RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/UKR/109
26 April 2002
(02-2402)
Working Party on the
Accession of UkraineOriginal:  English
ACCESSION OF UKRAINE
Review of the Latest Achievements in Bilateral Negotiations on
Market Access for Goods and Services and Enactment of  Legislation
The Governmental Commission on Ukraine's accession to the WTO has submitted the
following information with the request that it be  circulated to members of the Working Party.
_______________WT/ACC/UKR/109
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1. Review of the Latest Achievements in Bilateral Negotiations on Market Access for Goods
and services
During 2000-2002, Ukraine has been actively conducting bilateral negotiations with members
of the Working Party on access to the market of goods and services.  29 countries provided requestswith lists of specific products for which they sought tariff concessions. Over 6,000 tariff lines were
the subject of negotiations.  90 per cent of them have been agreed. Six bilateral protocols were signed
with Canada, Republic of Korea, Mexico, Ne w Zealand, Republic of Slovenia and Uruguay.
- Access to the market for goods
Ukraine has agreed to join sixteen of the nineteen sectoral initiatives. The exceptions are: "Oil
Seeds", "Fish" and "Beer".  The following initiati ves may be mentioned among the more significant
ones: "Information Technologies", "Chemical Harmonization", "Pharmaceutical Preparations",
"Textile and Clothing",  "Steel",  "Scientific Equipment",  "Agricultural Equipment", "Medical
Equipment", "Non-ferrous metals", "Civil Aviation", etc.  Ukraine has agreed to join the sector
"Distilled Spirits" during the three years following its accession to the WTO.
Ukraine has prepared and submitted to the WTO Secretariat a Consolidated tariff offer that
reflects the results of the negotiations.  The said Consolidated tariff proposal is information material
and designated for all members of the Working Party, including those which did not make specific
requests.  Such information was submitted twice, specifically as of 1 March 2001 (over 2,000 entries)and as of 1 December 2001 (over 6,000 entries, taking into account the sectoral initiatives). In order to
foster the expeditious completion of bilateral negotiations on goods market access, Ukraine has made
large concessions.  The maximum bound rate for agricultural produce will be 20 per cent, except for
sugar where the rate is 50 per cent (a tariff rate quota for raw cane sugar is provided), and 30 per cent
for sunflower-seed oil from year 2005.  Bound rates will also be more than 20 per cent at the end ofthe transitional period for certain goods subject to excise (wines, liqueur and vodka goods and tobacco
products).  The maximum rate of import duty for industrial goods will be ten per cent and up to 15 per
cent for certain entries that are particularly sensitive for Ukraine. The dynamics of change of the
arithmetical average rate of import duties resulting from negotiations on Ukraine's accession to the
WTO for the transitional period are the following: 9 per cent in year 2002, 7.6 per cent in year 2003,
6.5 per cent in year 2004 and 5.5 per cent in year 2005 (Note: the arithmetical average rate of import
duties for year 2001 was 10.7 per cent under the current tariff). That is, at the end of the transitionalperiod, the arithmetical average rate will be halved.  This demonstrates the liberalization of access to
the goods markets of Ukraine.
As of today, Ukraine has agreed to most of the requests of members of the Working Party.
- Access to the market of services
As of today, the negotiation process on access to the market for services is at its final stage.
Along with the signature of minutes, negotiations with a number of countries have been
completed and commitments reflecting requests of members of the Working Party on Ukraine's
accession to the WTO have been agreed.
The draft schedule of specific commitments in the field of services contains commitments in
134 sub-sectors (out of 155 possible).  This is one of the highest indexes not only among the accedingcountries but also among the WTO Members.  Commitments of Ukraine cover all 12 sectors of
services determined by the WTO classifier of services. In eight sectors commitments cover all sub-
sectors of the relevant classification.WT/ACC/UKR/109
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The schedule of specific commitments was prepared on the basis of analysis of applicable
Ukrainian laws, rules and practices for providin g services in full compliance with norms and
provisions of the General Agreement on Trade in Services.  Specific obligations were inserted into the
schedule according to Articles XVI-XVIII of the GATS.
The list of exceptions from most-favored-nation treatment was formed on the basis of
analyses of applicable Ukrainian laws, rules and practices in the field of services and all bilateral
agreements regarding services.  All existing exceptions were duly inserted into the list of exceptions
from MFN.
During the more than four-year negotiation process, the commitments list for professional and
computer services, services on research and development, services in the field of real estate, servicesto enterprises, status of environment, services related to organization of entertainment, etc. was
significantly extended.
Those sub-sectors which are not present, as of today, in the schedules of developed Member-
States of the WTO and insertion of which will be considered during the Doha round of negotiationsare contained in Ukraine's schedule of specific commitments in the field of services. These included
in particular: research services, services in the field of education and in the field of health protection,
i.e., services which are traditionally "national".
In the course of negotiations, access to the Ukrainian market of services was significantly
improved, namely: limitations regarding citizenship in the sector of real estate and auditing services
were cancelled, limitations on the share of foreign capital in the authorized fund of enterprises which
supply services in telecommunications, transportation and insurance sectors were cancelled,
conditions of employment of individuals in Ukraine were improved (the procedure was simplified and
work permit period was extended), limitation of opening branches of foreign banks in Ukraine andlimitations of the share of foreign capital in the aggregate banking capital was cancelled, as well as
limitation on access to the market of publishing and publication services, technical tests and analysis.
Certain obligations on access to the market of medical services of Ukraine were determined.
