Ukraine`s National Policy on Aquaculture: Reality or Myth?

Aquaculture is a promising sector in Ukraine’s agricultural economy and could contribute to the nation’s food security and assist in overcoming some of the challenges posed by the COVID‐19 pandemic. For years, Ukrainian government’s policy towards aquaculture has been less than supportive, in part because the government’s management of the sector has been tossed between different ministries. Legal regulation of the sector is overcomplicated, and producers face numerous difficulties with permits, rent of waterbodies, inspections, customs, and feed importation. There are no specific approximation obligations related to aquaculture in the Association Agreement between the European Union and Ukraine. State aid to struggling aquaculture producers remains insignificant and difficult to get compared to the aid available to other agricultural businesses. This article analyzes the main policy and legal problems faced by aquaculture businesses in Ukraine and concludes with solutions that can improve the situation.


Introduction
The COVID-19 pandemic has led to dramatic loss of human life across the world and presents an unprecedented challenge with deep social and economic consequences including compromising food security and nutrition. Responses need to be well coordinated across the world, including by the G20 and beyond, to limit impacts, end the pandemic, and prevent its recurrence.1 The United Nations' recommendations for responding to the COVID-19 pandemic urge states to take all available national and international measures to meet the world's food and nutrition needs. For many years Ukraine has been one of the world's stocks, fish breeding centres. The level of productivity of fish-breeding ponds exceeded the average figure in the Soviet Union." 6 In 1988, Ukraine's aquaculture output was more than 96,000 metric tons, and, along with the fishing catches, the republic was able to satisfy the domestic demand. Aquaculture output began to drop rapidly from 1990 onwards, and today more than 80 per cent of fish and seafood for domestic needs are imported. The table below displays the production output data for Ukraine compared to the same for Poland and Turkey. The figures speak for themselves. Aquaculture business representatives, however, add that in 1986, the Donetsk Fishery Plant alone produced about 13,500 tons of fish and seafood.8 Since then, total Ukrainian outputs have been only modestly higher than that single plant's output and have been substantially less than those of Poland for about a decade.
This decline can be partially explained by the end of the USSR's generous state aid to fishery and aquaculture production after Ukraine declared its independence. General economic problems and irregularities and the controversial privatization of numerous aquaculture farms and fishing plants also contributed to the sector's rapid decline. In addition, unlike most other former Soviet Bloc countries, Ukraine neither restructured the sector nor shifted from Soviet style to modern management practices.
The loss of Crimea in 2014 substantially impacted Ukraine's fisheries sector, causing catches to plummet by 60 per cent.9 But, as Table 1 shows, aquaculture was not affected. Even without Crimea, Ukraine has significant natural resources. Inland waters (rivers, ponds, lakes, reservoirs) total 1.3 million hectares, the largest total of any European country. And marine waters in the Black Sea and the Sea of Azov total 9.1 million hectares.10 Pond-based aquaculture 11 has a long tradition in Ukraine. It alone can produce 163,000 tons of aquaculture products annually. If used intensively, production in these waters might reach 400,000 tons, almost double Turkey's aquaculture output.12 Thus, Ukraine can potentially become one of the regional leaders in aquaculture production. However, according to the State Agency for Fisheries of Ukraine, only 67,873.1 hectares of those inland water resources were used for aquaculture as of late 2018, with only 26 kilos of fish grown per hectare. Because the fish capacity of inland water resources is 3 centner/hectare, comparing actual with potential production shows that water resources are being used inefficiently.13 Today's aquaculture in Ukraine is mostly pond-based and produces mainly such species as European carp, phytophagous fishes, various indigenous fishes (sterlet, salmon, and some predator species).14 What accounts for this rather pitiful situation? Is it only the lack of the state's financial investments or is there more? To see a broader picture, to answer these 10 Aquaculture Development in Ukraine, 11; "Reforms to Increase Production, Streamline Administration," ibid.

