10 Ukraine: autonomous trade preferences
| (35872)
7649/14
+ ADDs 1-13
COM(14) 166
| Draft Regulation on the reduction or elimination of customs duties on goods originating in Ukraine
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| Legal base | Article 207)2) TFEU; co-decision; QMV
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| Documents originated | 11 March 2014
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| Deposited in Parliament | 14 March 2014
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| Department | Business, Innovation and Skills
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| Basis of consideration | EM of 24 March 2014
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| Previous Committee Report | None
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| Discussion in Council | See para 10.7 below
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
10.1 Ukraine has been a priority partner country
within the European Neighbourhood Policy and the Eastern Partnership,
and a Partnership and Cooperation Agreement, which entered into
force in 1998, has provided a comprehensive framework for cooperation
between the EU and Ukraine in key areas. A new Association Agreement,
including a Deep and Comprehensive Free Trade Area, was negotiated
in 2007-2011 and initialled in 2012, and, on 10 December 2012,
the Foreign Affairs Council adopted conclusions which affirmed
the EU's commitment to signing the Agreement as soon as Ukraine
had made tangible progress towards achieving the necessary benchmarks.
10.2 However, on 21 November 2013, Ukraine announced
the suspension of preparations for the signature of the Association
Agreement, and the Commission has noted that, following the recent
"unprecedented" events in the country, and the resultant
security, political and economic challenges facing it, the European
Council has stated its intention to support economic stabilisation
through a package of measures, including the granting of autonomous
trade preferences.
The current proposal
10.3 The Commission has accordingly now brought forward
this draft Regulation, offering the country autonomous trade preferences
to the EU market, which (depending on the sector) would temporarily
remove or reduce until 1 November 2014 EU customs duties on goods
originating in Ukraine.
10.4 More specifically, it would:
· remove immediately existing EU tariffs
for 94.7% of industrial goods exported from Ukraine, whilst the
tariffs will be reduced for the remaining few products (including
certain chemical products);
· grant immediate and unlimited preferences
to 82.2% of Ukraine's agricultural exports, whilst a partial liberalisation
will be given for the other products (including cereals, pork,
beef and poultry) by the granting of duty-free tariff rate quotas
(TRQs); and
· grant immediate preferences to 83.4% of
Ukraine's exports of processed food products, with the remaining
products being partially liberalised through TRQs.
10.5 The Regulation includes specific safeguards
to reduce the risk of fraud, with the entitlement to benefit from
the preferences being conditional on compliance with the relevant
procedures linked to the "rules of origin" of products,
as well as involvement in effective administrative cooperation
with the EU. Furthermore, Ukraine must abstain from introducing
new duties or charges having equivalent effect or new quantitative
restrictions or measures having equivalent effect or from increasing
existing levels of duties or charges or from introducing any other
restrictions.
The Government's view
10.6 In his Explanatory Memorandum of 24 March 2014,
the Minister of State for Trade and Investment (Lord Livingston
of Parkhead) points out that the estimated annual value of this
support measure would be nearly €500 million in tariff reductions,
of which almost €400 million accrue to the agricultural sector.
However, he says that the impact on the UK is likely to be minimal.
10.7 The Minister also points out that a European
Parliament plenary vote is scheduled on 2-3 April, and that, following
COREPER approval and adoption of the legislative act on 14-15
April, it will be signed into law (provisionally on 16 April),
with the potential date for publication in the Official Journal
being 22 April, and potential entry into force on 23 April. He
adds that this timetable is provisional, but that the aim is to
bring in the measure as soon as possible, given the current situation
in Ukraine.
Conclusion
10.8 Although it is unlikely that we would normally
report on the introduction of autonomous trade preferences relating
to a particular country, particularly where the impact on the
UK seems likely to be small, this proposal forms part of a mosaic
of current measures arising from the present situation in Ukraine.
Consequently, although we are clearing it, we think it right to
draw it to the attention of the House.
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