MINUTES № 20 RG of the Interagency Working Group Meeting on International Trade Facilitation and Logistics in Ukraine

MINUTES No 20 WG

Meeting of the Interagency Working Group on Facilitation of International Trade and Logistics in Ukraine

Kyiv

October 30, 2015

Venue: 14 Peremohy avenue

Opened: 11:00

Closed: 12:45

List of Participants: Annex No 1

AGENDA

1. Operation and development of Port Community System (ISPS) as a tool for facilitation of international trade and logistics in Ukraine:

- ISPS operation model

- Results of ISPS implementation

- Draft Law of Ukraine "On Amendments to the Law of Ukraine "On Sea Ports of Ukraine" regarding the operation of the Port Community System".

- Expansion of users and payers for services provided by the ISPS Data Center according to the agreements on technical support and maintenance of ISPS.

- Changes in ISPS operation model.

Time: 30 minutes

Speaker: Mr Voronoy V. I., Coordinator of the Expert Group at IWG, Deputy Head of USPA

2. The work on the examination and efficient implementation of the WTO Trade Facilitation Agreement.

- Findings of the Time Release Study in the Port of Odessa in compliance with the World Customs Organization (WCO) methodology

- The results of the Seminar on the Validation of the Final Report on the Readiness of Ukraine to implement WTO Trade Facilitation Agreement.

- Seminar for representatives of donor organizations interested in investment projects to facilitate the international trade and logistics in Ukraine

Time: 30 minutes

Speaker: Mr Fedorov O. O., Director General, LLC PPL 33-35

3. Miscellaneous

Mr Shchelkunov V. I., Vice Chairman of the IWG, Advisor to the Prime Minister of Ukraine, President of the ICC Ukraine, opened the meeting and announced the Agenda.

He proposed to discuss the issues, envisaged by the Agenda.

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On the first issue of the Agenda:

Operation and development of Port Community System (ISPS) as a tool for facilitation of international trade and logistics in Ukraine:

- ISPS operation model

- Results of ISPS implementation

- Draft Law of Ukraine "On Amendments to the Law of Ukraine "On Sea Ports of Ukraine" regarding the operation of the Port Community System".

- Expansion of users and payers for services provided by the ISPS Data Center according to the agreements on technical support and maintenance of ISPS.

- Changes in ISPS operation model.

Mr Shchelkunov V. I. opened the floor for Mr Vaskov Y. Y., Deputy Minister of Infrastructure

Mr Vaskov Y. Y. thanked the participants for the great work done by the Interagency Working Group during the recent years, the result of which was the first Single Window information system, i.e. Port Community System (hereinafter - ISPS), based on the best practices of the European Union, and efficiency of which is verified. He said that today, in the context of deregulation policies, the transition from paper to electronic document management, optimization and reduce of procedures and further harmonization with the best European practices, the role of Single Window is growing. He encouraged even more efficient and professional operation and faster response to the wishes of experts and customers. He proposed to discuss various opinions and suggestions for the proper development of ISPS in an open and professional way and to determine the role of the government, based on the reports of the leading experts and the best practices.

Mr Shchelkunov V. I. gave the floor to the representative of the Ministry of Economic Development and Trade, Mr Proskurov M. V.

Mr Proskurov M. V. said that the Interagency Working group on Facilitation of International Trade and Logistics in Ukraine (hereinafter - the IWG) meets on an ongoing basis and works quite effectively. He confirmed that the Ministry of Economic Development and Trade (MEDT) has defined its leading role in the system of trade facilitation and looks forward to fruitful cooperation. The results are already on the table. He hopes that this meeting would encourage the further work towards technical assistance for the implementation of the WTO Trade Facilitation Agreement in Ukraine.

Mr Shchelkunov V. I. gave the floor to the keynote speaker on the first issue of the Agenda, Mr Voronoy V. I.

Mr Voronoy V. I. described the results of the ISPS implementation in Ukrainian seaports.

He reported that the ISPS, implemented in the Ukrainian seaports by IWG and USPA (Ukrainian Sea Port Authority), is the only Single Window system in Ukraine in terms of the requirements of the WTO Trade Facilitation Agreement.

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He recalled that Article 369 of the "Association Agreement between Ukraine, on the one part, and the European Union, the European Atomic Energy Community and its Member States, on the other part, for 2014-2017" provides funding for the development of strategies, aimed at deterrence and removing of barriers to capacity building and development of transport infrastructure and international trade facilitation within transport, including implementation of Single Window - Local Solution project at the national level.

