepublic, producers ofgoods, andwithconsumers. Thisissupported bythefollowing data:
overthecourse ofayear, 461enterprises, fromboththepublic andprivate sectors 340citizens turned
totheCommittee forassistance onissues within itsareaofactivity. More than1500persons received
consultations, explanations, andmethodological assistance from thestaffoftheCommittee.
Theneedtodevelop theeconomic relations ofUkraine withmembers oftheCISaswellas
withtheEuropean countries, determined another characteristic oftheactivity oftheCommittee. There
wereimportant stepstaken towards theestablishment ofinternational cooperation, mostimportantly,
withtheanti-monopoly bodies inneighbouring countries.
Itshould bestressed thatalltheabove-mentioned measures wereimplemented atthesametime
astheestablishment ofthestructural system oftheAnti-monopoly Committee. InMarch andApril,
theregional departments began tobeestablished, andatthepresent timetheyareoperating inalloblasts
andinthecities ofKyiv andSevastopol. Thenumber ofstaffatthecentral office hasreached 149
andin378intheregional departments. Itshould betaken intoaccount thatthese anti-monopoly bodies
inUkraine wereestablished fromtheground up,which should notbecompared withother countries,
where, asarule,anti-monopoly departments havebeenestablished onthebasisofexisting structures,
including theirexperts andtheirassets.
Notwithstandingthedifficultiesduringtheperiodofestablishment,theCommitteedidallpossible,
within theconditions existing in1994, forthefulfilment ofitsprincipal mission. According tothe
LawofUkraine "OntheAnti-monopoly Committee ofUkraine," theyareasfollows:
- theimplementation ofstatecontrol onadherence toanti-monopoly legislation;
- protection ofthelegal interests ofeconomic agents andconsumers through the
application ofmeasures withregard totheprevention oftheviolations ofanti-monopoly
legislation;
- promoting thedevelopment offaircompetition inallsectors oftheeconomy.
Nonetheless, Iwould liketostress, thatinconditions ofatransition period, measures related
totheestablishment ofacompetitive environment cannot belimited tothose included intheterms of
reference oftheCommittee. These measures, described as"theanti-monopoly policy," shallprovide
fortheelimination ofmonopolies intheeconomy (most importantly, through theremoval ofbarriers
tomarketaccessforeconomicagentsandtheeliminationofmonopolystructures),aconsiderableincrease
inthenumber ofeconomic operators, overcoming structural distortions, andanappropriate investment
policy, theelimination ofunjustified privileges tomonopoly associations andanincreased openness
intheeconomy, andsoforth.
AconsiderablepartofthesemeasureshasbeenincludedintheStateProgramforDemonopolizing
theEconomy andDeveloping Competition, approved bytheSupreme Rada ofUkraine in
December 1993. Their implementation shall gradually recover benefits forconsumers through the
restructuring oftheeconomic, financial, andpolitical power ofmonopolies andstructures, which not
onlydominate invarious markets, butinentire industries.
AsdirectedbythePresidentandtheCabinetofMinisters,theAnti-monopolyCommitteefulfilled
anumber offunctions related tothetasks oforganization, execution, andimplementation oftheState
Program fortheDemonopolization oftheEconomy andtheDevelopment ofCompetition. Nonetheless,
itisstressed inthisProgram, thattheimplementation ofdemonopolization policy isnotonlyaconcernWT/ACC/UKR/5
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oftheAnti-monopoly Committee, butaconcern ofallgovernment bodies. Creating acompetitive
environment isequally apriority forthestateintheeconomy aswellasinpolitics, since allthese are
guarantees ofdemocratic freedom.
Therefore, submitting thisreport, ourgoalwasnotonlytosummarize ourachievements but
alsotodraw theattention ofthePeople 'sDeputies, ofmembers oftheGovernment ofUkraine, and
ofthepublic ingeneral totheproblems ofanti-monopoly policy andtheneedtoimplement itinorder
toaccelerate thereform process.
During thediscussion ofthereport atCommittee meetings, allmembers wereunanimous in
agreeing thatourwork atthepresent timeisfarfromcomplete. Weunderstand thatmany more efforts
should bemade inorder tobecompletely responsive totherequirements ofreform andpublic interest.
Forthisreason weareverygrateful toourcolleagues from other government bodies, scientific
institutions, public organizations, andPeople 'sDeputies fortheunderstanding ofourproblems, support,
andcritical remarks.
From ourpart,weareready tocooperate withallwhoareinterested inimplementing real
reforms, notthose which merely existonpaper.
Promoting Development ofCompetition
Under theterms ofreference andauthorization oftheAnti-monopoly Committee provided for
inthelegislation ofUkraine, theCommittee shall implement tasks withregard topromoting the
development offaircompetition through:
- thedevelopment andpresentation ofproposals andrecommendations tostateadministrative
bodies concerning measures aimed atthedevelopment ofbusiness activity andcompetition.
