UKRAINE-EU ASSOCIATION AGREEMENT

EUROPEAN INTEGRATION: Making the most of Ukraine’s EU free trade breakthrough

EU markets present Ukraine with vast opportunities but multiple regulatory hurdles remain before Ukrainian exporters can take full advantage of free trade potential

EUROPEAN INTEGRATION: Making the most of Ukraine’s EU free trade breakthrough
The EU-Ukraine Association Agreement creates huge opportunities for Ukrainian businesses but regulatory obstacles remain before this EU potential can be unlocked
Tetyana Gryn
Sunday, 10 April 2016 19:33

The free trade aspect of the EU-Ukraine Association Agreement (EUAA) came into force on 1 January 2016, marking the start of a new era in commercial relations between Ukraine and the European Union. The free trade opportunities presented by the EUAA have been widely touted as a watershed moment in Ukraine’s longstanding European integration efforts. Nevertheless, in order to take advantage of these new opportunities, Ukrainian companies seeking to expand their trade ties with EU partners must first bring their operations into line with the terms and regulations set out in the EUAA. Many Ukrainian businesses are now focusing on meeting these requirements in order to acquire access to the world’s most lucrative marketplace, or to import EU goods into Ukraine under the new preferential terms. 

 

All about origins

If a Ukrainian company intends to import goods into Ukraine under the terms of the new preferential agreement, they must demonstrate that the goods meet EU regulations governing origins. The EU’s rules of origin are a crucial component in the free trade dimension of the EUAA, serving to determine whether goods can be classified as originating in the exporting country and whether they therefore qualify for preferential terms. Formal confirmation of EU-approved origin of goods comes in the form of an EUR.1 movement certificate. The EUAA deals at length with the issue of which goods do and do not qualify for preferential trade terms.

Given the complexities of the globalized economy, how is the issue of product origin determined? Under the terms of the EUAA, goods are considered to originate in the EU or Ukraine based on a range of criteria including if they are wholly sourced within the EU or Ukraine – this category covers natural resources and goods made entirely from natural resources originating in Ukraine or the EU exporter nation. Goods that meet minimum requirements for sufficient processing or manufacturing within the EU or Ukraine also qualify. 

Goods classified as based on locally obtained natural resources cannot contain non-local produce such as minerals or vegetable/livestock elements. The protocols included in the EUAA provide an exhaustive list of goods that do and do not meet the requirements to qualify as locally sourced in terms of the EU’s rules of origin.

The EUAA also offers detailed clarification on which kinds of goods meet EU standards for minimal local processing or manufacturing. Percentages and technological guidelines feature in the EUAA protocols, allowing exporters and importers to calculate whether they qualify for preferential terms.

 

Certification steps

In order to qualify for the preferential terms of the EUAA free trade regime, exporters need to obtain an EUR.1 movement certificate. Movement certificates are issued by the customs authorities of the exporting country in response to written applications by the exporters. In order to obtain a movement certificate, the exporter has to provide documentation demonstrating the origins of the goods they seek to export. Applications are then considered by the relevant authorities, with a decision – regardless of whether it is positive or negative – being due within a period of three days following the registration of the application with the customs office. It should be noted that in certain exceptional cases (e.g. because of errors or involuntary omissions, or in cases when a movement certificate was not obtained at the moment of importation due to technical issues with the customs authorities), a movement certificate may be issued retrospectively.

 

Approved exporters and invoices

There are a number of options open to those exporting small volumes or engaged in regular repeat trade. In cases where the total value of the declared goods does not exceed EUR 6,000, an invoice declaration can be completed at the relevant customs office. This document, in addition to the EUR.1  movement certificate, serves to substantiate the preferential origin of the declared goods. The exporter submitting the invoice declaration should be ready to provide the customs office with all the necessary documents to demonstrate the origin of the goods. Invoice declarations can be filed either at the time of export, or retrospectively.

Any company that makes frequent shipments of goods under the free trade terms of the EUAA may apply to the relevant customs office for approved exporter status. Applicant companies must submit all the necessary guarantees and documentation to the customs authorities verifying the origins of the goods involved. The customs authorities have considerable leeway regarding issuing approved exporter status, making this an appealing but somewhat ambiguous option. 

 

About the author:  Tetyana Gryn is a lawyer at Asters Law Firm and a speaker at the ЕВА-Аsters Legal School (www.asterslaw.com/ls) - a unique, free-of-charge platform for Ukrainian legal practitioners to share their experience and best practices in legal support and business protection

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