The schedule of obligations of Ukraine is transparent.  It includes practically all sub-sectors of
services (almost without limitations) determined by classifiers of the WTO.  This is the basis for
further harmonization of the national laws in the field of services pursuant to international norms andprinciples.
2. Review of legislative developments related to Ukraine's accession to the WTO
Document WT/ACC/UKR/81/Rev.1"Survey of the Legislation of Ukraine Related to Foreign
Trade 1995-2001" contains a brief description of changes in the national laws in various areas (trade
in goods and services, TRIPS, and international agreements of Ukraine).  As a result of
implementation of certain normative and legal acts, a large body of Ukrainian laws was brought into
compliance with WTO provisions.  Establishment of national treatment as regarding the fee for the
specialised expertise of medicines, liberalisation of treatment in passing the state border of Ukraine byestablishing unified rates of a single border fee, cancellation of provision regarding the local content
of automobile production, and establishment of national treatment as regards currency regulation for
all agents of business activity should be noted among the latest changes reflected in the document
WT/ACC/UKR/81.
Ukrainian laws in the field of intellectual property rights protection underwent significant
positive changes. A range of normative and legal acts were approved, in particular: the Laws of
Ukraine "On Amendment of Some Legislative Acts for the Purpose of Increasing Penalties for
Infringements in the Field of Intellectual Property",  "On Protection of Rights to Inventions andWT/ACC/UKR/109
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Utility Models",  "On Amendment of the Law of Ukraine "On Copyright and Related Rights",  "On
the Accession of Ukraine to WIPO Copyright Treaty",  "On the Accession of Ukraine to WIPO
Phonograms Treaty",  "On Ukraine's Accession to the International Convention for the Protection of
Performers, Producers of Phonograms and Broadcasting Organizations", as well as implementation of
the Presidential Decree "On Measures Regarding Protection of Intellectual Property In Ukraine" andResolution of the Cabinet of Ministers of Ukraine "On Approval of the Procedure for Registration and
Passage Through the Customs Border of Ukraine of Goods Containing Objects of Intellectual
Property",  Ukrainian laws comply with provisions of TRIPS completely.
The services sector was significantly liberalized.  Thus, upon approval of the relevant laws,
national treatment was established regarding the requirements as to the authorized capital for banks
with participation of national and foreign capital.  Prohibition of opening branches of foreign banks inUkraine, as well as 49 per cent limitation of foreigners' contribution to the authorized fund of
insurance companies were cancelled.  There are no limitations in the field of professional services in
Ukraine, except for legal (advocates) and auditing services.  Access to transportation services market
was significantly expanded.
The national laws of Ukraine in the field of anti-dumping, countervailing duties and
safeguards comply with the provisions of the WTO Agreements.  Such laws were developed taking
fully into account the relevant agreements of GATT/WTO.
Upon approval of the Laws of Ukraine "On Standardization", "On Conformity Assessment"
and "On Accreditation of Conformity Assessment Bodies", the system of certification and
standardization was fully harmonized with provisions of the WTO Agreements on Technical Barriers
to Trade.
Upon approval of the Law of Ukraine "On the Pu rchase of Goods, Works and Services at the
State Funds", the system of government proc urement was made compatible with universally
recognized rules.
In the area of customs and tariff regulation, Ukraine cancelled the use of minimum customs
values.  At the same time, the draft Customs Code  of Ukraine completely took into account the
provisions of the Agreement on Application of Article VII of GATT 1994 as to customs valuation.
Predictability of customs and tariff treatment was ensured by a provision on the possibility to changerates of import duties by the Cabinet of Ministers of Ukraine not more than once per year.  Therefore,
the system of customs and tariff regulation also complies with provisions of the WTO Agreements.
Document WT/ACC/UKR/89/Rev.1 "Law Enforcement in High-Priority Areas of Trade-
Related Legal Framework: Customs Fees, Customs Valuation, Technical Barriers to Trade andSanitary and Phytosanitary Measures" contains the list of normative acts grouped according to the
area of regulation (customs payments, customs valuation, TBT, SPS). The section "Customs Fees",
with reference to normative acts, mentions the paymen ts paid at the border, gives an estimate of their
compliance with the requirements of WTO Agreements, and where there is inconsistency, suggests
measures for its elimination. The section "Customs  Valuation" refers to certain shortcomings in
customs valuation procedures and notes the role that the draft Customs Code will play in correcting
those shortcomings. The section "Technical Barriers to Trade" presents a list of normative acts
governing TBT, evaluates their compliance with WTO requirements and offers methods of
harmonisation. The section on sanitary and phytosanitary measures contains a list of the legislative
and normative acts governing SPS, evaluates their compliance with WTO Agreements, and describesmethods for eliminating the existing inconsistencies.
Document WT/ACC/UKR/93/Rev.2 "Priority Draft Laws and Priority Draft Normative Acts
Relevant for the Accession of Ukraine to the WTO" contains information on the status of 20 priorityWT/ACC/UKR/109
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draft laws and 25 normative acts. The noted drafts cover the majority of areas regulated by the
relevant WTO Agreements: GATT 1994, TRIPS, TBT, GATS, SPS, TRIMS and Agreement on
Implementation of Article VII of GATT 1994.