- coordinating thedecisions ofthecentral administrative bodies, oflocalauthorities andlocal
andregional government bodies onthedemonopolization oftheeconomy, development of
business activity andofcompetition, ofprivatization, andcorporatization;
- providing reports ondraftlaws, Presidential decrees, decisions oftheGovernment ofUkraine,
theadoption ofwhich canaffect thecompetitive environment;
- participation inthedevelopment andimplementation ofmeasures withregard tothereform
process anddemonopolization ofsectors oftheeconomy andinthedevelopment ofthe
appropriate national, regional, andsector programs.
While fulfilling these tasks, in1994, theCommittee participated inthedevelopment of
government programs tosupport business development, theprocess ofprivatization, foreign investment
incentives,andalsoanumberofprogramstodevelopproductionofthemostimportanttypesofproducts.
Theproposals oftheCommittee were included intheabove-mentioned documents. TheCommittee
anditsregional departments received andprocessed 24programs developed forthevarious sectors
oftheeconomy and17regional programs formarket transformation. Asaresult ofthis,measures
onprivatization, restructuring ofvarious sectors oftheeconomy andregions, were elaborated and
made specific. In1995, theCommittee willcontinue towork onrefining theseprograms since, inmany
ofthese cases, theprogram developers could notavoid paying more attention toform thancontent.
Inviewofthisfact,thePrograms wereapproved bytheCommittee onlyinthefirstquarter of1995.WT/ACC/UKR/5
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Incarrying outactivities aimed atsupporting andpromoting thedevelopment ofcompetition,
theAnti-Monopoly Committee relies, firstly, ontheanalysis ofproduct markets. Thisisasignificant
aspect oftheCommittee 'swork.
Intheprocess ofanalysis thestaffoftheCommittee:
- assess thequality, price, andother characteristics oftheproduct, aswellastheeaseof
substitution from theconsumer 'spoint ofview;
- define products andgeographical boundaries, anddetermine thestructure ofthemarket, that
is,volume ofturnover, thenumber ofcompetitors active inthemarket andtheirmarket share;
- analyze factors thatdetermine market access fortheentrepreneur, andthepresence ofbarriers
thathinder freeaccess tothismarket forneweconomic agents;
- determine themarket share ofeachcompetitor andreveal thedominant associations which
haveamonopoly position inthemarket;
- evaluate theappropriateness ofandopportunities forimplementing measures directed at
demonopolizing themarket anddeveloping competition inthatmarket.
State statistics reports areusedformarket analysis aswellasdataonthevolume ofexport
andimport operations, andinformation which theCommittee receives directly from producers and
consumers.
In1994, together withtheMinistry ofStatistics, 1278categories ofindustrially produced goods,
comprised of15,000 items, weremonitored. Themarkets for700categories ofgoods (54.8 percent
ofthenumber observed) wererevealed tobedominated byamonopoly, toagreater orlesser degree.
AswecanseefromthetableinAnnex 2,themarkets mostdominated byamonopoly arethemachine-
building industry (97.7 percent), themedical industry (75.7 percent), thechemical andoilprocessing
industries (68.9 percent) andmetallurgy (44.9 percent). Based ontheresults ofresearch, theAnti-
Monopoly Committee approved theSchedule ofEnterprises thatenjoy aposition ofmonopoly inthose
markets. Itincludes industrial enterprises, whose market share onthenational market fortheappropriate
goods comprise more than35percent.
Theexistence ofasignificant number ofdifferent typesofassociations ofstateenterprises (more
than1000) isanobstacle tothedevelopment ofcompetition (Table 4,Annex 2).These associations
areparticularly concentrated inthemachine-building, metallurgy, andfoodindustries. Duetotheir
financial andorganizational leverage theyare,infact,monopolies.
TheCommittee devoted significant attention totheanalysis ofthenegative impact ofmonopoly
associations oncompetition inUkraine. Thefounding documents oftheassociations were analyzed
andmeasuresrelatedtoamendingthesedocumentsinordertoensurecompliancewithcurrentlegislation,
were implemented. Proposals onliquidating orreorganizing theassociations were submitted tothe
central authorities.
Onthebasisofgeneralizedresultsofthereviews,theCommitteeproposedapackageofmeasures
toeliminate monopolies inthevarious sectors andtheirnegative impact. These measures, inparticular,
provide for:there-registration ofassociations, which wereestablished without theconsent oftheAnti-
Monopoly Committee, amendments totheprocedures forthefulfilment ofstatecontracts andtopayment
procedures andprocedures forgranting statesubsidies, andcredits toeconomic agents, avoiding theWT/ACC/UKR/5
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receipt ofthese credits bytheassociations; restricting thecorporatization andprivatization ofentire
associations asaunitwithout sufficient grounds forsuchactions.
Analyzing thesituation inthemarkets andparticipation inthecommissions fortheanalysis
ofsectors oftheeconomy andinthedevelopment ofprograms formarket transformation enabled the
Committee topromote thedevelopment ofacompetitive environment invarious sectors oftheeconomy.
