"Soybean duties" that contradict Association Agreement with EU failed in the Rada

The Verkhovna Rada did not adopt a decision on amendments to the Tax Code, which proposed introducing a 10% export duty on rapeseed and soybeans.

Yaroslav Zhelezniak, deputy chairman of the Verkhovna Rada Committee on Tax and Customs Policy, wrote about this on his Telegram channel. The "soybean amendments" did not pass. The amendment flew in the hall," he wrote. The MP also published a photo of the vote, according to which 204 parliamentarians voted "for" the export duty, 8 against, 23 abstained.

The initiative to introduce a 10% duty on soybean and rapeseed exports belongs to MPs Dmytro Kysylevskyi and Andrii Motovylovets (the Servant of the People faction). The introduction of the corresponding amendments to the law was supported by the Verkhovna Rada tax committee. During the committee meeting, Zhelezniak called the initiative "self-interest": "If you did it in half a year, in a year, in advance, you warned the whole business - okay, call it state policy, protectionism. When it is done day after day in this way - it looks like "self-interest", sounds like "self-interest" and is "self-interest", most likely. I haven't seen such an approach in the committee for a long time."

According to Kysylevskyi's calculations, the introduction of the duty was supposed to bring the state UAH 7.3 billion annually. A number of specialized associations spoke out against it: the All-Ukrainian Agrarian Council, the Ukrainian Grain Association, and the European Business Association. In particular, the All-Ukrainian Agrarian Council believes that the imposition of duties is discriminatory for small and medium-sized producers, because the initiative is aimed at increasing the profits of processors at the expense of farmers and violates the Association Agreement with the EU, because small and most medium-sized farmers cannot independently export due to the small volume of raw materials they own, so they will not be able to take advantage of the exemption from duties on the condition of independent export. And traders will be forced to lower purchase prices.

According to farmers, in the medium term this will lead to a reduction in the sown areas of soybeans and rapeseed, as happened after the introduction of the "soybean amendments" in 2017.

The amendments were also criticized in the Main Legal Department of the Verkhovna Rada. According to the lawyers, the introduction of 10% duties contradicts the Association Agreement between Ukraine and the EU, which directly prohibits the introduction of new export duties or other measures of equivalent effect on exported goods.

In their opinion, it is worth noting that, according to the schedule set out in Annex I-C to the Agreement, the duty on rapeseed should be gradually abolished over ten years - to zero. For the eighth and ninth years, rates of 1.8% and 0.9% are envisaged, respectively, and from the tenth year - the complete abolition of the duty. As for soybeans, they are not included in the schedule at all, since no export duty has been introduced on them before.

The legal opinion also recalls the obligation of parliamentary committees to send draft laws related to European integration for examination to the relevant Committee on Ukraine's Integration into the EU and the Cabinet of Ministers. The opinion emphasizes that this was not done, despite obvious contradictions with obligations to the European Union.

Earlier, the media wrote about a number of risks of introducing duties, including, in particular, the loss of export positions in foreign markets, the decline in the price of agricultural land due to a decrease in the volume of crops of high-margin rapeseeds and soybeans, and a general negative impact on the agricultural sector. Experts called the reason for the increased demand for investment in processing a temporary blocking of the export of oilseeds through ports and a forced increase in domestic supply for processing companies. Currently, prices on foreign markets are more attractive for producers, but investors in processing capacities intend to return their investments, therefore they initiate such bills.

This time, it was possible to defend the position of agricultural producers thanks to the openness of civil society, the work of specialized associations, and the position of government representatives. But this does not mean that the attempt to resolve their financial issues by representatives of processors and processors themselves will not be repeated. Therefore, transparent work in the legal field should become a priority for everyone.