Draft law on localization in machine building procurement will be voted in the Parliament in the second reading, despite the possible negative consequences and criticism.

If this draft law is adopted, foreign companies will not be able to participate in public procurement of certain types of equipment.

We remind you that such changes in procurement legislation violate Ukraine’s international obligations under the Association Agreement and the WTO.  The European Commission has also expressed its concern in this regard in its report on the implementation of the Association Agreement.

In addition, Kyiv School of Economics calculated the cost of localization to be a 0.5% reduction of GDP annually. The initiative was also criticized by the NACP and the AMCU.

Transparency International Ukraine urges MPs not to support draft law 3739 and to consider other, less risky and more effective ways to support the domestic manufacturers. That may include subsidies, investments, preferential taxation and lending, projected tax policy and market regulation, impartiality of regulatory and law enforcement agencies, fair trial.