Electricity
Aconsiderable number ofenterprises inthissector oftheeconomy belong tothecategory of
natural monopolies. Duetotechnical restrictions andthepotential lossofefficiency, itisdifficult to
introduce competition tothissector. Theinadequate technical condition ofthefacilities, theneedto
locate sources ofsignificant amounts ofinvestment, thefactthatthesector, aswellasitsgovernment
regulatory system havenotbeenadapted toworking inmarket reform conditions, make necessary a
profound reorganization ofthissector oftheeconomy atthesame timeaschanges tothestructure
ofmanagement inthissector.
Thefundamental issue inthese reforms liesintheseparation ofthenatural monopoly, that
is,themain linesofpower supply, onthebasis ofwhich astateenergy company shallbeestablished
fromtheproducers oftheelectricity, whoarenotonlycapable ofoperating, butshould beoperating
inacompetitive environment. Thecreation ofseveral (4or5)jointstock power generation companies
onthebasisoflargecapacity hydroelectric power plants willfacilitate thecreation ofawholesale electric
power market, inwhich thereareseveral market participants. Regional power supply companies shall
alsobeestablished. Anindependent review body isbeing established thatshallsupervise licensing,
theconclusion ofcontracts, theprice-setting system, andadherence toquality standards. Inthisway,
theMinistry ofEnergy shallberelieved ofitseconomic functions andshallbere-established asa
government body thatwilldevelop statepolicy andimplement strategies foreconomic development
ofthissector.
TheOilandGasIndustry
Theoilandgasindustry isapowerful sector oftheeconomy which comprises morthan350
enterprises andassociations, where thetotalnumber ofemployees isapproximately 300,000 people.
Theenterprises inthissector aredistinguished bytheirlarge size,thevalue oftheirfixed assets, and
large number ofmarkets inwhich theyoperate (approximately 1,500).
Thissector includes enterprises which dominate onthemarkets (oilprocessing enterprises and
oilproducts supply), enterprises which operate inacomparatively competitive environment (machine-
building enterprises, andscientific andresearch organizations), aswellasnatural monopolies (oiland
gaspipelines, oilproduct pipelines andgassupply).
Theprocessofprivatization,corporatization,andothermarketreformsnecessitatedfundamental
restructuring inthesector. TheAnti-Monopoly Committee proposed theestablishment ofanoligopoly
inthissector through thecreation oftheseveral (3or4)competing vertically-integrated companies.
However,theGovernmentsupportedtheproposaloftheStateCommissiononOilandGaswhichentailed
theamalgamation ofallenterprises inthisgroup intoasingle national jointstock holding company
where asubstantial partofcompany shares could befreely traded andapartcould bedesignated for
thepayment ofdebts forenergy.
Atthesametime, in1994, various processes weretaking placeinthesector, which, asawhole,
facilitated theestablishment ofacompetitive environment. TheAnti-Monopoly Committee supported
theestablishment oftheindependent jointstock companies: "Ukrgasprom," "Ukrnafta," "Odessa OilWT/ACC/UKR/5
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Processing Plant," "Kremenchuk Organic Synthesis," "Naftagasbud," andalsotherestructuring of
"Ukrnaftoprodukt," asaresult ofwhich, 9regional enterprises wereestablished, byseparation from
thelatter.
Machine-building
Themachine-building industry isoneofthemostpowerful complexes intheindustrial sector
andiscomprised ofmore than3,800 enterprises where 1,500 enterprises maybeclassed aslarge and
medium-size (from 1,500 toseveral tensofthousands ofemployees). Asignificant number ofthese
enterprises werepartofthemilitary industrial complex oftheformer USSR. Adramatic decrease in
thenumber oforders forspecialized machinery hasworsened theproblem ofconversion and
diversification andtheneedtopreserve thescientific, technical, andindustrial expertise, which has
beenaccumulated inthissector, requires afundamental restructuring ofenterprises.
Themachine-buildingindustryisoneofthemostmonopolizedsectorsofindustry.Theenterprises
ofthisindustry areabsolute monopolies ordominate themarkets formore than300types ofproducts.
Hence, there isawhole range ofissues inthissector thatneedtobeaddressed withanappropriate
integrated approach. From thepoint ofviewoftheAnti-monopoly Committee, thissector hasgood
potential forthedevelopment ofacompetitive environment andmarkets shared byanumber of
enterprises. Thispotential should berealised through reorienting production, actively encouraging
investment (including foreign investment), andmodern technologies, establishing market-oriented
management structures such asfinancial-industrial groups andindustrial andinvestment holding
companies.
Steps havebeentaken towards theimplementation ofsuchmeasures. With theassistance of
theAnti-monopoly Committee, theMinistry ofMachine-building, theMilitary Industrial Complex
andConversion hasdeveloped ablueprint fortherestructuring ofthissector andforanumber ofthe
largest enterprises suchasAutoZAZ, Motor-Sich, andKyiv Aviation Association.