11
Article 13 of the Law on Aquaculture distinguishes between the land-based, cage-based and pond-based aquaculture.

12
Aquaculture Development in Ukraine,23. 13 Ibid,[9][10][11]23. questions, and to provide some of the possible solutions, this article will focus on the following problems: 1) aquaculture is not perceived by the state as a priority sector of agriculture; 2) overcomplicated legal regulation and untransparent system of permits; 3) customs problems, expensive feed and absence of capital for development; and 4) complications in getting state aid.15 (1) Aquaculture Is Not Perceived by the State as a Priority

Sector of Agriculture
In 2018 aquaculture accounted for only 0.3 percent of Ukraine's agricultural production.16Therefore, that the sector is virtually unknown even domestically is not surprising. Along with the state's rather specific attitude to environmental problems and existing inefficiencies in protection, use and monitoring of water resources, life of aquaculture businesses is not getting any easier. In February 2019, the Verkhovna Rada of Ukraine adopted the Fundamentals (Strategy) of the State Environmental Policy of Ukraine until 2030.17 The Strategy mentions the necessity of introducing the efficient management of water resources, but the language is declaratory. In January 2020, the Ukrainian Parliament issued Recommendations of Parliamentary Hearings on Priorities of Environmental Policy of Verkhovna Rada of Ukraine for the Following Five Years.18 Mentioning water resources in the recommendations, the parliament stressed the necessity to clarify and specify the Strategy's provisions "by means of its systematization by each natural resource providing the conformity with the ecological systemacy approach," 19 and also stressed the necessity of achieving the goals in the Association Agreement between the European Union and Ukraine.20 The parliamentary talk of "systemacy" looks weird considering earlier developments taken at the initiative of the new Ukrainian Cabinet of Ministers. In September 2019, the Cabinet of Ministers decided to "optimize" some of the ministries, including those responsible for environmental policies and agriculture. In particular, the Ministry of Agrarian Policy and Food of Ukraine was absorbed into the Ministry for Development of Economy, Trade and Agriculture, and the Ministry of Ecology and Natural Resources was combined with the Ministry of Energy and Coal Industry under the name "Ministry of Energy and Environmental Protection of Ukraine." 21 The potential gains from combining energy and the environment within a ministry is beyond the scope of this article. But the reorganized Ministry of Energy and Environmental Protection (MEEP)is now responsible for the formation and implementation of the state's policy concerning fisheries and fishing, the protection, use, and restoration of water biological resources, the regulation of fishing, and the safety of navigation of the fishing fleet, forest, and hunting industries.22 In the meantime, the reformed Ministry for Development of Economy, Trade and Agriculture (MDETA) will be responsible for Ukraine's agricultural sector.23 The reorganization of the two ministries left conflicting provisions in their respective charters regulating the scope of their authority. The MDETA remains the central executive body responsible for fisheries,24 while the MEEP is responsible for the "formation and implementation of the state policy" in the field of fisheries (aquaculture included Fisheries) essential for aquaculture production were transferred under MEEP's control.
In practical terms this means that aquaculture producers have to deal with MEEP rather than MDETA since those two state agencies are crucial for their business activities.26 The very fact that aquaculture production is now subordinated to MEEP is not only weird for observers but is heavily criticized by those who insist that agriculture should be treated as a whole by one ministry without excluding aquaculture. They summarize their discontent by using a phrase "the new ministry will deprive aquaculture of all energy." 27 In the context it has to be noted that, after the submission of this article for publication, the Cabinet of Ministers of Ukraine recognized the mistakes and adopted a resolution to split MEEP into the Ministry of Energy and the Ministry of Environmental Protection and Natural Resources.28 It remains to be studied how that change impacted the aquaculture industry and how the industry dealt with the abrupt changes, subsequent new appointments within the Government and problems related thereto (if any). Parliament's references to the Association Agreement in the Recommendations do not automatically mean that Ukrainian aquaculture producers can hope for improvements based on the rules existing in the European Union (EU) acquis. The Association Agreement provides that Ukraine and the EU will cooperate on water quality and water resource management, including the marine environment.29 Ukraine committed itself to the gradual approximation of Ukrainian legislation to the EU acquis on the environment consistently with the annexes to the Association Agreement.30 According to the Governmental Office for Coordination on European and Euro--Atlantic Integration and as of this writing, 47 per cent of Ukraine's obligations relating to environmental protection and civil defense have been fulfilled.31 But Ukraine's aquaculture industry can hardly benefit from that performance; the Association 26 In particular, aquaculture producers must report on outputs, sales, water resources used in the production cycle to the State Agency of Fisheries of Ukraine, the latter also deals with matters related to fishing per se; use of water resources is impossible without approvals issued by the State Water Resources Agency. Agreement does not contain any obligations that would benefit the industry and help it solve some of the specific problems briefly described below. Ukraine's lack of "noticing" aquaculture as such can also be traced in other parts of the Association Agreement. "Aquaculture" is mentioned in the text only in the context of aquaculture diseases. It is not mentioned in the Association Agreement's sections devoted to agriculture or fisheries; Ukraine is not obligated to implement any acquis on the common fisheries policy.