As of 5 April 2002, 15 out of 20 priority draft laws were approved by the Supreme Rada of
Ukraine and signed by the President of Ukraine. The Customs Code of Ukraine was approved by the
Supreme Rada on 20 December 2002, but was returned by the President with comments for
consideration.  It should be mentioned that the Draft Customs Code was drafted with consideration of
the relevant WTO Agreements. Thus, comparison of  provisions of the part of Customs Code on
customs valuation and the Agreement on Implementation of Article VII of GATT 1994 are contained
in document WT/ACC/UKR/103.  The President's comments touch upon the organizational issues of
the functioning of the system of customs bodies, an d do not require changes in content of the Code,
which fully corresponds to the norms and principles of WTO.
The Tax Code of Ukraine was considered by the Supreme Rada in its second reading and is
being prepared for its third reading. The Draft Law of Ukraine "On Amendment of the Law of
Ukraine "On Television and Radio Broadcasting" is being considered by the Supreme Rada ofUkraine. The Draft Laws of Ukraine "On Amendment of the Law of Ukraine "On Quality and Safety
of Food Products and Food Raw Materials" and "O n Amendment of the Law of Ukraine "On State
Regulation of Import of Agricultural Products" were introduced into the Supreme Rada in February
2002.
Six out of 25 draft normative acts were adopted, two lost effect in connection with the
adoption of other legislative or normative acts, two are being approved by the bodies of the executive
power, 15 are being drafted by the relevant bodies of the executive power.  Among the adopted
normative acts are the following: Cabinet of Ministers Resolutions: "On Amendment of the CMU
Resolution "On the State Registration of the Rights of Authors to Works of Science, Literature andArt" No.1756 of 27 December 2001; "On the Procedure for Assigning a Special Identification Code
for Optical Discs",  No.411, of 28 April 2001; "On Approval of the Procedure for Registration and
Passing Through the Customs Border of Ukraine of Goods Containing Objects of Intellectual
Property",  No.412, of 28 April 2001; "On Approval of the Provisions on the State Sanitary-
Epidemiological Supervision in Ukraine" No.1109 of 22 June 1999; and the Order of the Ministry of
Health "On Approval of the Provisions on the Stat e Sanitary-Epidemiological Service of the Ministry
of Health of Ukraine" No.78 of 18 April 2000.
The questionnaire on import licensing WT/ACC/U KR/99 was prepared following the format
contained in the Annex of G/LIC/7.
The questionnaire provides information on Ukraine's import licensing procedures and the
relevant administrative procedures.
The document describes import licensing methods and procedures applied to different
categories of goods, different supplying countries and different methods of importing, as well as the
current system of importing.
Transparency as regards information on import licensing procedures is ensured by obligatory
publication of rules and information on import licensing procedures and submission of copies of these
publications to the WTO Secretariat.
The Law of Ukraine "On Foreign Economic Activity" defines the licensing procedures and
application of quotas to exports and imports of goods, which are applied by Ukraine through its state
bodies.WT/ACC/UKR/109
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The current Ukrainian systems of import licensing are regulated by the relevant normative-
legal acts. The lists of goods, import of which is subject to licensing in any given year, is approved
annually by a Resolution of the Cabinet of Ministers of Ukraine.
Ukraine adopted a decision to establish a tariff quota for raw cane sugar.Ukrainian authorities have prepared a Draft Law of Ukraine "On Tariff Quota Allocation for
Raw Cane Sugar Imports into Ukraine", which is being approved by the relevant ministries and
agencies. The main article of the mentioned Law is the preparation and approval of the Regulation on
the tariff quota allocation for raw cane sugar imports, which corresponds to WTO norms and
principles, including the Agreement on Import Licensing.
The importers of the raw cane sugar shall appl y for licenses allowing importation within the
quota, using the licensing regime described in document WT/ACC/UKR/99 (Questionnaire on Import
Licensing Procedure: Information concerning impor t licensing and similar administrative procedures
in the format contained in Annex 1 of G/LIC/7).
Document WT/ACC/UKR/101 "Check-list of Illustrative SPS Issues",  which was prepared in
the format of WT/ACC/8, contains information re garding the system of technical, sanitary and
phytosanitary regulation of international trade in Ukraine.
The document confirms the compliance of legislation on sanitary and phytosanitary measures,
as well as on technical regulation with the principles contained in the SPS and TBT Agreements.
Thus, deviation from the "standstill rule" can only take place under extraordinary circumstances, in
particular, in case of the occurrence, threat of occurrence or spread of dangerous infectious diseases,
mass poisoning and radiation exposure.
Transparency and access to information regarding current measures are ensured by the
requirement of mandatory registration of all legislative and normative acts in the SPS and TBT fields
with the Ukrainian Ministry of Justice and their entry into the Uniform State Register of Rules and
Procedures, which is available to the public.
At present, the Ministry of Agricultural Policy  of Ukraine supplies the relevant international
organizations with relevant information on new SPS measures currently applied in Ukraine.
The national law provides for the conduct of public discussions of draft regulatory rules
within a period not exceeding 20 days from their first publication, and for the consideration of
proposals relating to such drafts.
Measures in SPS and TBT fields are applied in Ukraine only to the extent necessary to protect
the health of human beings, animals or plants.  Scientific justification of the necessity to apply
measures, rules, norms and standards is necessary.  In the formulation, development and application
of measures the relevant authorities use international standards and recommendations.
The national law recognizes different measures that achieve the same level of protection as
equivalent.
In the course of application of measures in SPS and TBT fields, there is no discrimination
between domestic and foreign suppliers.
