29.03.2022

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Export

 

Under the martial law, the Cabinet of Ministers of Ukraine extended the list of agricultural products which may not be exported and are subject to licensing3. These rules will remain in force from 6 March till 31 December 2022 and are to be followed to prevent the humanitarian crisis, bring stability to the market, and meet the public needs for basic foodstuff. The measures taken by the government were similar to anti-crisis measures to combat epidemics in 2020. For instance, it is completely forbidden to export the following foodstuff: oat, millet, buckwheat, sugar, salt, rye, livestock, meat, and livestock by-products. The declaration-based licensing (the Ministry of Economy must issue licenses free of charge within 24 hours) of exported wheat and mixtures of wheat and rye (meslin), corn, chicken meat and eggs, sunflower oil was introduced.   

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Moreover, the natural gas market is almost frozen, as the market actors were prohibited to export the natural gas from customs territories of our state as well as the gas kept in Ukrainian underground gas storages serving as the "customs warehouse." Thus, the gas collected by Ukrainian and foreign companies to be traded in winter at Energy Community markets was actually expropriated. 

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Also, the electrical power is neither exported nor imported: the market has been operating autonomously since the martial law was adopted (in one-zone mode without the "amber energy island"), and the system is being prepared for its early harmonization with ENTSO on the application of the Ministry of Energy, possibly by 15.03.2022. It is also worth noting that the Unified Energy System of Ukraine works in association with Moldova where the significant portion is generated by Russian entities. After joining, as soon as possible, the Unified Energy System will continue operating in the emergency mode, especially given the loss of control over some key generation assets, transfer and distribution systems. 

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Import transactions are carried out with the special permit to be applied for by the Cabinet of Ministers of Ukraine. The exception to the rule, which is rather widespread, is the imported critical products (the list of respective goods was introduced on 24 February and extended by the relevant Resolution dated 26 and 28 February, 1, 4-8 and 10 March) to procure which the NBU allows buying foreign currencies. The above-mentioned list includes tactical defense items, explosive substances and components, cold weapons, medicines, medical equipment and devices, semiconductors, fuel and energy sources, most groups of foodstuff and components, paper products, plant protection means and seeds, power generators, chemical alkalies and acids, sewing supplies made of cotton and staple, thermal imagers, video- and sound-recording devices, fertilizers, agricultural machines etc. The list of critical imports may be further expanded.  

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Unfortunately, works and services are not critical imports which makes it impossible to pay for software, telecommunication, transport, or legal services, not to mention repair and construction works which are essential for both infrastructure and defense; therefore, some economic sectors may face significant challenges soon unless the government is going to gradually expand foreign economic activities within the economic mobilization. 

Customs clearance of goods. The Cabinet of Ministers of Ukraine adopted Regulation No. 236 dated 09.03.2022 pursuant to which declarants will be able not only have their goods customs-cleared directly on the border or at any of customs agencies in accordance with the general procedure but also use the simplified customs clearance option with the preliminary customs declaration and without delivering goods to a customs terminal. 

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In addition, customs agencies will be entitled to defer customs payments for medicines, medical products, some foodstuff (meat, fish, vegetables, dairy products etс.), military goods the international deliveries of which are subject to state control as set forth in Resolution No. 1807 of the Cabinet of Ministers of Ukraine dated 20.11.2003, and critical imports the list of which was approved by Resolution No. 153 of the Cabinet of Ministers of Ukraine dated 24.02.2022. To formalize the deferred payment of duties for these goods, a taxpayer should submit a respective written application together with the customs declaration. The government urges not to abuse such benefits and, if possible, to pay customs duties to the state budget. 

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Domestic market

 

There are almost no restrictions on trade except for alcoholic beverages (the penalty amounts to UAH6,800 – 13,600) and the control over the dissemination of certain defense data in Mass Media. It is obvious that, in terms of working hours, transactions are significantly affected by curfew. It should be noted that during a war it is extremely important to ensure the turnover of funds and provide all and any support to businesses making money to finance the defense sector, maintain infrastructure, support the civil population, provide medical and educational services etc. 

In addition, the government preventively imposed control over prices for some goods including those which are further exported: wheat flour, pasta, white bread, brown bread, buckwheat, oat, pork, beef, poultry (chicken carcasses), milk, butter, sour cream, chicken eggs, sunflower oil, crystal sugar, white cabbages, onion, beets, carrots, potatoes, ethanol (96% solution), domestic non-steroidal anti-inflammatory drugs, domestic antibacterial drugs, petroleum (А-92, А-95), diesel fuel, liquefied gas for cars4. Failure to meet the requirements will result in the administrative fines amounting to 1 - 2 thousand non-taxable minimum incomes of citizens (UAH 17,000 – 34,000) or the withdrawal of unreasonably received revenues. 