He informed that the Implementation Plan for this Agreement, adopted by the Cabinet of Ministers’ Decree as of September 17, 2014 No 847-p, provides for the integration of the national transport system into the European and international transport systems, consultations with AnNa (Advanced National Networks for Administrations) international group of experts, which aims to ensure the efficient implementation of Directive 2010/65/EU of the European Parliament and of the Council of 20 October 2010 on reporting formalities for ships arriving in and/or departing from ports of the Member States, and implementation of the concept of Maritime Single Window in ports of Europe.

He informed that USPA is responsible for:

- Implementation of this Directive under item 276 of Euro Integration Plan of Ukraine,

- Ensure the ISPS functioning under the paragraph 2 of Typical technological scheme of crossing the state border for persons, road, water, rail and air vehicles of carriers and goods carried by them, approved by the Cabinet of Ministers Decree No 451 (as amended and supplemented by the Decree of the Cabinet of Ministers as of 07.07.2015 No 491).

He informed that paragraph 5 of the Plan for further implementation of ISPS in the ports of Ukraine for 2016-2020, approved by the Minister of Infrastructure of Ukraine, provides for studying EU experience on implementation of the Single Window concept in the ports of Europe and consultations with AnNa experts.

Pursuant to the Plan, on 16-17 June 2015 in Odesa and on 14-18 September in Latvia, USPA organized consultations on implementation of Maritime Single Window with representatives of the AnNa project, customs, border agency and coast guard of Latvia.

During the discussion on the practical implementation of Directive 2002/59/EC and 2010/65/EC, implementation of elements of a national Single Window and national segment of SafeSeaNet, participants agreed that as part of the pilot project on the introduction of Single Window - Local Solution in the area of Southern customs and ports of Odessa Region and on implementation of ISPS, USPA made great efforts aimed at the implementation of Directives 2002/59/EC and 2010/65/EC, which meet European standards.

As a result of these consultations, European experts of AnNa project, who participated in the Seminar, prepared the following recommendations.

Key findings of European experts:

1. There should be only one system. You cannot build a model in which you can simultaneously work in different systems. In that case, USPA, marine terminals, supervisory authorities and other members of the port community, providing information processing, would have to own 3,4,5-10 computers with ISPS. It would be impossible to connect them, as they all have the separate servers. It does not respect the Single Window principles.

2. ISPS, introduced by USPA in the seaports of Ukraine, has already implemented much of what corresponds to the European Single Window and should be implemented by 2017 according to the Agreement with the EU. European colleagues are surprised by what we have done already, despite the fact that no one has forced us, unlike it was in the EU, where there were mandatory requirements and deadlines.

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3. It is necessary to implement the existing ISPS elements in all the seaports of Ukraine.

4. Given the inadequacy of government procurement and noncompetitiveness of public institutions in the information technology market, it is appropriate to continue to implement the project according to the existing model of cooperation with Data Center on the principles of self-sufficiency.

5. Consideration should be given to guarantee the sustainable financing of national information projects at national and European levels.

He also reported on the analysis of the shortcomings and advantages of the transmission of the system to USPA as for different models, that were prepared by USPA on the order of the Ministry of Infrastructure.

Mr Bayazitov L. R. asked the speaker on the possible benefits of transferring the system to public control.

Mr Voronoy V. I. said that there is one advantage: no disputes in the part of the information on the server of a private organization. He pointed out that the data center is under the constant control of the State Service for Special Communications and Information Protection of Ukraine, which is responsible for the safety of information in the system, its immutability and full compliance with laws and regulations governing electronic documents.

Mr Proskurov M. V. said that, based on the deregulation policy that Ministry of Economic Development is implementing, and the need for economy cut in public funds, it is not appropriate for the state to purchase the system today, given the compliance of the organization, providing these services, to the legislation. The system is working under the self-sufficiency principle, and the MEDT is enforcing a policy aimed at search for technical assistance for the implementation of projects on trade facilitation, including ISPS implementation.

Mr Vaskov Y. Y. said that the media, potential and existing experts and other stakeholders, that welcome the ISPS, were invited to attend this meeting. It was done publicly and in advance. However, almost none of them attended the meeting. He called those who attended the meeting to the public and open discussion of issues raised, so that no questions undiscussed were left. He emphasized the Ministry’s of Infrastructure position: any work aimed at deregulation, improvement and development of common information systems, would be transparent, to confirm that the main purpose of the Ministry is to simplify procedures as it was done at the major EU ports.