(2) Overcomplicated Legal Regulation of Aquaculture Production, Untransparent System of Permits
The aquaculture industry is heavily regulated. As will be shown below, the existing regulation is overcomplicated. There are numerous conflicting provisions and gaps that create endless possibilities for abuses and corruption. It would be impossible to analyze them all within the framework of this article. This article therefore will focus on the most important ones frequently mentioned by aquaculture businesses: • general difficulties related to the existence of numerous bureaucratic procedures depending on a specific type of aquaculture in question; • difficulties related to the use of water bodies and aquatic biological resources for the needs of aquaculture; and • difficulties related to veterinary inspections and food-safety permits.
The Law of Ukraine on Aquaculture is the core law for the industry. It applies to aquaculture activities carried out in inland waters, fishery water bodies, internal seas, territorial seas, and the exclusive economic zone of Ukraine, as well as on land areas used for aquaculture. It defines aquaculture and divides it into land-based, cage-based, and pond production.32 Each category is subject to specific permitting and licensing requirements. No single and transparent procedure for issuing such permits exists as of this article's writing. For example, permits for business activities in the water sector to use water bodies are granted by local authorities based on the Water Code 33 and Land Code.34 If a legal entity or an individual wants to use fishery technological reservoirs (floating units, mollusks collectors, water supply installations etc.) or parts of water objects, the Law on Aquaculture 35  sea waters of the territorial sea, the exclusive (maritime) economic zone are to be used by aquaculture producers, they must obtain permits from the Cabinet of Ministers of Ukraine.37 Before any permits for business activities can be granted, all water bodies and fishery technological reservoirs must have a passport.38 The landlord has the duty to obtain the passport according to the  The requirement to obtain such passports does not facilitate renting of water objects in any way. In practice, obtaining passports can take up to three months, and the process is infused with corruption.41 In addition to provisions of the Land Code and the Water Code, the Law on Aquaculture establishes the basics of the land lease, lease of water bodies, and lease of fishery technological reservoirs for the purposes of aquaculture. It also establishes the essential terms of the water bodies lease agreement.42 The Resolution of the Cabinet of Ministers of Ukraine on Approval of Standard Lease Agreement of Water Objects No. 420 of May 29, 2013 43 leaves potential tenants with no alternative but to use the template's contract provisions. The Law of Ukraine on Fisheries, Industrial Fisheries and Protection of Aquatic Biological Resources 44 states that the use of aquatic biological resources that are isolated in natural or artificial water bodies for the purposes of aquaculture is not a special use of aquatic biological resources and shall be conducted in accordance with procedures established by the owners of such resources.45 Based on Article 42 of the Law, the State Water Resources Agency of Ukraine, which is subordinated to the Ministry of Energy and Environmental Protection, keeps the records on the fishery water bodies and their parts, fishery technological reservoirs, water areas, internal sea waters, territorial seas, and the exclusive maritime economic zone of Ukraine allocated for aquaculture. These Not many of the existing aquaculture businesses need an entire water body for aquaculture production and some cannot afford to lease an entire water body. The existing laws (the Water Code, the Law on Aquaculture in particular) permit using a part of a water body. However, in practice this is impossible. First, this is possible only if a part of the water body is used for fishery or to create a floating aquaculture farm (floating fish-breeding garden).46 When either occurs, the use of the parts of the water body for other purposes is forbidden. Second, current regulations are silent on the order of assignment for the use of a part of water body. In addition, it remains unclear how to site a water fund land plot underwater and to establish its boundaries though this is essential for signing a lease agreement. In 2018, the State Agency of Fisheries of Ukraine, in close cooperation with representatives of aquaculture producers, attempted to remedy this situation by drafting the necessary amendments to the Law on Aquaculture; the Water Code; the Land Code; the draft Resolution of the Cabinet of Ministers of Ukraine on Approval of the Procedure of Allocating for Use Based on Lease Agreements of Parts of Fishery Water Bodies for Purposes of Aquaculture, Water Space of Inland Sea Waters, Territorial Sea, Exclusive Economic Zone of Ukraine; and Siting Parts of Such Water Bodies for Purposes of Sea Aquaculture.47 Unfortunately, no amendment had been approved as of May 1, 2020.
