Ukraine's plans for greater state control of grain exports could push foreign grain trading houses out of the country, a German international trade association said on Tuesday. A draft law in Ukraine proposes that traders and exporters would have to buy grain from a Ukrainian state company instead of directly from the country's farmers, which critics say would effectively create a state cereals export monopoly.
"These rules, which reflect a state monopoly, would push foreign trading companies, which have invested large sums in building up export infrastructure, out of the Ukrainian market," said Eckhard Cordes, chairman of German east European international trade association Ost-Ausschuss. Investments made by German grain trading companies are among those threatened, Cordes said in a statement.
The association said it has written to Ukrainian president Viktor Yanukovich saying the plan could cause long-term damage to Ukraine's reputation as a long-term and reliable trading partner. The association also called on the International Monetary Fund (IMF) and World Trade Organisation (WTO) to become involved, claiming the grain export plan did not conform with WTO rules.
The European Bank for Reconstruction and Development's had said on March 11 it has sent a joint letter with the IMF and World Bank to Ukraine's Prime Minister airing concerns that the proposed state-controlled grain export monopoly could deter future private sector investment in the country's agricultural industry.
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