Ukraine can become a reprocessing hub for Norwegian seafood – Government confirms the possibility for diagonal cumulation
Norway is a global leader in exports of seafood. According to official statistics, Norwegian seafood exports was worth 65.7 billion NOK per September 2020. The EU is the most important market for Norwegian seafood. At the same time, import duties on Norwegian fish and marine products for the EU market are comparatively high. For example, import duty on trout from Norway to the EU is 2.40%; hake – 4.50%, mackerel – 20% etc.
|Fish||Import duty for EU market|
Diagonal cumulation between Ukraine, the EFTA states and the EU makes it possible for Norwegian seafood to gain Ukrainian origin in order to utilize Ukrainian trade preferences.
How does diagonal cumulation impact business?
The main benefit of diagonal cumulation is the elimination of duties and other barriers to trade. As a result, a competitive advantage emerges. Raw material originating from the EU or an EFTA state can acquire Ukrainian origin for further export to the EU and EFTA markets. In addition, the fish can change origin even without sufficient re-processing.
Let’s look at an example to illustrate. Norwegian raw mackerel is imported to Ukraine with zero percent duty. In contrast, custom duty on raw mackerel from Norway to the EU is 20 percent. Duty on reprocessed mackerel (dried, salted fillets in brine) from Norway to the EU is 14 percent. The same product with Ukrainian origin will have zero percent duty when imported to the EU. Hake and trout are good examples as well. Adding low processing costs in Ukraine, this makes a promising business opportunity for Norwegian seafood exporters.
|Seafood product||Import duty
NO – EU
NO – UA
UA – EU
|Raw mackerel||20 %||0 %||0 %|
|Reprocessed mackerel||14 %||0 %||0%|
|Hake||4.5 %||0 %||0 %|
The practical possibility of diagonal cumulation is confirmed by the EU Commission, the EU Delegation to Ukraine, Customs Office of the Kingdom of Norway and now also by Ukrainian authorities. The NUCC together with First Chair Legal – a member law firm – have already prepared the details about diagonal cumulation in a one-pager that soon will be shared with the Chamber’s members or businesses ready to explore the potential for duty free access to the EU market.