TheChemical Industry
Thisbranchischaracterizedbyitsrelativelysmallnumberofenterprisesandheavyconcentration
ofproduction. Interms ofbeing dominated bymonopolies, itissecond onlytothemachine-building
andmedicalindustries.Theenterprisesofthissectoraremonopoliesonthenationalmarketfor124types
ofproducts. Nonetheless, theprofitability andcompetitiveness ofmany typesofproducts havedecreased
duetotheincrease inprices forimported rawmaterials andtheconsiderable costofmaintaining
depreciated andobsolete equipment, which inmany enterprises, hasbeen depreciated by60to
70percent.
Theproblems ofdemonopolizing thechemical industry areinterconnected withtheproblems
ofinvestment inthisindustry, increasing theeconomic independence ofenterprises, andeliminating
joint stock companies, which emerged from theformer production associations (Ukrlakofarba,
Ukrpobutkhim) andwhich created obstacles inthedevelopment ofcompetition. Inestablishing a
competitive environment, thereduction orelimination ofbarriers tomarket access fornewenterprises
maybecrucial.
TheFood Industry
Thissectoroftheeconomyhasagoodpotentialforthedevelopmentofacompetitiveenvironment
withallitsadvantages. Themainproblem indemonopolizing industry, istheexistence ofalargenumber
ofassociations, bothonthenational andregional levels. Ananalysis ofthefounding charters andtheWT/ACC/UKR/5
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activityofanumberofassociationsinthemeat,dairy,sugar,alcohol,andcannedfruitsectorsofindustry
hasindicated thatitispossible todefine theseassociations asbeing voluntary associations onlyinform.
Theoverwhelming number oftheseassociations aremonopolies innational orregional markets.
Asignificant number ofenterprises arealsomonopolies invarious localmarkets (dairy plants, meat
processing enterprises). Thispoints tothenecessity ofeliminating theorganizational structures of
monopolies oratleast, eliminating elements ofmonopoly inthecentralised administration. The
decentralisation ofthesector, promotion ofprivate business development, anincrease inthenumber
ofsmall processing plants foragricultural products willbeofgreat importance forthedevelopment
ofcompetition.
Transport
Thetransport sector isacomplicated technological, technical, andorganizational complex,
whichincludesnaturalmonopoliesandenterpriseswhichshouldbefunctioninginamarketenvironment.
Today inthissector, stateenterprises dominate, anditisonlyintheareaofautomobile transport that
private enterprises compete withstateenterprises.
TheMinistry ofTransport, withtheassistance oftheAnti-Monopoly Committee hasdeveloped
draftnormative actsconcerning thedevelopment oftransport systems, andthegeneral blueprint for
reformhasbeenproposed.Thelicensingsystemforvarioustypesoftransportserviceshasbeenanalyzed.
Themodifications introduced allowed theremoval ofbarriers which hadcreated obstacles tomarket
access forbusinesses.
Intheautomobile transport sector, thenational automobile transport association wasdissolved,
inplaceofwhich,25regionalautomobiletransportassociationsandoneinternationaltransportassociation
werecreated. TheStateProperty Fund, together withtheAnti-Monopoly Committee andtheUSAgency
forInternational Development areworking onapilotproject ofdemonopolizing andprivatizing the
Odessa Territorial Automobile Transport Association, byseparating itintotheindependent enterprises
andintroducing acompetitive licensing system forpassenger routes. Similar projects havebeeninitiated
in12other oblasts ofUkraine.
Ablueprint forrestructuring railways isbeing developed, based ontheideaofestablishing
astateholdingcompanywhichwillcover6railwaysystems.Enterpriseswhicharenotdirectlydependent
ontherailways willbemade intocorporations andprivatized.
Intheaviation sector, aviation detachments havebeenseparated fromairport facilities. These
measures allowed theprivatization ofvarious aviation enterprises totakeplace andthecreation ofa
number ofnewcompeting companies withaprivate ormixed system ofownership.
Communications
Communications isatypical sector oftheeconomy, inwhich itisdifficult tocreate acompetitive
environment, duetothepresence ofnatural monopolies andlimited technical opportunities. Thelack
ofcompetition inthissector should becompensated forbytheprovision ofappropriate legislation,
which would create theappropriate framework ofgovernment regulation andtransparency requirements
forthesector.
TheAnti-Monopoly Committee hasputforward itsconclusions andproposals regarding the
draftLaw"OnCommunications" developed bytheMinistry ofCommunications, which iftaken into
account, could contribute tosome extent toresolving these issues.WT/ACC/UKR/5
Page49
Theseparation ofelectronic communications enterprises from thePostOffice willfacilitate
thedemonopolization ofthisbranch. Thismeasure hasalready beenimplemented bytheMinistry of
Communications incooperation withtheAnti-Monopoly Committee. Itwillexclude cross-subsidizing,
andfacilitate thebalancing ofsupply anddemand, determine therealvalue ofservices, andintheend
result, promote investment, andfacilitate theentry ofnewbusinesses intothemarket.