Control, inspection and approval procedures comply with SPS Agreement (Annex C)WT/ACC/UKR/109
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Certain specific instances of non-compliance with TBT and SPS Agreements, which exists in
the national law, will be resolved by the time of Ukraine's accession to WTO.
In general, the existing system of technical regulation and application of sanitary and
phytosanitary measures complies with SPS Agreement and the TBT Agreement.
Laws protecting Ukrainian producers against unfair or increased imports have been developed
on the basis of and in pursuance of respective articles of the 1994 General Agreement On Tariffs and
Trade (GATT 94) and the three specialized agreemen ts approved by the Uruguay Multilateral Trade
Negotiations Round, namely: the Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade, 1994, Agreement On Subsidies and Countervailing Measures, and
Agreement on Safeguards.
The core of Ukraine's legislation on protection against unfair or increased imports is made up
of the Laws of Ukraine On Protection of National Producers from Dumped Imports, No.330-14 of
22 December 1998 as amended on 23 March 2000 under No.1595-III; On Protection of National
Producers from Subsidized Imports No.331-14 dated 22 December 1998 as amended on23 March 2000 under No.1595-III; On Applying Speci al Measures Relating to Imports Into Ukraine
No.332-14 22 of December 1998 as amended on 23 March 2000 under No.1595-III.
The domestic market protection against unfair competition of imported goods is carried out
with reliance on three types of legal procedures:
- antidumping;
- anti-subsidy measures;
- special (targeted against massive imports) processes (safeguard measures).
The antidumping code is an effective tool of defending Ukraine's trading interests and its
domestic market making use exclusively of universally recognized international legal mechanisms
employed within the GATT-WTO framework.
With the view of addressing the issue of  initiating and conducting antidumping, anti-
subsidization or safeguard investigations and application of relevant antidumping, countervailing and
safeguard measures, a special administrative executive agency has been set up in Ukraine – theInterdepartmental Foreign Trade Commission composed of representatives from Ministries and other
executive power authorities and headed by the Minister of Economy and European Integration of
Ukraine.
Throughout the period from 1999 to date, six safeguard investigations and four antidumping
investigations were initiated and completed. Based on the results of these investigations, safeguard
measures in the form of quota regimes were applied in four instances while in three cases a final
antidumping duty was applied. Three safeguard and anti-dumping investigations were completed
without applying safeguards or antidumping meas ures. Three safeguard measures were eventually
liberalized after their application.
Three safeguard and three antidumping investigations were initiated in 2001-2002 and are
currently underway.WT/ACC/UKR/109
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3. Illustration of the mechanism of action in such important areas as customs valuation, and
customs and border fees
- Customs Valuation
Harmonization of Ukrainian legislation with the WTO requirements in the area of customs
valuation is one of the priorities in legislative maintenance of Ukraine's WTO accession process. The
part of the Draft Customs Code of Ukraine on customs valuation is drafted in full compliance with the
norms and principles of the GATT Article VII and the Agreement of Implementation of Article VII of
GATT. On 20 December 2001 the Supreme Rada of Ukraine adopted the Customs Code. Thus, the
detailed comparative analysis of the provisions on customs valuation in the Customs Code with norms
and principles of GATT Article VII and the Agreement on Implementation of GATT Article VII,which was submitted by Ukraine in document WT/ACC/UKR/103 "Agreement on Customs Valuation
- Comparative Table", remains unchanged.
- Customs and Border Fees
The legislative-normative base and the mechanism of charging fees upon the entry of goods
into the customs territory of Ukraine are illust rated in detail in document WT/ACC/UKR/90 "The
Consolidated Table of Levies and Duties Collected by the Ukrainian Customs Service and Other
Authorities of the Executive Branch upon Entry of Goods into the Customs Territory of Ukraine" and
WT/ACC/UKR/100 "Applicati on of the Unified Border Fee and Customs Fees".
On 22 September 2001 the Law of Ukraine "On Amendment of the Law of Ukraine "On the
Introduction of the Unified Fee Collected at Entry Points on the Ukrainian State Border" " No.2659-
III of 12 July 2001 came into effect.  Its article 1 stipulates that the unified fee shall come into effect
and shall be collected with respect to motor vehicles of national and foreign owners listed in Article 5of this Law which cross the state border of Ukraine.  The unified fee is collected at the entry points of
the state border of Ukraine pursuant to Ukrainian law, and covers the cost of the performance of
customs control in case of transit of goods and motor vehicles, and, for all cargoes and motor
vehicles, the performance of sanitary, veterinary, phytosanitary, radiological, and environmental
control (imported and transited goods subject to such control are identified in document
WT/ACC/UKR/105 "Goods Requiring Sanitary, Veterinary, Phytosanitary, Radiological or
Ecological Verification Upon Import or Transit"). The fee to be paid by motor vehicles for use ofUkrainian highways, including fees for motor vehicles that exceed the prescribed amounts of total
weight, axle loads, or/and overall dimensions, is also specified by the Law.
Article 5 of this Law establishes the rates of the unified fee and of the highway use fee in
EURO.
According to paragraph 4, article 2 of this Law: "it shall be prohibited to collect fees not
provided for by this Law at entry points on the Ukrainian State border".
