EU wines started to enter Ukraine duty free. Expert opinion on this situation
From the beginning of the year, EU wines started to enter Ukraine duty free, a boon for European exporters and a challenge for Ukrainian winemakers. Even with the duty of 30-40-euro cents a liter, Ukraine was importing 10 times the volume of wines is exports. In 2019, Ukraine imported $147 million worth of wine and exported $12 million.
Ukraine's introduction of a zero duty on wine imports from the European Union will negatively affect domestic producers of these products. This opinion was expressed in a comment to AgroPortal.ua by the chairman of the association "Ukrsadvinprom" Vladimir Pechko.
He calls such a policy short-sighted, because the decision is not just about winemaking. “We talked about this back in 2018, realizing that there would be such requirements. If we turn to the Association Agreement with the EU, we will see that it will affect many other segments, just not all rules come into force in 2021, some will come into force next year, "said Pechko. According to him, the zeroing of duties on wine imports will deprive the Ukrainian market of protection. "We are fully opening our customs territory for the import of products with which we will not be able to compete. Especially given the subsidy policy pursued by the EU, "said the chairman of the association" Ukrsadvinprom ".
He adds that Ukrainian wine can compete with European wine in quality, but cannot compete on price. “Quality wine from good grapes costs about 150-250 hryvnias (up to $ 10). This price includes the cost of planting, care of grapes, its collection, production of wine itself, wages, etc. But Europeans have a subsidy component. They are reimbursed for the costs of planting a vineyard, irrigation, construction of wineries and so on. At the same time, our companies are building production facilities for expensive loans, ”says the expert. That is, he notes, there are unequal conditions for doing business. "Europeans sell wine for 3 euros. But they can sell at -3, it will still be profitable for them to do it, ”adds Pechko.
He agrees that Ukrainian winemakers receive some support from the state. There is partial compensation for equipment, tanks, pneumatic presses. But these funds are too few. “For example, we have 30% compensation for the equipment. In the last 2-3 years, about $ 15 million or UAH 400 million a year has been allocated. But, for comparison, the 4 largest companies - "Shabo", "Koblevo", "Odessainprom", LLC "Niva" - pay about UAH 1 billion in taxes, "says Pechko.
At the same time, they will have to compete with manufacturers who have billions of support each year. For reference: from January 1, 2021, a zero import duty on wine imported into Ukraine from the European Union came into force. This norm is stipulated by Ukraine's obligations to zero import duties on a number of goods within a 7-year period after the conclusion of the economic part of the Association Agreement with the EU. Until now, the duty on wine imports was 0.3-0.4 euros per liter.