Other measures implemented inthissector bytheCommittee arerelated tobusiness licensing
issues intheareofcommunication services.
Construction
Thissector ischaracterized byhaving agreatpotential fordeveloping competition. Thesector
hasapproximately 2500enterprises which, however, cannot befullyrealized duetothemany monopoly
organizations established bydecision oftheGovernment whose functions areadministrating theassets
ofsubordinate enterprises andorganisations. Forinstance, thecorporation Ukrbud, which consists
of902enterprises, isengaged in35different types ofconstruction activity, andin10ofthose, occupies
amonopoly position inthemarket, withitsmarket share being from 90to100percent.
TheAnti-MonopolyCommitteeconsidersitfeasibletodemonopolizethissectorbydecentralizing
theadministrativesystemandseparatingamaximumnumberofenterprisesfromtheassociationsthrough
privatization andcorporatization while maintaining asufficient number ofthemtocarry outlargescale
construction projects andtocompete oninternational markets. Thismaybeimplemented through the
establishment ofanumber ofholding companies.
Trade
Acharacteristic ofthissector istherapidly increasing number ofeconomic agents, which will
facilitate thedevelopment ofcompetition. Atthesame time, asaresult ofmeasures taken during the
commercialization ofenterprises, monopoly structures, thatdeveloped fromformer tradeorganizations
andother associations, continue toexistinthissector.
Ingeneral, there isarelatively highlevelofcompetition inthissector. TheCommittee has
directly contributed totheimprovement ofconditions forthedevelopment ofcompetition totakeplace,
participating intheimprovement ofthelicensing system fortrade, implementing measures inorder
toprevent theestablishment ofmonopoly structures andprevent unfair competition; aswellasindirectly,
byeliminating barriers thatobstruct themovement ofgoods tothemarket andthefreemovement of
products toconsumers. Acompetitive environment fortradewilltrulybeestablished onceprivatization
ofsmall-scale enterprises hasbeenachieved. TheAnti-Monopoly Committee shallplayanactive role
insmall-scale privatization withtheaimofpreventing theestablishing ofprivately-owned monopolies
inthissector.
TheFinancial Market
Thefinancial market isatanearly stage ofdevelopment. Thesystem offinancial institutions
suchasinvestment funds andcompanies, trustcompanies, banks, insurance companies, andstock
exchanges, isnotyetsufficiently developed. Themaingoalofthissector istopromote theestablishment
ofanumber offinancial institutions, which willbesufficient tocreate acompetitive environment. It
isalsonecessary toaccelerate thedevelopment ofblueprints forthefinancial system, since, dueto
inadequacies ofthelegislation andregulations, theremaybenegative trends appearing withanincrease
inmass privatization andtheliberalization ofprices.WT/ACC/UKR/5
Page50
Taking thisintoaccount, theAnti-Monopoly Committee submitted proposals totheCabinet
ofMinistersofUkraine,theMinistryofFinance,andotherbodies,ontheimprovementanddevelopment
offinancialmarkets.TheseproposalswereacteduponinordertoestablishtheCommissiononSecurities,
inwhich arepresentative oftheAnti-Monopoly Committee isparticipating, andtheyweretaken into
account inthedrafting oftheLaw"OnState Regulation oftheSecurities Market."
InaccordancewiththeproposalsoftheCommittee,thecontrolprocedurestopreventmonopolies
onthefinancial andcommodities markets wereprovided forinthedecrees ofthePresident ofUkraine
oninvestment funds andholding companies andalsointheblueprint fortheestablishment ofthefinancial
market, which wasapproved bytheCommission onSecurities andsubmitted tothePresident ofUkraine
forconsideration.
TheCommittee hassetupcontrol procedures ontheacquisition ofshares, stocks, andother
assets byinvestment funds andcompanies andopposed theUkrainian Stock Exchange initsefforts
tomonopolize themarket.
TheCommitteehasbeenimplementingmeasuresdirectedatthepreventionofunfaircompetition
among agents inthefinancial market.
Preventing Market Monopolies
Whenever economic agents areestablished, reorganized, merged, oracquired (henceforth the
above-mentioned reorganization willbereferred toasmergers) thestructure ofthemarket changes,
andunder certain conditions theabove-mentioned changes maycreate market monopolies.
Forthisreason,theAnti-MonopolyCommitteeiscarefullyanalyzingtheresultsofthesemergers
andthepotential consequences forthecompetitive environment, taking intoaccount bothitspositive
andnegative aspects. Concentrating capital, financial, andhuman resources maycontribute totheir
more efficient utilization, lowering thecostsofproduction. However, atthesame time, mergers may
decrease competition, andasaresult, negatively impact onconsumers, increasing prices, restricting
choices forconsumers, andlowering thequality ofproducts. Inthiscase, onlysuppliers orproducers
ofgoods benefit, tothedetriment ofconsumers.
