Lower import duty rates are envisaged by the bill “On Changes to the Law ‘On Customs Tariff’” submitted to the Verkhovna Rada by the Ministry of Economic Development and Trade (Minekonomrozvytku), levying 5 rather than 6 percent on new cars with a cylinder capacity exceeding 3,000 cubic cm; 7.5 rather than 8 percent on sea motor boats; 5 rather than 6 percent on motor vehicles equipped as mobile homes.
The bill further provides for 15 instead of 20 percent preferential import duty rates for seafood: cooked or canned crustaceans, mollusks and other aquatic invertebrates, and 10 instead of 15 percent for cooked or canned fruit, nuts and other edible parts of plants without the addition of alcohol and sugar.
Import duty rates, however, are lowered only for goods whose original duty rates exceeded the level laid down in the 2013 protocol on Ukraine’s WTO membership. The duty rates in the Customs Code that are lower than the internationally accepted ones remain unchanged.
Minekonomrozvytku estimates show that, if the imports remain on the 2011 level and if the import duties are levied as provided for by the bill, the central budget may lose four billion dollars.
In June 2012, Minister of Economic Development and Trade Petro Poroshenko informed that the Interdepartmental Commission on International Trade had resolved to levy a special import duty on motor vehicles.
Viktor SUSLOV, ex-economy minister of Ukraine:
“If this requirement is envisaged by international agreements (like the one with the WTO), Ukraine must lower customs duties on such commodities. However, the whole idea is out of context in regard to the progressive and luxury taxes. Cars, jeeps, seafood aren’t commodities for the man in the street, not even for the middle class [in Ukraine]. They can be afforded only by very well-to-do individuals who need no budget support.
“Today there are grounds for changing customs duty rates within the WTO. The Ukrainian domestic market is practically dominated by foreign manufacturers. Finding domestically made products is increasingly difficult, so it is high time the government supported the domestic manufacturer by using customs mechanisms, particularly customs duty rates. These rates average 4.5 percent, whereas under the agreement with the WTO it has to be around 10 percent. In other words, Ukraine is consciously losing large sums as import proceeds while doing nothing to protect its market against excess imports. As a result – there are State Statistics Committee estimates – the negative trade balance has increased, reaching 8.6 billion dollars in June. This negative balance has to be covered by foreign debt. Ukraine borrows money abroad and then pays for foreign products and technologies. This is wrong. Ukraine badly needs reasonable protectionism. It can be organized even within the framework of current cooperation with the WTO, without changing anything – the more so that making changes in the ratified agreement with the WTO would involve long and complicated procedures. Ukraine can use its right to revise tax rates as a WTO member, provided these rates are less than the maximum permissible amount. This option has been studied and there are findings to the effect that some 2.5 thousand commodity groups require higher duty rates. This would add to the central budget, and the national manufacturer would have carte blanche and receive a fresh impetus on the domestic market.”
