VZCZCXRO3463
RR RUEHDBU RUEHLN RUEHSK RUEHVK RUEHYG
DE RUEHKV #1547 2541304
ZNR UUUUU ZZH
R 111304Z SEP 09
FM AMEMBASSY KYIV
TO RUCNCIS/CIS COLLECTIVE
RUEHC/SECSTATE WASHDC 8388

UNCLAS KYIV 001547 
 
SIPDIS 
 
STATE FOR EB/IFD/OIA AND EUR/UMB 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV PREL UP XH
SUBJECT: 13% TARIFF SURCHARGE ON AUTOS AND REFRIGERATORS 
EXPIRES 
 
REF: KYIV 1495 
 
¶1. (U) Summary.  The tariff enacted by the GOU in February 
2009, which applied a 13% surcharge on imports of cars and 
refrigerators, has expired as scheduled on September 7th. 
End Summary. 
 
¶2. (U) Using Ukraine's trade deficit as a justification, the 
GOU had enacted a 13% tariff measure in February 2009.  This 
tariff was originally intended to be applied to all imports, 
but a resolution of the Cabinet of Ministers reduced its 
scope to automobiles and refrigerators.  A time limit on the 
tariff was included in the enabling legislation, requiring 
the tariff to expire on September 7th. 
¶3. (U) As of September 7th, the measure has officially 
expired and the tariff is no longer valid.  The Ukrainian 
Customs Bureau confirms that the tariff is no longer being 
collected, and that the computer equipment that had been used 
in its collection has been disconnected. 
¶4. (SBU) Comment.  In June, the Ukrainian automobile industry 
appealed to the GOU to extend the tariff an additional six 
months, and there were media reports that three of the 
strongest blocs in the Rada (Litvyn, BYUT, and Regions) were 
in support of such a measure.  However, the language of the 
original law did not permit any extensions.  At present, 
there is another draft law being considered in the Rada that 
would apply a 15 percent tariff on imports of automobiles and 
meat products from January 1st, 2010.  Due to the improvement 
in Ukraine's trade balance (Reftel KYIV 1495), it makes no 
mention of Balance of Payments as a justification.  Deputy 
Ministry Piatnytskiy of the Ministry of Economy told EmbOffs 
that the draft law would face presidential opposition and 
that, if passed, it might only be applied to imports from 
non-WTO members. 
¶5. (SBU) The just-expired tariff was a failure as a 
fund-raising tool, according to customs figures which 
estimated that the loss of sales tax revenue caused by the 
tariff exceeded UAH 500 million (USD 60 million) during its 
effective duration.  Rather than revenue enhancement, 
measures such as the recently expired 13% tariff and the one 
now in draft legislation appear to be serving protectionist 
goals, especially as concerns the Ukrainian automotive 
industry.  With the presidential election looming in January 
2010, the sponsors of the new tariff bill are likely hoping 
it will help their parties generate populist support among 
farmers and factory workers.  End comment. 
PETTIT