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Permission of grain export to FTA countries to question practicality of introduced quotas

Kyiv. December 1, 2010.

Ukrainian Ministry of Economy’s offer to permit grain export to the Free Trade Area (FTA) countries will question appropriateness of the previously introduced grain export quotas, as such restrictive measure has been purposed to prevent severe grain shortage.
An Associate of Volkov & Partners Law Firm Andrii Zablotskyi expressed mentioned opinion commenting to the Interfax-Ukraine Agency on the draft decree of the Cabinet of Ministers of Ukraine, which provides that agricultural products should be available for export to the countries that signed free trade agreements with Ukraine.
"It’s worth considering, that Ukraine introduced quantitative export restrictions to avoid the threat to the country’s food security. Naturally, the question arises: are these actions appropriate? After all, if the country is in shortage of foodstuff, it is doubtful whether the issue of export can be discussed, even for the FTA countries," said Mr. Zablotskyi.
Besides, the Associate says that from the one hand such actions may be regarded as violation of Article ХІІІ:1 GATT-1994, provide for non-discriminatory application of quantitative restrictions with regard to other WTO members and third countries. On the other hand, Mr. Zablotskyi pointed to Ukraine’s right to create the most-favoured treatment for the FTA countries as envisaged by Article XXIV GATT-1994.
He explained further that the said provision is an exception of the most-favoured treatment, which is crucial in the multilateral trade system and stipulates non-discrimination between member countries when accruing preferences and benefits.
The Associate reminded that restrictions on agricultural products in the form of quotas were designed to prevent severe grain shortages in Ukraine. Mr. Zablotskyi added: "Today the procedure of exportation to the countries, with which Ukraine has the Free Trade Agreements, has not been definitely enacted. The point is whether the state will be able to ensure an equitable access of all participants to the export. Otherwise the competition will be restricted and the rights of disqualified companies will be violated".
Reportedly, in the Cabinet of Ministers’ Draft Decree the Ministry of Economy proposes to allow grain export to the countries, with which Ukraine has the Free Trade Agreements. The deed, in particular, entrusts the Ministry of Agricultural Policy, Ministry of Economy and State Customs to arrange the grain export to FTA countries.
Ukraine imposed 2.7 mln grain quotas from October 19 till December 31, 2010, where wheat accounts for 0.5 mln tons, barley – 0.2 mln tons, corn – 2 mln tons, rye and buckwheat – 1 000 each.
According to the Ministry of Agricultural Policy’s forecasts, Ukraine is to harvest this year 39.6 mln tons of grain vs. 46 mln tons in 2009.
Ukraine is a party to the FTA with CIS countries, Georgia and Macedonia. Earlier Ukraine discussed with the Russian Federation the possibility of Ukrainian corn import to the Russian market.
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