Thus, as a result of putting into effect the above mentioned Law, the procedure for crossing
the customs border of Ukraine has been considerably simplified, since previously the fees for
ecological, veterinary and phytosanitary control had been calculated by the representatives of these
control services, and the customs officer calculated the fees on the basis of submitted documents,
filled in a unified document of payment and handed it over to the carrier in order for him to pay the
fees at the authorized bank at the entry point. Currently, the prescribed types of control are carried outsimultaneously or in a set order, and the amount charged for them is established by the rates of the
unified fee for a unit of motor vehicle, as defined by Article 5 of the mentioned Law of Ukraine,
which reduces the time for filling in a unified document of payment.WT/ACC/UKR/109
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The rates of the unified fee and highway use fees established by the law are lower than those
previously established by the Resolution of the Cabinet of Ministers of Ukraine No.1034 of
15 June 1999 "On Regulating the Collection of Fees at the State Border Entry Points".  For instance,
for buses from 10 to 30 seats inclusive, the unified fee rate for each kilometer was reduced from 0.14
to 0.02 EUROS for each kilometer of passage.
Moreover, after the coming into effect of this Law, no separate customs fee is charged for the
customs clearance of goods in transit (previously the rates of such fees were established by the
Cabinet of Ministers Resolution "On Customs Duty Rates" No.65 of 27 January 1997).
The new Customs Code does not envisage customs fees, except in the case of customs
clearance undertaken outside the usual location of the customs authorities or outside of business hoursprescribed for the customs authorities.
In line with paragraph 3 of Article 2, the procedure for collecting a unified fee is determined
by the Cabinet of Ministers of Ukraine. Currently, the Ministry of Economy and European Integration
of Ukraine is preparing a Draft Resolution of the Cabinet of Ministers of Ukraine "On the Procedurefor Collecting a Unified Fee at the Entry Points of the State Border of Ukraine", which shall be
submitted for approval to the Cabinet of Ministers of Ukraine in April, 2002. The noted draft
Resolution provides for approval of the Procedure for Collecting a Unified Fee at the Entry Points of
the State Border of Ukraine and the types of control carried out upon transit of cargoes
(WT/ACC/UKR/105 "Goods Requiring Sanitary, Ve terinary, Phytosanitary, Radiological or
Ecological Verification upon Import or Transit").
The new procedure for collecting a unified fee at the entry points of the State border of
Ukraine alters the information contained in Sect ion 5 "Unified Fee" of document WT/ACC/UKR/90,
"Consolidated Table of Levies and Duties Collected by Ukrainian Customs Service and OtherAuthorities of the Executive Branch upon the Entry of Goods on the Customs Territory of Ukraine"
and supplements the information contained in document WT/ACC/UKR/100 "Application of the
Unified Border Fee and Customs Fees".
4. Status of Reforming Property Relations and De veloping Laws in the Field of Agricultural
Relations
- Reforming the Agrarian Sector of the Economy in the Year 2001.
During 2001, the Government of Ukraine continued to undertake organizational measures to
create a favorable economic environment for the functioning and development of reformed
agricultural enterprises and the formation of a civilized agrarian market.  As a result, in 2001 positivetrends in agriculture, as well as in the economy in general, could be observed. Investments in
agricultural production followed the successful implementation of land reform; the abandonment of
state-run input supply mechanisms, better financing of agriculture through preferential credit schemes
and increases in the purchasing power of the population supported positive tendencies in agriculture.
Approval of the new land Code of Ukraine is one of the greatest achievements of land reform
in 2001.  The Land Code of Ukraine in its new wording resolves the issue of its compliance with the
Constitution of Ukraine, and aligns the provisions of the Land Code of Ukraine with land laws and
Presidential Decrees.  It contains norms of direct application, as opposed to general declarations.  The
main achievement of the Land Code of Ukraine in its new wording is the fact that it confirmed all the
existing practices of privatization of land for agricultural purposes, in particular, the issuance of
certificates of  the right to a land shares.  The Land Code of Ukraine creates grounds for further
improvement and development of land relations not only in the agrarian sector but also in the field of
land for non-agricultural purposes on the following principles: inviolability of the right of privateWT/ACC/UKR/109
Page 10
ownership of land and inclusion of land into market circulation, social justice in re-distribution of
lands which are in state and communal ownership, and the combination of high economic
effectiveness with ecological safety in land use.
During 2000-2001, economic mechanisms for regulating land relations were implemented.
Money evaluation of agricultural lands was conducted.  Money evaluation of non-agricultural lands
has been continuing. The basis for land sales and purchases is being established. The legal
establishment of ownership rights to land, i.e., en suring the issuance to peasants of state deeds of
private ownership of land is the most important in this process.  As of the end of year 2001, of the
6.8 million individuals who have acquired the right to a land share, 6.6 million, or 97.6 per cent, had
obtained their certificates of the right to a land share. Moreover, 2.2 million holders of certificates of
the right to a land share, or 34 per cent of their total number, have exchanged certificates of the rightto a land share for state deeds of private ownership of land.
37.6 thousand private farms have been using almost 2 million hectares of agricultural lands.
A market for land leases is developing.  Peasants have been leasing over 20.7 million hectares of land.
As of the beginning of 2002, 5.3 million individuals leased their land.
Approval of the Law of Ukraine "On Stimulating the Development of Agriculture for the
Period 2001-2004", No.2238-III dated 18 January 2001, in the beginning of the year, established the
main guidelines of state regulatory policy in the agrarian sector for 2001 and for the following years.
