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Changes in distribution of sugar imports quotas to make importers dependent on Derzhkomreserv or Agrarian Fund

Kyiv. November 23, 2010

The changes offered by the Ministry of Economy to the Procedure of the Establishing Tariff Rate Quota to Import Raw Cane Sugar to Ukraine make imports directly dependent on the State Committee on the State Material Reserve and Agrarian Fund, said Associate of Volkov and Partners Law Firm Iryna Polovets to the Interfax-Ukraine Agency, commenting on the draft order of the Cabinet of Ministers of Ukraine prescribing changes to the specified Procedure.
"Currently, import of raw cane sugar to Ukraine is allowed under the contractual relations between Ukrainian entities involved in foreign economic activity and their foreign contractors producing sugar. However, virtually the total volume of imported sugar is supervised by the Ministry of Agrarian Policy and UkrTsukor Association. Thus, today import of sugar depends on the following three counterparties – the Ministry of Agrarian Policy, UkrTsukor, and entities involved in foreign economic activity,” said Ms. Polovets.
She explained that in case the changes to the Procedure of the Establishing Tariff Rate Quota to Import Raw Cane Sugar to Ukraine are adopted, the entities of foreign economic activity, though being the main link, will be excluded from the chain, and the import of sugar will depend on contractual relations between producers and the Derzhkomreserv and Agrarian Fund.
As the Associate puts it, the Cabinet of Ministers – due to the provision – obliterated its tries attempts to harmonize the procedure of the establishing tariff rate quotas for sugar imports with commitments Ukraine undertook acceding to the WTO. Thus, according to p. 136 of the Panel’s Report on Ukraine’s assessment to the WTO, Ukraine has committed itself to the ‘first come, first served’ method of quota allocation. At the same time, an additional condition such as valid contracts with the Derzhkomreserv and Agrarian Fund does not comply with some other requirements indicated in agreements with the WTO. For instance, under the Agreement on the Import Licensing Procedures, “non-automatic import licensing shall be implemented in a impartial, transparent and predictable manner…” and “…a licensing procedure should be no more administratively burdensome than absolutely necessary to administer the relevant measure”. In this case, it can be clearly seen that the requirement to have contracts with the Derzhkomreserv and Agrarian Fund makes a procedure of non-automatic licensing more complicated, and cannot be considered a transparent one.
Reportedly, the Ministry of Economy of Ukraine proposes to license the import of raw cane sugar due to the implemented quota provided that an importer is a party to the contract of sugar supply to the State Material Reserve or intervention fund.
Respective draft order of the Cabinet of Ministers, published at the web-site of the Ministry of Economy, inter alia, inter alia, stipulates that 210 thsd. tons shall be distributed among the companies which have signed a sugar supply agreement with the State Committee for Material Reserve, and 40 thsd. tons - among the parties to the agreement with the Agricultural Fund. However, the document provides no information on the fate of the remaining 10 thsd. tons of sugar.
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