By Carolina Curiel (ScrapMonster Author)
May 17, 2016 07:51:55 AM
MOSCOW (Scrap Monster): The Ukranian President Petro Poroshenko has returned a bill that proposes hike in scrap export duty. The bill that proposes temporary hike in ferrous scrap export duties from EUR 10 per tonne to EUR 30 per tonne was vetoed by Poroshenko and sent back to the Parliament with his suggestions. Earlier in April this year, the Ukranian Parliament had passed the bill and sent it for final Presidential approval.
Ukraine-EU Association Agreement
The Ukraine–European Union Association Agreement is a treaty between the European Union (EU), European Atomic Energy Community (Euratom), their 28 Member States and Ukraine that establishes a political and economic association between the parties. The agreement commits Ukraine to economic, judicial, and financial reforms to converge its policies and legislation to those of the European Union. Ukraine committed to gradually conform to EU technical and consumer standards. According to Poroshenko, the increase in scrap metal export duty is in violation of the provisions of the Agreement.
The agreement implies that parties are not supposed to impose any duties, taxes or similar restrictions on exports of good. In fact, any such duties that are in effect currently are to be nullified in a phased manner as per the terms of the schedule attached to the Agreement. The liabilities in line with the schedule will stay in effect even in cases where amendments are made to Ukrainian customs laws. The agreement allows exporting country to apply restrictions on exports, in case of severe shortage of the material in the domestic market. However, such actions should not hamper international trade. Under these circumstances, the imposition of increased scrap export duty for a period of three years could not be approved. Meantime, Poroshenko proposed that the exports duty may be increased to EUR 30 per tonne for one calendar year for the time being.
The Ukrainian Presiden, in his proposals, noted that the title of the law should be adopted in new wording: amending some Ukrainian laws regarding the reduction of scrap ferrous metal shortage on the domestic market. He also proposed that the Article 13 be expanded with new provisions, so that export transactions involving scrap metal are carried out in line with the law. The transactions must adhere to the provisions of the law on scrap metal and the law on export duty on scrap metal.
Export quota for 2016
The country had reported acute shortage of scrap metal in domestic market. In order to ensure sufficient availability of scrap locally, metal producers and regional lawmakers had urged for lowering the export quota for the current year. However, the government set the permissible volume of scrap metal exports out of the country at 1.1 million tonnes during the year, almost the same levels as 2015. According to Ukranian Ministry, Ukraine’s ferrous scrap generation is expected to increase marginally by over 7% from 4.28 million tonnes in 2015 to 4.6 million tonnes in 2016. Out of the 4.6 million tonnes, 3.5 million tonnes will head towards domestic market, assuming that 1.1 million tonnes will be shipped out of the country.