On the 2nd of February 2011 another draft law to amend the Law of Ukraine “On State Support of Agriculture of Ukraine” was registered in the Verkhovna Rada of Ukraine (registration No8053, hereafter – draft law No 8053). Authors of the draft law are Vitaliy Bort (Party of Regions), Maryna Perestenko (Communist Party), Sergiy Tereshchuk (People’s Party) and Ivan Sydelnyk (All-Ukrainian Union “Bat’kivshchyna”). On the 15th of February, 2011 at the meeting of the Committee on Agrarian Policy and Land Relations of the Verkhovna Rada of Ukraine where General Director of “NIBULON”, Hero of Ukraine Oleksiy Vadaturskyy took part, the draft law was reviewed and by majority of votes was returned for revision as inappropriate and the one that contradicts the Constitution and current laws of Ukraine. However, on the 25th of February, 2011, people’s deputies of Ukraine Inna Bogoslovs’ka (Party of Regions) and Maryna Perestenko (Communist Party) again and Ivan Sydelnyk (All-Ukrainian Union “Bat’kivshchyna”) did not even wait until the passions as to the draft law No 8053 smooth down and it would be completed, and registered the draft law of the Law of Ukraine “On Amendments to the Law of Ukraine “On Grain and Grain Market in Ukraine” (as to grain export under foreign economic agreements (contracts)) (registration No 8163) in the Verkhovna Rada. Thus the text of the draft law No8163 appeared on the official website of the Verkhovna Rada of Ukraine only on Monday the 28th of February that once again confirms its classified content. The draft law No 8163 provides that “… grain export under economic agreements (contracts) is performed by agricultural producers of grain, in the extent of own production, other economic entities operating in the grain market, in the amounts stipulated by agreements (contracts) with agricultural producers for corn growing that have made advance payment in amounts not less than 50 percent of the price of corresponding production that prevailed in the stock market of Ukraine for a period of not less vegetation growing period of the corresponding crop, and State operator on export grain security”. According to the Law No 8163 “state operator on grain export security” should be a state enterprise or commercial company, where the State owns more than 25% of its authorized capital, and it is determined on a competitive basis by the Cabinet of Ministers of Ukraine. As to 2011 it is permitted “… as an exception, entities acting on the grain market to set off the volumes of winter crops to the volumes of export, advance payments for which are made not later than 15 days from the date of entry of the Law into force. The draft law No 8163 introduces a type of contract, as contract for growing, which is not provided for laws in force. In addition, the draft law No8163 introduces the concept of “State operator on grain export security” regardless the fact that paragraph 5 of Article 1 of the Law of Ukraine “On Grain and Grain Market” already contains a definition of “State agent on export and import of grain and products of its processing – the state enterprise or a business entity, share of the state in its authorized capital is not less than 75 percent, which is determined on a competitive basis by the Cabinet of Ministers of Ukraine on implementation of international treaties to ensure the export and import of grain and products of its processing. The draft law No 8163 does not differentiate functions that should be performed by the State operator on grain export security and the State agent on export and import of grain and products of its processing that lead to unnecessary duplication and regulatory uncertainty in the legal regulation of foreign economic transactions with grain. In explanatory note to the draft law there is a following rationale: “to implement a healthy competitive environment in the internal market, it is offered to define the national operator of grain export on a competitive basis and to permit export operations to other participants in the grain market, but only provided that they participate financially in formation of the future harvest”. But creating the state operator with opportunities that are not available to other exporters, does not correspond with the principles of fair competition. In fact, by the draft law No 8163 to the entity that operates legally in the grain market and one type of its activity is purchase at the domestic market for the national currency and export of grain, additional rigid discriminatory requirements are established and significant additional risks are imposed: 1. Encumbrance of legally established business and financial activity by actual constraint to conclude so-called “contracts for the cultivation” of crops with agricultural producers. 