The Law reinforced the policy of protecting revenues of agricultural producers by establishing pledgeprices for agricultural products and ceiling tariffs for electricity for agricultural use. According to
Article 10 of the said Law, expenditures from the State budget for financing the development of
agriculture should be not less than five per cent of total budgetary expenditures. Upon approval of the
said Law, in the year 2001 the moratorium for conducting bankruptcy procedures for agricultural
enterprises was cancelled.  This simplifies the system of relations between borrowers and lenders, aswell as ensures protection of lenders' rights.
The credit policy of the Government of Ukraine in the year 2001 was aimed at increasing the
financing of the agro-industrial complex by commercial banks and improvement of the system of
relations between participants in the credit market.  At the expense of the State budget of Ukraine
under the Resolution of the Cabinet of Ministers of Ukraine "On Partial Compensation of Interest
Rates of Credits Extended by Commercial Banks to  Agricultural Producers and Other Enterprises of
the Agro-Industrial Sector" No.59 dated 27 January 2001, partial compensation of the rate of interest
on commercial banks' credits provided to agricultural producers and other enterprises of the agro-
industrial complex took place (in the amount of not less than 50 per cent of the discount rate
established by the National Bank of Ukraine). For these purposes, 150 million Hryvnias (about
US$ 30 million) was allocated from the State budget of Ukraine.
The interest cost compensation mechanism gave a powerful impetus to the growth of
commercial credit financing of the agrarian sector. During 2001, credit extension by commercial
banks to agriculture on these terms more than tripled, showing a 3,4 times increase against 2000 (the
equivalent of US$ 512 million versus US$ 152 million). In 2001, the number of commercial banksproviding credits to the agro-industrial sector increased to 88 as compared with 56 in the year 2000.
In addition, agro-industrial enterprises received from commercial banks US$ 520 million of credit
funding outside of the compensation system. Credit repayment rate in 2001 equaled 92 per cent.
The reduction that has occurred in the use of non-monetary forms of payment demonstrates
significant new relations in the agro-industrial complex.  In 2001, barter payments constituted
18 per cent of the total volume of sugar sales (in 2000 it constituted 37 per cent); 13 per cent for
cereals (28 per cent in year 2000); 12 per cent for sunflower seeds (39 per cent in year 2000) and
7 per cent for vegetable oil (19 per cent in year 2000).WT/ACC/UKR/109
Page 11
Approval last year of a range of governme ntal food programs involving grain and cattle
breeding was aimed, first of all, at increasing agricultural output.  Improvement of cultivation
technologies, increased use of purchased inputs and very favorable weather conditions allowed
fulfillment of the tasks for year 2001 laid out  in the Program "Grain, Years 2001-2004."  During
2001, active work on the draft Law of Ukraine "On Grain and Grain Market in Ukraine" took place.
Measures provided by the said draft Law are aimed at stabilization of the situation in the grain market
and increasing the effectiveness of production and grain marketing.
Upon approval of the new wording of the La w of Ukraine "On Insurance" on 4 October 2001,
mandatory insurance of agricultural crops and perennial plantations for state agricultural enterprises,
as well as cereals and sugar beets for agricultural enterprises of all ownership types was introduced.
In order to improve the situation in the consumer market, to stabilize prices for animal
products and to promote the development of anim al husbandry, Decree of Ukraine's President "On
Measures to Stabilize the Situation in the Consumer Market and to Develop Animal Husbandry in the
Years 2001-2002" No.100 of 17 February 2001 was issued which determined some correspondingmeasures, including the drawing up of a Program of Stabilization and Development of Animal
Husbandry for the Years 2001-2004. The latter was approved by Resolution of the Cabinet of
Ministers of Ukraine "On Measures to Stabilize and Develop Animal Husbandry and Poultry
Farming" No. 799 of 11 July 2001.
Further development of physical infrastructure related to agricultural markets has been taking
place.  Currently, 35 accredited commodity exchanges have been operating in all regions of Ukraine.
In 2001, 372 agro-trading houses and 906 wholesale markets for food and vegetables were created;
162 auctions of live animals and 1,423 fairs were held.  The network of purchasing points expanded
significantly.  The number of such points reached more than 20,000.  Activities to promote thecreation of company shops, machinery and technologies stations and service points have been
continuing.
Provision of consulting services and education of agricultural producers is an important
aspect of the further development of agricultural production under the new economic conditions.
Advisory services, networks of which, are being created at the national and regional levels, are
designated to meet these needs.  The draft Law of Ukraine "On Agricultural Advisory Service" wasdrafted for successful development of the Ukrainian advisory service.
Increases of personal income played a significant role in stimulating the internal demand of
consumers in 2001. The normative basis for resolving issues in the social field is being established.  In
particular, the President of Ukraine ratified Decree No. 637 dated 15 August 2001, which approvedthe Strategy for Overcoming Poverty.  The integr ated program for ensuring implementation of the
Strategy for Overcoming Poverty is being developed. The increase of pensions, decrease of wage
arrears and creation of new jobs through development of entrepreneurial activity, small businesses,
and services, including foreign investments, are all aimed at resolving the main issue – overcoming
poverty in Ukraine.  Among the most important measures in this direction are the following ones:creation of conditions for independent employment of the population, development of entrepreneurial
initiative, improvement of conditions for conducting entrepreneurial activities and creating a
comprehensive competitive environment, optimization of state intervention into the financial and
business activities of business agents, simplification of the procedure for receipt of permits for
conducting entrepreneurial activity, optimization of the procedure for registration of business agents,etc.
