13:47 23.07.2020

Bill on local content policy does not comply with Ukraine-EU Association Agreement – PM

3 min read
Bill on local content policy does not comply with Ukraine-EU Association Agreement – PM

Prime Minister Denys Shmyhal said that the bill on local content policy adopted by the Verkhovna Rada at first reading, aimed at the development of mechanical engineering, in its current version does not correspond to some parameters of the Ukraine-European Union Association Agreement.

"The law was adopted at first reading. It is quite tough for me and our international partners. It is quite interesting for our industry and economy," Shmyhal told reporters on Thursday during his working visit to Brussels.

The prime minister said that at the moment the authorities' task is to find a "golden mean" in order to support their own economy during the crisis, but at the same time, not to violate the international agreements that have already been signed. Shmyhal is sure that there are opportunities for such a compromise.

"So far, international partners take it absolutely calmly, as they understand that this is the first reading," he said.

The prime minister also said that the government's position is that there can be no talk of strict local content policy, but only of the use of non-price criteria in the amount of 30% when conducting public procurement, which will give some preferences for goods with component of Ukrainian production.

"In the current version, it does not correspond to some parameters of the Association Agreement, so the government will insist that we edit the version along with the MPs so that it does not violate our international agreements, and not only about the association," Shmyhal said.

As reported, on July 21, the Verkhovna Rada adopted at first reading bill on local content policy aimed at the development of mechanical engineering, it implies preferences in public procurement with a local content requirement of 25-40% from 2021 with a further increase by another 15 percentage points starting from 2024.

Bill No. 3739 was registered in parliament on June 24, 2020. Its co-authors were mainly MPs of the Servant of the People faction, including, Deputy Chairman of the Verkhovna Rada Committee on Economic Development Dmytro Kysylevsky, Dmytro Natalukha, Roksolana Pidlasa, heads of parliamentary factions and groups, parliamentary committees, as well as members of the economic development committee and other members of parliament, a total of 37 co-authors.

However, Head of the EU Delegation to Ukraine Matti Maasikas sent a letter to Prime Minister Denys Shmyhal and Speaker of Parliament Dmytro Razumkov, in which he expressed concern about the initiatives of the government and parliament on preferences for Ukrainian machine building in public procurement, which contradict Ukraine's commitments under the World Health Organization (WHO). In addition, the EU believes that the bill violates the principles of non-discrimination, and taking into account the proposed level of localization of up to 60%, it actually deprives foreign products of the opportunity to participate in public procurement

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