The move is enshrined in Ukraine's 2008 State Budget (Registration number 107-IV)which was adopteds by the parliament RADA at the end of December.

The processors in teh FEZ were the major consumers of U.S. poultry as tThe majority of poultry imports were imported through the FEZs in order to circumvent the prohibitively high import duty, according to the USDA's Foreign Agricultural Service.

* "The legality of this law is in question but in the short term the intended outcome is clear, to stop imports of poultry through the FEZs."

USDA Foreign Agricultural Service

In a Global Agriculture Information Network (GAIN) report FAS saqid the action of the Ukraine government closed the legal channel through which the 75 per cent of U.S. poultry products are imported.

The remaining 25 per cent is imported through other unofficial channels but these products are expected to be hit as well because of a new "Contraband Stop" programme initiated by Ukraine's new Prime Minister.

FAS said that an unofficial translation of the relevant portion of the new law related to FEZs said: "In case of bringing in (sending) to the territories of the special (free) economic zones and priority development territories of excise goods and goods with HS Codes 1-24 according to the Ukrainian HS Listing (2371?-14), all businesses will lose their existing privileges related to payment of custom duties and value added taxes. The privileges are revoked with no connection of purpose of their original introduction.

"In case of other legislative acts of Ukraine (the dates of adoption are not relevant) including those that grant the stability of the taxation regime by establishing a different regime and condition for tax payments (compulsory payments) the norms of this Law will prevail (override all existing laws).

"According to Article 19 of the Constitution of Ukraine1 (254?/96-??), state authorities are prohibited from adopting and executing decisions (Editorial: rulings) that establish different rules of taxation for the entrepreneurs that are developing investment projects in the special (free) economic zones and in the territories of priority development if they are different form those established by the norms of this Law."

FAS said: "The legality of this law is in question but in the short term the intended outcome is clear, to stop imports of poultry through the FEZs. Possible WTO accession in 2008 will resolve this situation and reduce the import duty rate of poultry to non-prohibitive levels."

In 2007, Ukraine was a $70 million dollar market for U.S. poultry.

Further Reading

- You can view the full FAS report by clicking here.