The above-mentioned reforms, which are supported by the relevant legislative and normative
acts, supported decentralization of property relations in the agro-industrial complex.WT/ACC/UKR/109
Page 12
- Status of Reforming Property Relations in Agriculture and Purchasing Sphere of Ukraine
During the 2001-2002, the following legislative and normative acts were approved in the field
of privatization of agricultural enterprises and decentralization of relations:
- The Law of Ukraine "On Stimulating the Development of Agriculture for the Period of
2001-2004" No. 2238 dated 18 January 2001;
- Land Code of Ukraine (the new wording) dated 25 October 2001;
- The Presidential Decree "On the Main Basis of the Land Reform in Ukraine",  No.372
dated 30 May 2001;
- The Presidential Decree "On Measures on Ensuring Protection of Ownership Rights of
Peasants in the Course of Reforming the Agrarian Sector of Economy",  No.62 dated
29 January 2001;
- The Law of Ukraine "On Amendment of the Li st of State-owned Enterprises which are
not Subject to Privatization",  No.2657 dated 12 July 2001;
- The Law of Ukraine "On Evaluation of Prop erty, Proprietary Rights and Professional
Valuation of Activity in Ukraine",  No.1790/3 dated 29 September 2001;
- The Resolution of the Cabinet of Ministers of Ukraine "On Settlement of the Issues on
Ensuring Protection of Ownership Rights of Peasants in the Course of Reforming the
Agrarian Sector of Economy",  No.177 dated 28 February 2001; and,
- Decree of the Cabinet of Ministers of Ukraine "On Measures Regarding Fulfillment of
the National Program for Support of Small Businesses Development in Ukraine for the
Year 2002".
In 2001, the process of reforming agricultural enterprises continued.  As of 1 October 2001,
there were 3,500 farms owned by individuals (single person enterprises), constituting over a quarter ofall private agricultural enterprises. The number of business partnerships grew to 7,500 (or
55.4 per cent of private agricultural enterprises) while the number of agricultural co-operatives
declined, as compared with the end of 2000.  Additionally, 1,452 new private farms were registered in
the course of reforming collective agricultural enterprises.  The number of registered private farms
reached 40.8 thousand.
Issues relating to the sharing of property of the reformed enterprises (former collective
agricultural enterprises) are being resolved.  The Presidential Decree "On Measures on Ensuring
Protection of Ownership Rights of Peasants in the Course of Reforming the Agrarian Sector of
Economy",  No.62 dated 29 January 2001, provides for ensuring a possibility for each former member
of a reformed collective agricultural enterprise to obtain his property share of the reorganized
collective enterprise.  6,313,000 individuals have the right to a property share.  4.4 million or69 per cent have obtained their certificates.  73 per cent of agricultural enterprises have determined
the amount of individual property shares of their members.
As of 1 October 2001, 54.1 thousand individuals had sold or otherwise disposed of their
property shares.  3.6 thousand of such individuals tr ansferred their property rights to other owners on
the basis of civil agreements.  Under mutual consent between individuals who own property and
enterprises, property was transferred to 7.5 thousand of agents of entrepreneurial activity on the basis
of lease agreements. The value of the leased property is US$ 2.5 billion.
Privatization authorities, along with other governmental bodies, conducted significant work
on privatization of state-owned property in agricultur e.  Privatization of state-owned property is being
undertaken pursuant to the following legislativ e acts of Ukraine: the Law of Ukraine "On
Privatization of the State-owned Property",  "On Peculiarities of Property Privatization in the Agro-
Industrial Complex",  "On Property",  "On Joint Stock Companies",  and others.WT/ACC/UKR/109
Page 13
Along with reforming property of agricultural enterprises, reforming property of processing
enterprises, agrarian service enterprises and construction in the agro-industrial complex was
undertaken.
As of today, 8,257 enterprises out of 8964 enterprises of the agro-industrial complex (state
farms, processing enterprises, agrarian service enterprises and construction) are subject to
privatization, of which:
- 6,980 (85 per cent) enterprises have been completely privatized;
- 1,020 objects of the agro-industrial complex are at the stage of completion of the
privatization process; and
- 176 objects of the agro-industrial complex are at the stage of preparing privatization
plans.
As of 22 March 2002, among 2,540 state farms, eight enterprises were at the stage of
preparing privatization plans, nine enterprises had effectuated registration of founding documents aswell as securities and information on their issue, and 2,391 enterprises were either in the process of
selling shares or had completed that process.  Of this latter group, 2,316 enterprises were privatized
with over 70 per cent of their property privately owned, and, within this group, 2,013 enterprises were
100 per cent privately owned.
For fulfillment of the Presidential Decree "On Urgent Measures on Putting into Order
Activities of State (National) Joint Stock and Holding Companies", No.1049 dated 7 November 2001,
the issue of reorganization of the State Joint Stock Company "Khlib Ukrainy" (Bread of Ukraine) has
been examined with a view to changing the organiza tional structure of this Company.  Currently, the
State Joint Stock Company "Khlib Ukrainy" controls 81 granaries.  80 of them are in the list ofenterprises prohibited for privatization.  This constitutes only 14 per cent of the total number of
enterprises of the former grain storage and processing system.  The State Joint Stock Company "Khlib
Ukrainy" was not included in the List of enterprises which keep a monopoly status on the national
market.
All 443 enterprises, which store and purchase grain but were not included into the statutory
fund of the State Joint Stock Company "Khlib Ukrainy",  are in the process of privatization.
