January 24, 2008

Ukraine invokes new law to block contraband US poultry imports
 

Ukraine has blocked exports of poultry meat from the US by removing all privileges granted to poultry processing companies in the Free Economic Zones (FEZ).

The move is enshrined in Ukraine's 2008 State Budget which was adopted by the parliament RADA at the end of December 2007.

According to the USDA's Foreign Agricultural Service, FEZ processors were the majority consumers of US poultry as most of poultry imports went through the FEZ in order to avoid the exorbitant import duty.

A Global Agriculture Information Network (GAIN) report FAS said Ukraine's action had closed the legal channel through which 75 percent of US poultry products are imported. The remaining 25 percent is imported through unofficial channels and they will be affected by the new 'Contraband Stop' programme initiated by Ukraine's new Prime Minister.

An unofficial translation of the relevant portion of the new law related to FEZ said all businesses will lose their existing privileges related to payment of custom duties and value added taxes. The norms of the new law will override all existing laws and state authorities are prohibited from adopting and executing decisions that establish different taxation rules for entrepreneurs working in FEZ.

FAS questioned the legality of the new law but it is to their understanding that the intended outcome for the short term is to stop poultry imports through the FEZ. It also said that possible WTO accession in 2008 will resolve this situation and reduce poultry's import duty rate to a reasonable rate.

In 2007, Ukraine was a US$70 million market for US poultry.