TheaimofAnti-MonopolyCommitteecontrolofmergersistopreventthenegativeconsequences
entailed byrestriction ofcompetition. However, ifthedisadvantages areadequately compensated for
bytheeconomic advantages toconsumers, theCommittee usually approves mergers.
According toArticle 14oftheLaw"OntheRestriction ofMonopolies andPrevention ofUnfair
Competition inBusiness Activity," theCommittee exercises acontrol function overtheestablishment
andreorganization ofenterprises, associations,a andeconomic organizations.
TheCommittee hasapproved thefounding charters andstructures ofthe32associations that
arecomprised ofapproximately 700enterprises. Therequirements oftheCommittee were fulfilled
ineachcase.
TheCommittee hasdeclined toapprove theestablishment ofUkrsudrem, anassociation of
stateenterprises. Thegrounds forthiswasastudy ofthemarket forshiprepairs, thecooperative and
technological relations between shipyards, thedegree ofcompliance offounding charters withlegislation
andalsoindependent expert opinion, according towhich, theestablishing ofsuchanassociation would
create amonopoly inshiprepairs.WT/ACC/UKR/5
Page51
TheCommittee hasconsidered 8applications fortheacquisition ofenterprises which operate
in30markets. Taking intoaccount thenecessity tomaintain thescientific andtechnical potential,
approval wasgiven totheSpecialized Project Design andTechnological Centre (SPDTC) orelectric
engines Ukrelectromash inKharkiv tomerge withtheKharkiv Electronics Plant. Similar decisions
were adopted ontheSpecialized Project andDesign Centre "Temp" andoneofitsenterprises in
Cherkassy, ontheSPDTC forAutomatization, andtheenterprise Promprylad inIvano-Frankivsk.
Thecharters of4jointventures, active in30markets were examined andapproved.
WiththeadoptionoftheDecreeofthePresidentofUkraine"OnHoldingCompaniesEstablished
during theProcess ofPrivatization andCorporatization" theAnti-Monopoly Committee hasconsidered
therequests ofministries, organizations, andeconomic agents, concerning theestablishment ofholding
companies onthebasis oflegislation andregulations. Proposals fortheestablishment of15holding
companies havebeenconsidered, andproposals fortheestablishment of7holding companies have
beenapproved bytheCommittee.
Oneshould mention, thatcontrol ofmergers isnotbeing implemented effectively enough due
tothefactthatthelegislative andregulatory framework hasnotbeensufficiently developed. Withthe
aimofimproving theeffectiveness ofcontrol procedures, theCabinet ofMinisters ofUkraine adopted
aDecree "OntheImplementation ofProcedures toPrevent Monopolies ontheCommodities Market"
after itwassubmitted bytheCommittee. Theimplementation oftheDecree willfacilitate the
establishment ofaclearly-defined andreliable system ofcontrol. Regulations developed onthebasis
oftheDecree haveestablished theminimum sizeofenterprises which would require theapproval of
theCommittee inorder tomerge. Thismeasure should notrestrict thefreedom ofbusiness activity
incases where theeffect ofmergers onthecompetitive environment isinsignificant.
Thefollowing answers donotcorrelate tothequestions tabled bytheEU:260,261,265,266,
268,273,274,282,287,298,309,310,313,315,316,318.Fullresponses tothese questions are
requested.
Question 260.
Howdoesthegovernment ofUkraine intend tomake the"substantial cutsinnon-critical imports
inorder toreduce thetrade deficit below 5percentofGDP"?
Reply 260.
TheGovernment hasintentions tosignificantly decrease imports toUkraine bymeans oftariff
regulations,i.e.forimportswhichisconsideredtobe"essential"(energyresources,technicalequipment
forinstallation andremodelling ofproduction lines, etc.)-tosetuplower tariffs. Fortheproducts,
which aremanufactured inUkraine inasufficient quantity -higher tariffs willbeintroduced. Along
withanymeasures, related tothemarket protection, willbetaken onlyonthebaseofthecorresponding
Agreements ofUruguay Round (Agreement onProtection Measures, Anti-Dumping Code).
Question 261.
Istheattraction ofprivate investment limited inanyway?Areanysectors excluded fromforeign
investment?WT/ACC/UKR/5
Page52
Reply 261.
Attraction ofprivate investments toUkraine isunlimited. There isnosectors oftheeconomy,
which would beexcluded orinaccessible forforeign investors.
Question 265.
Howdoesthesystem ofprior declaration ofprice alterations work andtowhatsectors does
itapply?
Reply 265.
SeeReply 46n.
Question 266.
Itseems asystem ofadministrative controlling ofprices isbeing setup.Please explain more
specifically howthissystem istobeimplemented, inparticular howthemark-up willbelimited to
55percentofthemanufacturer 'sprice regardless oftheprice ofagood. Please elaborate onthe
influence ofprogressive taxation onprices restriction.
Reply 266.
