Ukraine Puts Hold On Duty-Free Sugar

KIEV -- Ukraine has temporarily banned duty-free imports of sugar from Russia and Belarus under a loophole in a free-trade agreement, the government press service said Thursday.

It said the decision had been made to "defend the local market from massive supplies of cheap Russian and Belarussian white sugar that hit Ukrainian sugar producers' revenues."

Ukrainian agricultural officials had earlier said Russia and Belarus might export at least 300,000 tons of white sugar to Ukraine in 2001. They said Russian and Belarussian sugar is cheaper as it is produced from raw cane sugar, whereas local sugar plants refined sugar beet.

Earlier this year, the Ukrainian government prevented local sugar producers from selling white sugar at prices below 2,300 hryvnas ($433) per ton, while Russian and Belarussian producers are offering sugar at about 2,100 hryvnas.

"In some eastern Ukrainian regions, traders had registered contracts to supply Russian white sugar at less than 2,100 hryvnas," one trader said.

Russian and Belarussian sugar traders had enjoyed duty-free status because of a free-trade zone encompassing Russia, Belarus and Ukraine. However the duty-free agreement allows countries to exclude certain commodities.

Despite the Ukrainian restrictions on producers selling sugar below 2,300 hryvnas, no such limits have been put on traders, who often receive sugar as payment in barter deals.

Traders said domestic white sugar bid prices had fallen to between 2,030 hryvnas and 2,050 hryvnias per ton as of Oct. 5 from 2,200 hryvnas on Sept. 25. Traders expected the trend to continue, though the ban on Russian and Belarussian imports was likely to stabilize prices.

Ukraine produced 1.56 million tons of white sugar from beet in 2000, while analysts estimate that the former Soviet state needs at least 1.9 million to meet domestic needs. This year, Ukraine plans to produce up to 1.8 million tons of white sugar from beet, and agricultural officials say the country may continue to import raw cane sugar in 2002.