NAUDI is a change driver per the defense equipment export liberalization

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01.02.2022

In late 2021, NAUDI addressed the newly-appointed management of the Ministry of Economy of Ukraine and the Ministry of Strategic Industries of Ukraine with several initiatives regarding the burning need to abolish export licenses for private and public defense companies of Ukraine.

On January 28, 2022, the NAUDI experts attended a working session on the liberalization of the export control legal environment held in the Ministry of Economy of Ukraine.

During the session, the attendees considered a draft of amendments to the Law of Ukraine “On State Control over International Transfers of Military and Dual-Use Goods.” In addition, NAUDI contributed the following suggestions:

  • To abolish the requirement that public and private defense companies must request the right for international transfers of military goods;
  • To bring definitions used in the Law of Ukraine “On State Control over International Transfers of Military and Dual-Use Goods” in line with definitions used in the Customs Code and Tax Code of Ukraine;
  • To amend the resolutions of the Cabinet of Ministers of Ukraine that regulate expert evidencing per request review duration, and set out the sharply defined criterion of interagency approximation process.

The private defense and security sector is booming in Ukraine, with the share of private entities in the state defense order procurement growing accordingly. Today, the private defense sector procures over 60% of the state defense order. Further development of the Ukrainian defense companies is intimately related to the opportunity to operate internationally complying with the requirements of the Law of Ukraine “On Foreign Economic Activity.”

“At NAUDI, we conduct a detailed analysis of the best practices of the global defense market leader countries, – noted Andrii Senchenko, NAUDI Head. – It empowers us to expertize Ukraine’s legislation and contribute relevant suggestions. If adopted, the amendments will boost international business activity in the defense and security sector, fuel scientific and production capacity-building, and, therefore, strengthen national security.”

Regulations on export control over international transfers of military goods and goods that contain information classified as state secret (export licenses) have already lost their initial value. Currently, they substantially deter the international activities of Ukrainian businesses. Moreover, the mentioned legal barriers bring corruption-related risks and are contrary to the principles of the Law of Ukraine “On Foreign Economic Activity” and international practice.

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