Ukraine Has Adopted the Economic Security Strategy: Changes to Be Expected for the Investors
Dmytro Vidsota, Managing Partner of Robinson Patman Law Firm
The President of Ukraine has enacted the Economic Security Strategy of Ukraine for the period up to 2025, adopted earlier by the National Security and Defense Council.
The Strategy for the first time in Ukraine's history sets an efficient base for the formation of a state policy in the field of economic security and contains a detailed assessment of its key areas: financial, production, foreign economic, macroeconomic, investment and innovation security. In each of these areas the Strategy defines the main challenges, targets, as well as tasks and measures for their implementation.
Among the key tasks defined by the Economic Security Strategy of Ukraine are prioritizing the industrial development by increasing domestic and export markets for Ukrainian products (the special emphasis is made on advanced technology products like air- and spacecrafts), improving the trade investigations procedures (anti-dumping, safeguard, anti-subsidies) in Ukraine, introducing competitive environment monitoring on the Ukrainian markets.
Particular attention in the Strategy is paid to the implementation of harmonizing national energy and ecology standards with the relevant EU directives in these fields, improving the sanctions policy in order to increase its efficiency and reduce potential risks for national interests.
The Economic Security Strategy of Ukraine presupposes reducing regulatory burden on business, extending international trade and economic relations, entering into new free trade agreements, revising and extending the scope of the existing ones, developing public procurement rules in line with the EU standards.
The strategy also provides for introducing separate system of management and organization of economic processes in the territories of Donetsk and Luhansk regions, as well as introducing foreign investments screening regime to assess impact of investments on national security and avoid concentration of foreign investments in strategically important sectors of economy.
Ukraine has already started developing legal framework for foreign investments screening. In January 2021 the Cabinet of Ministers of Ukraine approved draft law no. 5011 ‘On Foreign Investments in Entities Having Strategic Importance for Ukraine's National Security’, introducing a screening procedure for foreign investments in entities that are active in industries of strategic importance for Ukraine’s national security.
The draft law no. 5011 contains the list of the transactions that would trigger the screening, overview of the screening procedure (including filing requirements and timeline), as well as the list of strategic activities subject to screening. Those include activities in the areas of nuclear energy, radioactive waste management, weapons and ammunition, aviation and space exploration, provision of services to natural monopolies, extraction of mineral resources.
The draft law is pending its first reading before the Ukrainian Parliament.