Mr Fedorov O. O. reported on the problems arising in connection with ISPS. He reported that the principle of self-sufficiency, on which the ISPS was built, has its positive and negative sides. Equipment and software has been purchased by private investors exclusively from the official dealer and it is licensed. More than 600 users of ISPS have concluded the relevant agreements on technical assistance. There are users who pay for services, and a significant share of users who do not pay for access to the system. Today only freight forwarders pay for the use of ISPS. This is understandable when they accuse USPA or Data Center that they carry the financial burden regarding ISPS. ISPS works for the port community: sea lines, agents, stevedoring companies and other organizations working in this area, but somehow the principle of self-sufficiency should be “covered”

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only by freight forwarders. Anyone who provides or receives services through ISPS should compensate the cost of its maintenance in one form or another.

He reminded that when the ISPS was launched, it was just a local decision, i.e. pilot project for Odessa seaport. Today two ports are connected. The connection of all the other ports is expected. It requires more equipment and the funds for its maintenance.

At the same time, he pointed out the need to establish service centers in ports for customers that would submit information on paper, free of charge. Thus, there will be no monopoly and the customers would have the right of choice. He proposed USPA together with Data Center to monitor who receives services, in order to reduce the burden for freight forwarders and spread that payments evenly between those who provides or receives services through ISPS.

Mr Lugovets V. A. offered the Ministry of Infrastructure to examine the situation related to the further development of ISPS to define the future expansion of ISPS, the funds necessary for its maintenance, and to submit the results to those, who are able to draft a project of technical assistance, which could adequately address donors of European Community. Ministry of Infrastructure may be the applicant; beneficiaries - all transporters.

Mr Golubiatnikov M. I. gave his professional assessment of ISPS implementation, suggesting that ISPS is an advanced system that meets European standards. At the same time, he drew attention to some shortcomings. He received expert commentaries on objective reasons for certain shortcomings and proof of the work done to eliminate other deficiencies.

DECIDED:

1.1. To take into consideration the information provided by the speaker.

1.2. To recommend the Ministry of Infrastructure of Ukraine to retain the existing investment model of port community system.

1.3. To offer USPA to study the situation related to the further development of ISPS, to determine the funds required for its maintenance and drafting the project of technical assistance.

Deadline: 12.11.2015

Responsible: IWG Secretariat

On the second issue of the Agenda:

The work on the examination and efficient implementation of the WTO Trade Facilitation Agreement.

- Findings of the Time Release Study in the Port of Odessa in compliance with the World Customs Organization (WCO) methodology

- The results of the Seminar on the Validation of the Final Report on the Readiness of Ukraine to implement WTO Trade Facilitation Agreement.

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- Seminar for representatives of donor organizations interested in investment projects to facilitate the international trade and logistics in Ukraine .

Mr Fedorov O. O. presented the results of the meeting pursuant to item 1.7 of the Minutes No 15 of IWG meeting as of 08.28.2014 "Findings of the Time Release Study in the Port of Odessa in compliance with the World Customs Organization (WCO) methodology” (Annex No 2 - Presentation, Annex No 3 - Results). He reported that the aim of the study was to identify the strengths and weaknesses of the process to make the necessary adjustments. He analyzed some indicators of research. He thanked the control authorities in Odessa for their active participation in the study. He proposed to conduct such TRSs permanently not only at sea border crossing points, but at the checkpoints for other modes of transport in order to identify bottlenecks impeding the movement of goods across the border in order to respond to them through the IWG or ministries and agencies, which revealed the following deficiencies, to amend the regulatory framework, to show that Ukraine has the capacity and commitment to become a powerful transit state.

Mr Platonov O. I. informed on the appeal to Prime Minister drafted by the Public Council under the Ministry of Infrastructure, requesting priority consideration for trade facilitation and transport issues associated with technologies, because today it is one of the actual services that can generate GDP without great efforts. This requires clear framework, enshrined in law.

