Executive Director of the Ukrainian Council of Gunsmiths Ihor Fedirko noted that, despite all the statements of the top leadership of the state and the updating of by-laws, the export of Ukrainian weapons still remains extremely limited and is constrained by a number of unrealistic requirements.
Executive Director of the Ukrainian Council of Gunsmiths Ihor Fedirko noted that, despite all the statements of the top leadership of the state and the updating of by-laws, the export of Ukrainian weapons still remains extremely limited and is constrained by a number of unrealistic requirements.
Fedirko wrote about this on his Facebook page.
According to him, in October it will be a year since the government announced the resumption of controlled exports of Ukrainian weapons, and in February the first permits were presented as actual first steps. Also, on July 1, Resolution No. 875 was adopted, which provides for a special simplified mechanism for exports during martial law. However, this did not yield any special results.
«According to my calculations, during this time the entire private market has received up to 10 small export contracts. In reality, one joint venture is operating abroad. No permits have been issued under the new Resolution No. 875,» the expert stated.
The executive director of the Ukrainian Council of Arms Manufacturers believes that, in general, the aforementioned resolution contains the right solutions — up to 30 days for consideration of the application, a simplified procedure for partner countries, and the possibility of transferring technologies. However, its key conditions, according to Ihor Fedirko, make export either unprofitable or too risky for the manufacturer.
In this context, he identified five main problems.
— the amount of the fee and the lack of differentiation
Ihor Fedirko reminded that the fee is 20% of the cost of finished products and technologies and 30% of the component parts. At the same time, it must be paid before the application is considered, and there is no clear mechanism for refunding funds in case of refusal. In addition, the same rates are applied to completely different products. «Our proposal is to reduce rates and introduce a differentiated model that will take into account the type of product, its purpose and real competition on the international market,» the expert noted.
— payment until a decision is received
«The producer pays even before the state decides whether to allow him to export,» the expert notes. In his opinion, it is worth providing for a refund of the fee in case of refusal or introducing a phased payment — part of it when submitting the application, and the rest only after a positive decision.
— threshold of 15 million UAH
Another problem that Ihor Fedirko highlighted is that the special procedure applies to exports worth UAH 15 million or more. «But a foreign customer rarely starts cooperation with a large series right away. First, he orders a few units for trials, evaluation, and testing. Such contracts often do not reach UAH 15 million and therefore fall out of the special procedure,» he says. Fedirko proposes to abolish this threshold for pilot, demonstration, and test batches.
— the intention of the public customer
Another stumbling block that the expert drew attention to is that the intention of the Ministry of Defense or another state customer to purchase the relevant goods can become a basis for both refusing to issue a permit and suspending an already issued permit. «The priority of the Ukrainian army is undeniable. But if the state blocks exports, it must be ready to buy these products,» Fedirko emphasizes. He sees a way out of the situation in a model in which the intention of the state customer must contain specific volumes, terms, confirmed financing and an obligation to conclude a contract — otherwise it cannot be a sufficient basis for refusal.
— export of services
Ihor Fedirko also drew attention to the fact that the resolution allows only the minimum amount of instruction necessary for the use of exported products, but it does not create a full-fledged mechanism for the independent export of services. «Service and maintenance, operator training, services of accredited UAV schools and certified humanitarian demining operators remain outside the special procedure,» he says, proposing to extend the special procedure to the independent export of certified and accredited services.
As dev.ua previously wrote, the Ukrainian Council of Arms Manufacturers called on the Ministry of Defense to ensure the continuity of defense procurement amid changes in the system and warned of possible negative consequences in the event of rash steps.