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We think that too much interference in pricing, and especially by agencies which lack competence or resources for the same (oblast military administrations, the National Police, State Service on Food Safety and Customer Protection, State Service on Medicines and Drugs Control, Bureau of Economic Security) will cause the discrimination and deficit of legally circulated goods. At the same time, such powers may be useful when interacting with big market operators, i.e. regional and national chain stores; such operators will keep setting benchmark retail prices in all territories where they operate, on a mutually beneficial basis. 

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Repayment of loans, inter alia, forcible

 

On 25 February 2022, the NBU approved the Rules for Banks to Operate under Martial Law which allow banks not to consider unpaid loans as delinquent during the whole period when the martial law remains in force and 30 days afterwards, if such a failure to pay is caused by the Russian aggression. Thus, a lot of banks (PrivatBank, Oschadbank, Monobank, Ukrgasbank, Alfabank and others) introduced repayment holidays for individuals and businesses. They deferred obligatory payments and interests on loans, and fines and penalties will not be charged for delayed performance of loan agreements. The duration of such benefits may vary and should be specified by each bank individually. It is also worth mentioning that such benefits will not be applied to existing delays and debts what occurred before the war. Therefore, banks may charge interests and fines on such loans.  

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Banks do not give new loans (it is worth mentioning that during the quarantine period, starting from 2020, such loans were not frequently given, except for mortgage loans), but individuals and businesses can keep using their credit limits on their current and card accounts.  

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Utility services. Resolution No.  206  of the Cabinet of Ministers of Ukraine dated 05.03.2022 prohibited to suspend or terminate the provision of utility services if they are unpaid, in full or in part, from 24 February 2022 till the cancellation of the martial law in Ukraine. In addition, fines for the breach of payment obligations may not be charged and collected.  

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Cell services. To extend the coverage, the mobile network operators namely Kyivstar, Vodafone Ukraine and Lifecell together with the Ministry of Digital Transformation, State Service of Special Communication and Information Protection, National Communications Commission and Association of Mobile Network Operators launched the national roaming from 7 March. First of all, it will be provided in Kharkivska, Khersonska, Sumska, Poltavska, Dnipropetrovska, Zaporizka, Donetska, Luhanska, Kirovohradska, Mykolaivska oblasts, and later – in all Ukrainian territories. 

It is worth noting that mobile network operators set credit limits for the population. It means that their services may be paid after such limits are actually used and with no commission fee paid. 

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Rail transportation for evacuation purposes. Ukrainian Railways transports people from hotspots to the west of Ukraine and abroad (Poland, Hungary, the Czech Republic) free of charge, and delivers the humanitarian aid to the east for free.  

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Note. Ukraine still has effective restrictions imposed in 2014 on the aggressor (the Russian Federation) and occupied territories of the Autonomous Republic of Crimea and Occupied Districts of Donetska and Luhanska Oblasts: the movement of persons, vehicles and cargoes (goods) across the confrontation line (in the Occupied Districts of Donetska and Luhanska Oblasts) or the administrative border (the Autonomous Republic of Crimea) is supervised according to the procedure established by the Cabinet of Ministers of Ukraine as amended in 2019. Both in the Occupied Districts of Donetska and Luhanska Oblasts and the Autonomous Republic of Crimea, it is prohibited to transfer cargoes, except for the humanitarian aid provided by Ukrainian and international organizations. None of cargoes except for personal stuff may be transferred from the occupied territories. 

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However, the trade with Russia was not terminated until 2022, and during the period for which the martial law was in effect in 2018 (after the Russian armed hostilities in the Kerch Strait area), excluding the trade with hundreds of legal entities and individuals on which sanctions were imposed. Meanwhile, states restricted the export/import of certain goods (foodstuff, agricultural products, clothes, and medicines), but many energy and metallurgical transactions were still carried out.  

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Useful references:

 

• Order of the Ministry of Energy of Ukraine No. 99 dated 03.03.2022 

• Resolution No. 1147 of the Cabinet of Ministers of Ukraine "On Prohibited Import of Goods Originating from the Russian Federation to Ukrainian Customs Territories" dated 30.12.2015. 

• Statement of the Minister of Energy of Ukraine

• Resolution No. 1548 of the Cabinet of Ministers of Ukraine "On Powers to be Granted to Executive Bodies and City Councils' Executive Bodies to Regulate Prices (Tariffs)" dated 25.12.1996 (as amended by Resolution No. 153 of the Cabinet of Ministers of Ukraine dated 24.02.2022.) 

 

Messages received from citizens about unreasonably increased prices with maximum details provided, and, if possible, videos or photos sent by citizens to the following Telegram bot: https://t.me/StopOverpriceBot or e-mail: zvernennya@esbu.gov.ua.