Maritime Transport of Ukraine and the EU accession
The European Commission assessment published in February 2023 indicated some level of preparation (2 points out of 5) in the area of transport policy in Ukraine and emphasised the need for Ukraine to implement legislation that aligns with the Port Services Regulation 2017/352. These regulations mandate that tariffs for pilotage services are set in a transparent, objective, non-discriminatory, and proportionate to the cost of the service. However, Ukraine has not made any progress in bringing national legislation closer to this regulation. In terms of transparency of the sector, no transport data was provided under the regulated statistics, according to the report.
To date, the tariff for pilotage services in the seaports of Ukraine has been established without any economic justification. In the first decade of October, as this Digest was finalised, the Ministry for Communities, Territories and Infrastructure Development of Ukraine (MTU) proposed a draft order on Tarrifs. The initiative was meant to increase the pilotage dues rate by 20% in the seaports of Izmail, Reni, and Ust-Dunaysk, including the fee for keeping a pilot on board a vessel. The reason given for raising the tariff was solely to boost the income of the Ukrainian Sea Ports Administration (USPA).
The rise in port tariffs presents a tough decision for the domestic agricultural sector. The Ukrainian farmers are forced to choose between losing money due to expensive logistics or accepting low prices on the Ukrainian internal market in high competition conditions. Metallurgical and agrarian industries, as well as manufacturers that use imported raw materials, could benefit from lower port tariffs and thus bring higher revenues into the Budget of Ukraine.
The same problem exists with port dues, which are port infrastructure charges according to Regulation 2017/352. For the past 11 years, the MTU has not been able to develop and approve a methodology for calculating port dues rates required by Article 22 of the Law of Ukraine On Seaports. As a result, the elements serving as a basis for determining the structure and the level of the port infrastructure charges have remained unknown, which contradicts with the principles set out in the Regulation 2017/352 and Directive 2019/883.
Furthermore, a portion of the port fees is allocated to activities unrelated to vessel utilisation of the seaport infrastructure. As per several by-laws, the USPA uses income from port dues to fund the maintenance, restoration, and safety of navigation on inland waterways. It also finances the operations of the River Information Service (RIS) and the Maritime Search and Rescue Service (MSRS).
In May, the Parliament of Ukraine registered a draft law No. 9283 on the regulation of activities in the safety of life and search and rescue of people at sea. The draft law proposes to enshrine the financing of the search and rescue at sea (SAR) at the expense of port dues, but without specifying the maximum ceiling percentage of funds. In the absence of prior financial and economic forecasting of the SAR system funding, the port dues might increase with the boost in the MSRS’ expenses, thereby increasing the logistics costs in seaports for exporters and importers. The alternative draft law No. 9283-1 has less chance of being voted on due to the position of the Ministry of Finance of Ukraine and the Parliamentary Committee on Budget, which are critical of financing the SAR from the state budget.
The draft law No. 1193-1, which promotes the harmonisation of legislative acts of Ukraine regulating the carriage of dangerous goods through Directive 2008/68/EC, has been discussed for four years. In December 2021, the European Business Association publicly criticised this draft law since it could impose licensing on the storage and transhipment of dangerous goods, which contradicts the principle of deregulation. The observations of the Main Scientific and Expert Department of the Parliament referred to the exemption of urban transport and the clarification of certain terms and the powers of authorised bodies in the field of carriage of dangerous goods. It also highlighted the need to regulate the procedure of certification of authorised officers responsible for the safety of transportation of dangerous goods. Consideration of this draft law is expected at the current session of the Verkhovna Rada of Ukraine.
Ukraine continues creating specific rules to enforce the law on inland waterways adopted in 2020. By order No. 462 of 30 May 2023, the MTU approved a new version of the Regulation on the River Information Service (RIS), which would become effective in February 2024. This by-law was developed to align with the Directive 2005/44/EC and Commission Regulation (EC) No 414/2007 and in order to determine the RIS’ organisational and legal status and functions. It also provides for a register of inland waterways on which harmonised information services are provided, and the procedure for exchanging information between the RIS and its users.
In May 2023, the MTU, for the third time, published a draft order on the approval of the Procedure for authorising a classification society (recognised organisation) to supervise the fulfilment of merchant shipping by sea vessels requirements. The two prior draft orders were not approved by the State Regulatory Service of Ukraine, as they did not comply with the current laws and principles laid down in the Directive 2009/15/EC and Regulation No 391/2009.
In particular, the recognised organisation term is stipulated in point “g” of Article 2 of the Directive 2009/15/EC. It provides that an EU member state can delegate the authority of convention certification exclusively to recognised organisations approved by the European Commission in the manner specified by Regulation No 391 /2009. The draft order does not mention that the relations of the Shipping Administration with the classification societies should be related to the decisions of the European Commission. In addition, the document does not resolve the existing conflict of interests of the Shipping Administration and its subordinated classification society, aka Shipping Register of Ukraine. Furthermore, it grants the Shipping Administration discretionary powers, and establishes control procedures that contradict the Law of Ukraine on the principles of state supervision (control) in the field of economic activity.
The Directive 2013/54/EU concerning certain flag state responsibilities for compliance with and enforcement of the Maritime Labor Convention, 2006 (MLC 2006) has not been yet been aligned with by Ukraine as the Verkhovna Rada has still not ratified the Convention. The minimum global standards outlined by the MLC 2006 aim to guarantee decent living and working conditions for all seafarers, regardless of their nationality or the flag of the ships they serve on. Additionally, it strives to prevent social dumping and promote fair competition among shipowners who observe the seafarers’ rights. The last attempt to ratify the MLC 2006 in 2021 ended with the refusal by the State Regulatory Service of Ukraine to approve a draft law developed by the MTU due to the shortcomings of the regulatory impact analysis.
