PRESS RELEASE: The American Chamber of Commerce in Ukraine Strongly Opposes Distribution of Grain Quotas Through Selling Them at Auctions
Kyiv, April 18, 2011 – In a letter sent to President Yanukovych on April 14 the American Chamber of Commerce in Ukraine expressed its concern with the deteriorating situation on the Ukrainian grain market and has requested that the president veto law No. 8324, which was passed by the Verkhovna Rada on April 7th.
The law envisages the distribution of grain quotas through selling them at auctions, which contravenes free market principles, current legislation as well as the obligations Ukraine has undertaken to GATT and WTO.
The American Chamber of Commerce in Ukraine believes that failure of the Ministry of Agricultural Policy and Food to issue stock confirmations, which resulted in an unfair and nontransparent distribution of export quotas in November 2010 and January 2011, is discriminatory towards major foreign grain exporters. Such actions demonstrate unequal treatment to market participants, in particular in the view of the newly adopted Law No. 8324 "On Amendments to the Certain Laws of Ukraine regarding Provision of the State Support for Development of Agriculture." As a result, a group of companies received quotas for free while others will have to pay for them at auctions.
The American Chamber of Commerce in Ukraine stresses that it is also a bad signal to the market that those companies that failed to meet their commitments before (receiving quotas in January but being unable to ship by March 31) are getting an extension for free, while those who did not receive quotas will have to pay for them at auctions. The main beneficiary of this nontransparent process was a private company "KhlibInvestBud" which received almost 50% of all quotas allocated in January and was incapable of meeting its export commitments. This is further destroying trust in the development of a predictable and equitable policy geared towards free markets in the agriculture industry in Ukraine, which would attract and retain much needed investment and technologies.
In the official letter disseminated on April 14 the American Chamber of Commerce in Ukraine urged the President of Ukraine to veto law No. 8324, as it is not in line with Ukraine's international commitments and violates Article VIII of the General Agreement on Tariffs and Trade of 1994 (GATT), as well as Article 3 of the World Trade Organization Agreement (WTO) of which Ukraine is a signatory and member. The American Chamber of Commerce in Ukraine requests the president's support in ensuring the development of a competitive agricultural market that will promote free market principles and equal treatment of all operators.
The American Chamber of Commerce in Ukraine is also advocating the immediate cancellation of a Cabinet of Ministers of Ukraine resolution that extended grain export quotas until June 30, 2011 and for companies with confirmed stocks either to be given the right to freely export, or to amend the resolution and allocation procedure for quotas, allowing companies that were discriminated against before to receive the right to export their property.
The American Chamber of Commerce in Ukraine is highly concerned about further developments in the grain market, as currently there is a lack of clarity about the government's agricultural policy. This lack of clarity will influence the decisions of companies in relation to investing in the new crop campaign due to the lack of predictability and transparency in policy and process.
The member companies of the American Chamber of Commerce are among the biggest investors into Ukrainian agriculture, food processing, logistics and trade, and have invested several billion dollars into the sector over the years. The American Chamber of Commerce in Ukraine remains committed to working with relevant policy makers to develop a more efficient and competitive agricultural industry based on free market principles.