Mr Proskurov M. V. reported that the Committee of the Ukrainian Parliament has registered a bill on ratification of the Trade Facilitation Agreement. On November 3, the relevant hearings should take place. The bill will be considered as soon as possible. He reminded that during a series of seminars concerning the Agreement, two monumental studies were made, that clearly showed that Ukraine has problems regarding the readiness for the implementation of this Agreement. It was proposed to search for financial aid, necessary for the implementation of the Agreement as soon as possible. Said that Ukraine needs help in the form of funds, training counselors and others. Therefore, it was decided that the central authorities or representatives of business associations provide suggestions to the MEDT, in order to clearly specify the scope of financial assistance. He informed that currently they are preparing a summary table, which will be provided to UNECE experts up to 19 November to complete the study of Ukraine's readiness to implement the WTO Trade Facilitation Agreement. He thanked the central government authorities, which have already provided the necessary information.

Mr Platonov O. I. informed that the next meeting is scheduled for November 19, 2015 as part of the Seminar for international donors and investors interested in investing in trade facilitation in Ukraine and stressed that if the ministry wants to get real help, it must prepare a substantiated request.

Mr Voronoy V. I. drew attention to the very dangerous situation related to the dismissed (lustrated) employees of the Department of Customs under SFS. This is the first meeting of the IWG, where there are no SFS representatives. It is impossible to move towards trade facilitation without customs experts. He proposed to apply to the SFS Head regarding this matter.

Mr Vaskov Y. Y. added that it is a serious matter, as in addition to issues IWG is responsible for, there is also the 1st of January 2016 coming, when, according to

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Government Decree No 491, important changes in customs procedures are coming into force. Those changes are supposed to move Ukraine towards the European model of control procedures in ports. There are two months left, however, the readiness level of the Customs Service is still very low and it is unclear with whom to work on the implementation of this very simple model. Before the arrival of the ship with containers, there should be the option to get advanced information to define the instrumental control level. This helps the port operator to find the separate lot for containers to be monitored. The percentage of these containers (selected by customs to perform physical control) should meet European practice. Other containers should be unloaded and released according to the usual procedure. If this doesn’t happen, Ukraine will be unable to implement this provision.

Mr Platonov O. I. reported that they would prepare a report to the Prime Minister asking for urgent orders to the Minister of Finance to handle this matter.

Mr Proskurov M. V. pointed out that the customs service is the main performer responsible for implementing the WTO Trade Facilitation Agreement A-class provisions. Therefore, it is not clear how this is carried out without the participation of customs officials.

In conclusion, Mr Vaskov Y. Y. stressed that the Ministry of Infrastructure definitely supports the development of electronic documents, especially in the interaction between the port community, customers, port authorities and public regulatory bodies, as well as the maximum coverage of all ports and all processes. Firstly, only electronic document can identify the bottlenecks of each stage; secondly, they lead to the acceleration of processes, and thirdly and most importantly, as a result there is a reduction and complete elimination of physical contact between the officer and the client, respectively - the maximum exclusion of corruption practices. He informed that the Ministry of Infrastructure believes that the development of electronic documents should take place with regard to experts in port services, especially the EU and US experts. Just like freight forwarders and associations, he is also concerned that only they bear the financial burden for the use of the ISPS services. He emphasized that now more and more users work with ISPS, so you need to balance the payment system and distribute it between all the ISPS users. Thus, it is important that all categories of users had the free alternative, which will be monitored by the USPA. He asked the organization that provides services to ISPS users, to continue to adhere to financial transparency in their activities and regularly publish reports on the financial performance.

DECIDED:

2.1. To take into consideration the information provided by the speakers.

2.2. To draft a report to the Prime Minister asking for urgent orders to the Minister of Finance to investigate the situation in connection with the dismissal of officers at the Department of Customs under the SFS, to bring order in this matter and ensure the systematic involvement of SFS competent employees in IWG meetings.

Deadline: 20.11.2015

Responsible: IWG Secretariat

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2.3. To recommend LLC PPL 33-35 (Data Center) to prepare proposals concerning the coverage of costs for ISPS implementing by real recipients of services.

Deadline: 15.12.2015

Responsible: LLC PPL 33-35

2.4. To schedule the Seminar for representatives of central government authorities and representatives of international donor organizations that are interested in investment projects to facilitate international trade and logistics in Ukraine on 19.11.2015.

Deadline: 19.11.2015

Responsible: IWG Secretariat, MEDT

2.5. To recommend government authorities to take part in the Seminar for representatives of donor organizations that are interested in investment projects to facilitate international trade and logistics in Ukraine.

Deadline: 19.11.2015

Responsible: IWG members

Chairman V. I. Shchelkunov