2. Single option constraint to accomplish advanced payment by “agreements for cultivation” in the amount of not less than half of the grain cost actually before the sowing is started to hypothetical direct producer-partner, the business activities of which they have no influence and as to which before sowing it is not known whether he will really sow is that particular culture (whether the producer will have necessary fund balance and/or means, seeds, etc.) and whether he will actually supply this particular grain (corn grown can be seized, for example by judicial decision for tax or other debts, etc.) 3. An order and payment scheme is actually imposed on an exporter with no alternative, usage as a price indicator at the advance payment by so-called “agreements for cultivation” of so-called “exchanging market of Ukraine”, which actually does not exist, including by Government of Ukraine creation of monopoly formation – State Agrarian Exchange. With such a load of responsibilities and risks of an independent entity of the grain market – which is a contender for grain export, no other requirements for “state operator on grain export security”, which according to the draft law of the law can be ¾ of non-commercial company, were imposed. Thus, discrimination of grain market entities, which are not “agricultural producers” and/or “state operator on grain export security”, is committed by the draft law No 8163, unacceptable and intolerable conditions for their operating activity are created, which is provided by class 51 of National Classifier of Types of Economic Activities of Ukraine, as for example, wholesale trade and export of agricultural products, that is carried out including the owners of stores at their own expense (CTEA § 51.2-51.7). There is no healthy competition here! Under these conditions, the provisions of the draft law No 8163 do not comply with the legislation of Ukraine and international law, namely: 1. Violate the legal guarantees of protection of competition, enshrined in Article 42 of the Constitution of Ukraine. 2. Inconsistent with the Law of Ukraine “On Grain and Grain Market in Ukraine”, which states that the grain market is based on principles of free competition, free choice of grain sales directions and price determination. 3. Inconsistent with the Law of Ukraine “On Foreign Economic Activities”, which does not involve restrictions that would be resulted from the need to purchase of right for export, depending on the form and order of payments for goods and establishes the principles of freedom, legal equality and non-discrimination, equal protection of interests of all entities engaged in foreign economic activity interests (Article 2), equal right of all entities engaged in foreign economic activity to conduct any of its kinds, regardless of forms of ownership and other characteristics (Article 5). 4. Do not meet the requirements of the Convention on the grain trade in 1995, Ukraine joined to it on the 6th of July, 2010, namely: promotion of the international grain trade extension and ensuring of the most free possible development of such a trade, including eliminating of trade barriers (Article 1), settlement of a transactions of grain on favorable terms so as not to damage the normal industrial structure and commercial international trade (Article 6). 5. Contradict the Law of Ukraine “On State Support of Agriculture of Ukraine” in Article 14, whereby the decision of central and local authorities on the introduction of any administrative, quantitative or qualitative restrictions on the unconditional and free movement of agricultural products all over Ukraine and on export are considered invalidandnotenforceable. In addition, the draft law of the law No8163 violates the Civil Code of Ukraine (Articles 3, 627, 628, 712), where restrictions on the timing and settlement terms for delivered goods are not set, and the Commercial Code of Ukraine (Articles 265, 382), that does not limit the right of parties to determine the order and terms of payment freely. In compliance with these legislative innovations, carrying out of such types of economic activities provided by class 51 of National Classifier of Types of Economic Activities of Ukraine, as for example, wholesale trade and export of agricultural products, that is carried out including owners of stores at their own expense (CTEA § 51.2-51.7) will be impossible for entities, which in recent years provide 90 percent of grain export. Hidden expropriation will actually take place in relation to these entities, which is determined by the Seoul Convention 1985 on establishing the Multilateral investment guarantee agency (paragraphs II, “a” art. 11) as any legislative action or administrative action or inactivity that comes from the host state, as a result of which investor disposes of property rights as to his capital investment, control over it or a substantial income from such investment. * * * It should be noted that despite the fact that the text of the draft law No 8163 was released on the official website of the Verkhovna Rada of Ukraine only on the 28th of February, 2011 in the second half of the working day, without giving time to participants of the grain market to study and to experts from the Central Scientific Experts Office of the Verkhovna Rada of Ukraine to handle and prepare appropriate conclusion and to notify representatives of the market and civic organizations, the Committee on Agrarian Policy and Land Relations hastily included the draft law to agenda dd 01.03.2011 and at 1400 actually without discussion decided on its approval in the proposed by authors edition. Such actions of individual members of parliament show extreme nontransparancy procedure of legislative decisions on key issues for agricultural market and unpredictability of government policy in agricultural sector that could question the existence of the agricultural market per se and agricultural sector in general.