Jorge Zukoski writes: The main beneficiary of this nontransparent process was a quasi-state company, Khlib Investbud.
In a letter sent to President Viktor Yanukovych on April 14, the American Chamber of Commerce in Ukraine expressed its concern with the deteriorating situation on the Ukrainian grain market and requested that the president veto law #8324 that was passed by parliament on April 7.
The law envisages distribution of grain export quotas through selling them at auctions. This contravenes free market principles, current legislation and obligations Ukraine has with the World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT).
The Chamber believes that failure of the Ministry of Agricultural Policy and Food to issue stock confirmations that resulted in unfair and nontransparent distribution of export quotas in November 2010 and January 2011 is discriminatory towards major foreign grain exporters.
The main beneficiary of this nontransparent process was a quasi-state company, Khlib Investbud.”
– Jorge Zukoski, president of the American Chamber of Commerce in Ukraine.
Such actions demonstrate unequal treatment of market participants, in particular in the view of the newly adopted Law #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 would have to pay for them at auctions.
The Chamber stresses that it is also a bad signal to the market that those companies that failed to perform on their commitments before (received quotas in January and were unable to ship by March 31) are getting an extension for free while those who did not receive quotas would have to pay for them at auctions.
The main beneficiary of this nontransparent process was a quasi-state company, Khlib Investbud, a previously little known player on the market which received a large share of the quotas. Such developments destroy trust in the development of a predictable and equitable policy geared toward free markets in the agriculture industry in Ukraine that will attract and retain much-needed investment and technologies.
In the official letter disseminated on April 14, the Chamber requests President Viktor Yanukovych to veto law #8324 as it is against Ukraine’s international commitments and violates Article VIII of the General Agreement on Tariffs and Trade of 1994 and Article 3 of the World Trade Organization Agreement, of which Ukraine is a signatory and member.
Representing the biggest investors in Ukraine’s agriculture sector, food processing, logistics and trade, the Chamber is highly concerned about further developments in the grain market.
– Jorge Zukoski, president of the American Chamber of Commerce in Ukraine.
The Chamber 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 Chamber is also advocating for the immediate cancellation of the Cabinet of Ministers resolution that extended grain export quotas until June 30 and for the right for companies with stocks to freely export or to amend the resolution and allocation procedure of quotas allowing companies that were discriminated against before to receive the right to export their property without further delay.
Representing the biggest investors in Ukraine’s agriculture sector, food processing, logistics and trade – which have invested several billion U.S. dollars into the economy – the Chamber 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 Chamber remains committed to working with key policymakers to assist in developing legislation that will introduce the predictability, stability and transparency that is necessary to ensure the agricultural industry is competitive and is able to attract the much needed investment to expand production and play a significant role in feeding the growing global population.
Jorge Zukoski is president of the American Chamber of Commerce in Ukraine which unites leading companies from over 50 nations across the globe.