Oneofthemajor keyPrograms ofeconomical reforms istheoneonpriceliberalization, which
maintains thattheprices forproducts, works andservices provided bynatural andalsobysome artificial
monopolies, aresubject tostateregulation, and,inparticular, -gasandcoalsupply, electric energy,
water supply, public transportation, communication andalsoretail prices forbread products, baby
food. TheGovernment determines tariffs fortheseproducts andcontrols marginal mark-ups. Atpresent
11percentofprices areregulated bythestate, therest-isregulated bymarket.
Question 268.
Although theattraction offoreign investment isapartofgovernment policy, itappears that
theprocess ofcorporatisation, initsfirststage, doesnotencourage foreign ownership ofshares. Are
anypolicy changes expected toencourage greater foreign participation intheprivatization process?
Reply 268.
After theprocess ofprivatisation, restriction ofGovernment controls andstatesector share
ineconomy iscompleted, therewillbeapossibility forgreater foreign participation intheprivatisation
process.
Nowadays allobstacles inforeign investment ’sparticipation intheprivatization areremoved.
ThelastDecree ofthePresident ofUkraine “OnthePrivatization AndLease OfthePlots OfLand
OftheNon-Agricultural Application ForCarrying OuttheEntrepreneurial Activity ”of12July1992
No.608/95 grants therighttoprivatization ofnotonlytheobjects butthelandwhere theyaresituated.
Question 273.
Howcananti-dumping dutybeimposed ontheexport ofgoods? Canthisbedoneautonomously
oronlyaftertheinitiation ofanti-dumping proceedings inanother importing country? Issuchaduty
imposed onanMFN basis oronlyonexports destined aspecific import market?WT/ACC/UKR/5
Page53
Reply 273.
Theprocedure ofanti-dumping tariff regulation intherelation ofexports isnotdeveloped in
theframes ofUkrainian legislature. TheGovernment ofUkraine hasnodefinite plans toelaborate
thismechanism inthenearest future.
Question 274.
Please provide more details onthelevying of"seasonal customs taxes". What istheeconomic
rationale behind them.
Reply 274.
SeeReply 24n.
Question 282.
Istheterm "considerable processing" thesame asthecriterium ofthe"last substantial
transformation" towhich theFinal Actrefers?
Reply 282.
Actually, theterm"considerable processing" isthesameasthecriterium ofthe"lastsubstantial
transformation" towhich theFinal Actrefers.
Question 287.
Thelistofproducts subject toexport licensing andquota'sin1994isextensive. Please provide
atHS6digitlevellatest listofproducts which areinvolved, andtheapplicable quota foreachproduct.
Isthere atime-table tophase-out these restrictions?
Reply 287.
SeeReply 20n.
Question 298.
Forwhich products does state trading exist? Please describe extensively what trading
organizations play, andhowtheyoperate.
Reply 298.
Thesystem oftheMinistry ofAgriculture andFood includes thefollowing statetrading
organisations:
Ukrtekhagroservis exports -agricultural products
imports -agricultural equipment -70%
-fuelandlubricants -20%
Ukrprodresursyrovyna exports -dairy andmeatproducts
imports -material and technical supplies fortheprocessing
industry -30%WT/ACC/UKR/5
Page54
Ukragrokhim exports -agricultural products
imports -herbicides andpesticides -70%
Ninety-one industrial complexes wholesaling andretailing fruitandvegetables:
exports -potatoes
-fruit
-vegetables
imports -fruit-5%
-vegetables
Stateorganizations ofagro-industrial complex donotspecialize inimport offoodcommodities.
Import ofthefoodcommodities iscarried outbythetradeenterprises which werealmost allprivatized
during theperiod ofsmall privatization.
Regarding theMinistry ofIndustry (here andafter"Minid") ofUkraine inaccordance with
thegeneral status statetrading enterprises which aresubordinate toitareestablished withthepurpose
to:
- provide theMinind enterprises withimported rawmaterials, equipment andspare partsatthe
expense oftheimports (works andservices);
- implementationofthemissionsdeterminedbystateordersrelatingtonationalexportspromotion;
State trading enterprises inaccordance withthepurposes oftheirestablishment aredesignated:
- tocarryoutbusinessactivitieswiththeotherenterprisesastoexportofworks,services,imports,
re-export andexchange (barter operations) ofproducts;
- tosupport incertain stateinstitutions general andtemporary licences andquotas forexport
andimport ofgoods aswellastheirdistribution incooperation withMinind between certain
participants offoreign economic activities ofMinind;
- toimplement incooperation withother enterprises andbodies ofMinind onbehalf ofthe
Ministry theplans forstateorders concerning theexports ofproducts ofMinind.
Along with, thestatetrading entities oftheMinistry ofIndustry ofUkraine provide asetof
services presupposing anactivization andstimulation ofbothdomestic andforeign trade activities of
thenational enterprises aswellastheirpromotion tothemarket nationally andinternationally. The
listofthestatetrading entities established within theframes ofMinistry ofIndustry hadbeenprovided
before.
