After numerous promises, the Ukrainian government has finally approved a transparent mechanism for exporting defense technology and weapons without undermining Ukraine’s wartime needs, Prime Minister Yulia Svyrydenko said in a video statement Wednesday.
– The government will continue to control exports, Svyrydenko said, but the new mechanism could generate much-needed extra revenue for Ukrainian manufacturers while strengthening the country’s defense industry.
– During the war, Ukraine’s defense sector expanded to an estimated annual production capacity of $35 billion to $55 billion. Yet anywhere from 40 percent to 70 percent of that capacity has remained idle because the state, the industry’s only buyer during wartime, has lacked the funds to buy everything manufacturers can produce.
– While Ukrainian President Volodymyr Zelenskyy had signaled earlier this year that such exports would be allowed, the official procedure to do so was not clearly spelled out by the government and was largely non-existent, meaning companies found it difficult to sign contracts in practice and exports remained restricted.
– Defense Minister Mykhailo Fedorov said Wednesday the new rules establish a single, transparent framework for the government, manufacturers and international partners.
– Under the mechanism, only partner countries that have signed drone deals with Kyiv will be allowed to purchase Ukrainian-made defense tech, drones and other weapons through direct contracts with Ukrainian manufacturers. Ukraine’s foreign ministry will determine which partner countries are eligible to participate in wartime export deals.
– Manufacturers seeking export contracts worth 15 million hryvnias (about €294,000) or more will have to submit applications for government review, a process that should take no longer than 30 days.
– The defense ministry will also draw up a list of critical items that cannot be exported because they are needed for Ukraine’s own defense against Russia’s invasion. Exports of surplus or non-critical equipment will be allowed. Products such as Ukraine’s low-cost interceptor drones may also be exported, provided manufacturers can guarantee they can fully meet the Ukrainian military’s needs.
– “Ukrainian technologies will remain protected by the state. Transfers will take place without the assignment of intellectual property rights, and any re-export or transfer to third parties will require Ukraine’s prior written consent,” Fedorov said in a written statement.
– “If products manufactured using Ukrainian technologies are exported to third countries, 20 percent of their value will be paid into the state budget,” he added.
– The announcement was welcomed by Ukraine’s defense industry, although manufacturers warned that the approval process could become a bottleneck at the State Export Control Service, the agency responsible for overseeing exports.
– “There are already thousands of companies in the defense technology sector in Ukraine. Even if … 200–300 manufacturers apply for export, it will be almost impossible to physically consider such a number of applications qualitatively and within 30 days without strengthening the team,” Ihor Fedirko, CEO of Ukraine Council of Defense Industries, said, predicting upcoming delays.
– “To prevent this, along with the launch of the export mechanism, the state must increase salaries and the staffing of the State Export Control Service,” he added.
https://www.politico.eu/article/ukraine-launches-framework-for-wartime-defense-exports