Wednesday, February 11, 2009

Parliament Insists on 13% Customs Duty Surcharge

Ukrainian Parliament amended by 328 votes the draft law providing law amendments for the improvement of balance of payment due to financial crisis on 4th February, 2009.

The draft law provides temporary 13% custom duty surcharge on imported goods in order to improve state payment balance. It is expected to reduce the volume of imported goods and consequently decrease the flow of currency abroad.

The President of Ukraine vetoed the draft law noting it contradicts to A. 12 of the GATT 1994 and Balance-of-Payment agreement[1]. The Head of Parliament Tax and Customs committee Mr. Teriyohin argued President’s note by explaining that abovementioned WTO treaties obligate member states to use the least disruptive price based measures for improvement of balance payment. Price based measures include import surcharge, import deposit requirement or equivalent measures with an impact on the price of imported goods. The proposed custom duty surcharge influences the price of the import and is likely to fall within the scope of ‘price based measures’. Consequently, customs duty surcharge may be applied by Ukraine in line with WTO rules.

Following Mr. Teriyohin’s explanation deputies amended the draft law by the list of import products subject to temporary custom duty surcharge: It includes meat, fruit, wine, coal, electric generators, motor vehicles and other goods.

The amended draft law was sent for signature to the President. Despite the possibility of repeat veto deputies had shown strong political will during last voting. The draft law was supported by the constitutional majority of deputies. Such tendency, if maintained, may allow Parliament to overcome President veto and enforce the draft law.

[1] Understanding on the Balance-of-Payments Provisions of the General Agreement on Tariffs and Trade 1994

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