Asanexample: TheResolution oftheCabinet ofMinisters No.140of2April 1994, sets
forththelimits ofquotas forexport ofthegoods under thestatecontract for1994. Within these limits
themajor share belongs totheproducts ofmetallurgy shipped viatheUKRZOVNISHPROM foreign
trade association. ThisResolution introduces, also,some amendments tothegeneral procedure ofthe
export ofgoods under statecontracts, inparticular, those regarding thepriority oftheproduction and
shipment oftheproducts tobecarried outunder statecontracts. Italsoexempts suchgoods from
compulsoryadvancepaymentsforcostsofrawmaterials,powerconsumption,andtransportationservices.WT/ACC/UKR/5
Page55
TheResolution oftheCabinet ofMinisters ofUkraine ofApril 1994, No.140, "OnProvision
ofExport ofGoods under theState Contract for1994" specifies thevolume ofgoods tobeexported
under thestatecontract.
Products Unitof
measurementExport volume %
Total State
Ferrous metallurgy thsnd t 20674 7220 39.4
Wastes offerrous metals ditto 405 150 37
Non-ferrous metals ditto 318.37 80 25
Chemical products ditto 3805.2 2091 54.9
Chemical products mildl 28.7 2.5 8.7
Salt thsnd t 3700 30 0.8
Note: Thisexport mechanism isbeing terminated withfurther liberalization offoreign trade. And
asanexample, theUKRZOVNISHTORG (foreign trade) Concern which hadbeenestablished bythe
Cabinet ofMinisters inMay1994wasterminated bytheDecree ofthePresident ofUkraine No.412/94
of27July1994, which rescinded Resolution No.292oftheCabinet ofMinisters ofMay1994.
Question 309.
Isprocurement byutilities subject toanyregulation?
Reply 309.
Atpresent thesuppliers ofthementioned types ofservices aremonopolies. Inthiscaseprices
forthese services arestate-regulated inaccordance withtheUkrainian lawsystem. Incases of
privatization aswellasofestablishing private enterprises providing prices forthese services willbe
market-oriented.
Question 310.
Pleasegivesomeinformationregardingprocurementrulesandpracticesinrelationtoconstruction
works andservices ingeneral. Please include statistical information onthevolume ofprocurement
operated atthecentral, regional, andlocallevelwithrespect togoods, works andservices.
Reply 310.
SeeReply 1n.
Question 313.
Please provide alistofthose state-trading enterprises which aregranted exclusive orspecial
rights toimport orexport, andtheproduct groups forwhich suchrights areestablished.
Reply 313.WT/ACC/UKR/5
Page56
Question 315.
Please specify whatcustoms andtaxpreferences aregranted tofirms establishing themselves
inaspecial economic zone.
Reply 315.
Nowadays there exists thegeneral LawOfUkraine ontheprocedure ofregistration and
functioning offreeeconomic zones inUkraine.
Thepresent Decree determines theprocedure ofestablishment, liquidation andmechanism
offunctioning ofeconomic zones inUkraine; general, legalandeconomic grounds oftheirstatus and
alsogeneral rulesofregulation oftherelations between theeconomic agents inthese zones andlocal
Soviets ofPeople ’sDeputies andotherorgans ofexecutive body. Ontheterritory ofUkraine thedifferent
kinds ofzones canbeestablished. Ontheterritory ofthefreeeconomic zoneiseffective thelegislation
ofUkraine, taking intoconsideration thepeculiarities, stipulated intheabove mentioned lawandalso
inthespecial lawontheestablishment ofthespecial freezone, which isworked outbythelocal
authorities.
Theprivileges andpreferences, which aregranted totheparticipants (members) ofthefree
economic zones, aredetermined bythespecial lawontheirestablishment.
Question 316.
Areanytaxorother advantages, granted tofirms investing thespecial economic zones made
contingent oneither localcontent requirements oronexport performance?
Reply 316.
SeeReply 315.
Question 318.
Please setouttheprecise legalcondition withrespect tooffshore banking andinsurance, as
wellascross-border trade.
Reply 318.
Inconformity withtheLawofUkraine “OnTaxation OftheEnterprises ’Profit ”:
Article 16.Offshore banking andinsurance.
Theprofits oftheeconomic agents arenotthesubject totaxation, which havethefollowing
features:
16.1 Thepromoter oftheeconomic agent isonlynonresident.
16.2 Profits andother incomings totheeconomic agent, which arenotoftheUkrainian origin.
16.3 Allkinds ofpayments oftheeconomic agent arecarried outbyauthorised banks ofUkraine.WT/ACC/UKR/5
Page57
16.4 Executive bodies andadministrative personnel oftheeconomic agent include onlythecitizens
ofUkraine.
16.5 Theeconomic agent doesnotrepresent itspromoters ontheterritory ofUkraine.
16.6 Annual audit inspection iscarried outbytheinstitutions, which havethelicence oncarrying
outtheaudit inspection ontheterritory ofUkraine.
Theregistration procedure oftheoffshore companies isdetermined bytheCabinet ofMinisters
ofUkraine.