One can truly say that there is no corner of the world that would rest for a minute. This is true for the Eastern European customs landscape that sets an example of a turbulent year-end.
The New 2016 Year will mark a significant change as the Deep and Comprehensive Free Trade Area (DCFTA) created between the EU and the Ukraine will start to apply on that day. The DCFTA is the ‘trade part’ of the Association Agreement signed by the parties back in 2014 and is more than a ‘classic’ FTA. In addition to opening up markets to trade, the DCFTA also addresses competitiveness issues and the steps needed to meet EU standards when trading on EU markets.
Under the DCFTA, the majority of customs duties on goods will be removed on 1 January 2016. For industrial goods, the liberalization milestones foresee the immediate removal of existing tariffs on most products, with exceptions for a few with a transition period, e.g. in the automotive sector.
Among agricultural goods, duty-free tariff rate quotas have been granted to the Ukraine for cereals, pork, beef, poultry and a few additional products, while for others the progressive elimination of the custom duties by the EU will occur over a longer transition period (generally 10 years).
As regards non-tariff barriers (NTB) on trade in goods, the Agreement incorporates fundamental rules such as e.g. national treatment and the prohibition of import and export restrictions. Export duties will be prohibited right from the start, with some temporary exceptions for Ukraine on a few agricultural and metal products.
The DCFTA is a great benefits for Ukrainian exporters; nevertheless, it is slightly overshadowed by challenges in the East. The EU, Ukraine and Russia have been holding trilateral talks – the last one ending on 21 December 2015 – to reconcile the different interests deriving from the DCFTA on the one hand and Ukraine’s association with the Commonwealth of Independent States CIS and the free trade zone thereunder on the other.
Despite continued efforts, the trilateral negotiating parties could not reach a mutually satisfying standpoint in the areas of customs cooperation, technical barriers to trade and sanitary/phytosanitary measures.
And what news do Ded Moroz and Snegurochka bring to the business community?
From the CIS side, Russia has announced that the CIS-FTA benefits will be suspended with regard to Ukraine by a presidential decree. The President confirmed this decision during its annual press conference of 17 December 2015. This step has caused controversies as Ukraine would not be the first country enjoying free FTA privileges with Russia/CIS and other trade blocks. The above changes and their rapid implementation will undoubtedly subject traders in both trade blocks to increased challenges with regard to smooth documentation and conduct of shipments.
On a more light-hearted note, the Eurasian Economic Union has taken steps forward to further integrate Armenia and the Kyrgyz Republic and also introduced measures to facilitate smoother trade within the Union.
As an example, customs transit procedure will be simplified for authorized economic operators and customs carriers already registered with customs by dropping the need for certifying their status on paper for each shipment. Also, transit by instalments under certain conditions will be subject to less paperwork.
Apart from reforms from within, the Union is also strengthening its international ties. In November, it signed a Memorandum of Cooperation with South Korea setting a platform for discussions on trade and economic issues, technical regulations, tariff and non-tariff measures and innovation.
As an attempt to increase supply chain security, preliminary information on goods imported into the Union by air will be obligatory from 1 April 2017. This will supplement the already operational preliminary information filing for rail and road shipments. Hence, carriers are advised to implement the required system changes to comply adequately.
Harmonization efforts have been made in the field of technical regulations, in particular with respect to tobacco products and their conformity, too. In this respect, new labelling and sketch warnings are expected to be implemented to raise health awareness. Traders in this field are advised to follow the upcoming requirements closely.
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