As of 22 March 2001, the sale of shares of all 443 enterprises had commenced.  Completion
of privatization is in its final stage.  Thus, according to the information of the State Property Fund of
Ukraine, as of 1 May 2000, 401 enterprises were privatized with a sale depth of over 70 per cent (as
of 1 March 2002, the comparable number is 443).  As of 1 May 2000, 146 grain-purchasingenterprises were privatized with the sale depth of 100 per cent (as of 1 March 2002, the comparable
number was 330 enterprises).
- The Main Priorities of State Agrarian Policy and Legislative Provision of further Reforms in
the Agrarian Sector
The following are the main priority directions  of further reforms in the agrarian sector.
- Administrative reform:
- to improve the system of state management and regulation of the agro-industrial complex
in the direction of ensuring the needs of each individual for information and services, and
comprehensive support to the development of private initiative;WT/ACC/UKR/109
Page 14
- Land and property relations:
- to improve the regulation of land relations on the basis of the new Land Code of Ukraine;
expedite and simplify the procedure for issuing state deeds of private ownership of land
with the aim of creating a legal basis for development of the land market; introduce aunified system of property rights' registration for real estate; improve regulation of land
and property lease relations; develop and implement a strategy on protection and rational
use of land for agricultural purposes in the process of completing land privatization.
- Financial and credit policy in rural areas:
- to introduce the system of medium and long-term low interest credits for agricultural
enterprises of all types of ownership and activities;
- to develop alternative credit institutions, for example, credit unions and cooperative
banks; develop micro-credits;
- to create the normative and legal basis regarding risk insurance for agricultural activities;
- to extend possibilities of financial leasing and transformation of leasing into an effective
mechanism for the technical re-equipment of agricultural production; and
- to stabilize the income of agricultural goods producers by introducing pledge  purchases
of agricultural produce.
- Development of entrepreneurship and markets:
- to expedite investment and innovation processes through legislative formation of a
favorable tax and investment climate and improve technologies available to agricultural
producers;
- to create a system of agricultural advisory services and support associations of regional
land owners (Agrarian chambers) with the aim of protecting their social and economic
interests;
- to increase the concentration of the commodity  exchange market and put into order the
types of agreements made on commodity exchanges; and
- to develop advertising and other marketing services with the aim of improving the
quality of specialists' training and effectiveness of scientific research and their
implementation into production practices.
- Social policy in rural area:
- to work out a program of social development of rural areas, which should provide for
ways of resolving demographic issues, development of education, health protection,housing construction; to improve the system of social protection of the rural population;
to approve programs for creating new jobs, employment and re-qualification; to develop
a program of improvement of general and professional education in rural areas.
- Foreign economic activity:
- to develop measures regarding support to export of agricultural produce, expand its
infrastructure and create favorable conditions for expansion of produce sold on foreign
markets; and
- to harmonize the national trade law according to the EU requirements (in particular,
regarding certification and standardization requirements).WT/ACC/UKR/109
Page 15
Further, the following draft laws, which were drafted by the Government of Ukraine and will
come into force in the years 2002-2003, making the process of reforming the agricultural sector of
Ukraine irreversible:
- "On Amendment of the Law of Ukraine "On Collective Agricultural Enterprise" (it was
prepared for the second reading on 7 February 2002);
- "On Mortgage" (it was considered in the second reading on 17 January 2002 and it was
returned for the completion of its development);
- "On Amendment of the Law of Ukraine "On State Regulation of Agricultural Produce
Imports" (the draft Law was submitted to the Verkhovna Rada of Ukraine on 22
February 2002.  It was registered for consideration on the Verkhovna Rada of Ukraine);
- "On Amendment of the Law of Ukraine "On Quality and Safety of Food Products and
Food Raw Materials" (the draft Law was submitted to the Verkhovna Rada of Ukraine.
It was registered with the Verkhovna Rada of Ukraine);
- "On Grain and Grain Market in Ukraine" (the Verkhovna Rada of Ukraine approved it in
the second reading on 7 March 2002);
- "On Amendment of the Law of Ukraine "On Commodity Exchange (it was submitted to
the Committee of the Verkhovna Rada of Ukraine in February 2002);
- "On the Agrarian Chamber of Ukraine (it is under consideration in the Verkhovna Rada
of Ukraine);
- "On Amendment of the Law of Ukraine "On Plants Quarantine" (it was approved as a
basis for further development and prepared for the second reading);
- "On Amendment of the Law of Ukraine "On S eeds" (the Verkhovna Rada approved this
draft as a basis for further development).
- The following draft laws are being developed:
- "On State Registration of Real Estate";
- "On Private Peasant Farms"; and
- "On Lands Protection".
Therefore, during 2001, the process of reforming property relations in the agrarian sector of
the economy continued.  Beginning in 2000, significant changes of property relations and forms took
place.  In the course of fulfillment of the Presidential Decree "On Urgent Measures Regarding
Acceleration of Reforming the Agrarian Sector of Economy",  No.1599/99 dated 3 December 1999,
the structure of non-state-owned agricultural enterprises underwent significant changes. Currently,agricultural producers are represented by private and corporate forms, which occupy 97 per cent of all
agricultural lands of Ukraine (except for an insignificant number of state farms).
In the year 2001, further steps in the reform of enterprises in the grain-products system took
place. 100 per cent of grain-purchasing enterprises were privatized with a sale depth of over70 per cent.
The results for 2001 confirm that creation of conditions for formation of a class of private
owners and the development of transparent market relations in the agrarian sector continues.
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