There are numerous practical complications with land tenders, both for underwater plots and for those on the surface necessary for aquaculture. There are completely different mechanisms for the registration of a right to use different kinds of water bodies. Current legislation allows registration of ownership of Water Fund land plots not exceeding 3 hectares 48 or of a right to use those plots based on lease contracts.49 Ukrainian laws sometimes provide for the possibility to draft different lease contracts for a water body, a land plot on which such water body is located, a hydraulic structure, and the like. The necessity to negotiate and conclude several different lease contracts is time-consuming and creates numerous possibilities for corruption.50 Allowing the signing a single lease contract along with amending the existing procedures for obtaining passports of water bodies could improve the situation.
Aquaculture businesses also complain about difficulties with the rent of water reservoirs for general-purpose use. The law allows local offices of the State Water Resources Agency of Ukraine to issue certificates for the right to use water reservoirs that are valid for 3-25 years.51 Because of inconsistent laws and regulations, however, only certificates valid for three years are issued. The costs for obtaining these certificates are high, and processing applications for them is time-consuming.52 The Water Code of Ukraine also contains "communist" provisions relating to the rights of citizens to use waters, including for fishing.53 In practical terms, this means that if an aquaculture producer rents a pond "within a populated area" and breeds fish there, a local resident can catch 3-5 kilos of fish a day in that pond.54 Needless to say, this legally sanctioned poaching reduces the aquaculture producer's profits.
The Law of Ukraine on the Animal World 55 designates fish and other objects of aquaculture as a part of the animal world.56 It also contains provisions on using water bodies for fishing, the rights and obligations of fish farming enterprises for using animals, the prevention of anthropogenic environmental pollution by aquaculture, and the prevention of the reduction of biological aquatic resources.57 The Law on Fish, Other Aquatic Biological Resources and Food Products from Them 58 includes provisions related to the requirements for fish breeding and other 48 Article 59 (2)  aquatic living organisms. These requirements establish that fish breeding and other aquatic living resources in fishery water bodies and their parts and in the continental shelf of Ukraine is permitted based on a positive evaluation of veterinary-sanitary condition of water bodies where such breeding is to be conducted.59 The quality and food safety of live fish and other aquatic living organisms that were grown in ponds and other water bodies or their is to be confirmed by a veterinary certificate.60 Procedures and conditions for obtaining these veterinary certificates as well as for obtaining a positive evaluation of veterinary-sanitary condition of water bodies are found in another law -the Law on Veterinary Medicine.61 That law also deals with the importation of fish into Ukraine, fertilized fish eggs and other hydrobionts for breeding, keeping and growing in terms of aquaculture, placing them in quarantine station, migration from quarantine stations to other fishery water bodies (parts thereof), fishery ponds and veterinary-sanitary control in aquaculture.62 Veterinary certificates and related permits are issued by the veterinary control bodies. Food safety certification of canned, frozen or otherwise cooked fish and other non-alive aquatic fish is done by the State Service of Ukraine on Food Safety and Consumer Protection based on the provisions of the Law of Ukraine on the State Control of Compliance with the Legislation on Foods, By-Products of Animal Origin, Health and Well-Being of Animals.63 There are elements that make the procedure extremely costly for Ukrainian producers. In particular, if a producer had grown 100 kilos of fish or other living aquatic organisms, to obtain the necessary veterinary certificates mentioned in Article 2(2) of the Law of Ukraine on Fish, Other Aquatic Biological Resources and Food Products from Them, he must give up 30 kilos to an authorized laboratory. Given that majority of aquaculture producers in Ukraine are small businesses, this amount is not scientifically based and causes significant financial losses.64 Another illustrative case happened when an aquaculture business in Odesa, after 10 years of heavy labor of growing sturgeon, finally managed to obtain 10 kilos of black caviar. To obtain the necessary certificate to be able to sell the caviar, the producer consulted a laboratory operated under the auspices of the State Service of Ukraine

(3) Customs Problems, Expensive Feed and Absence of Capital for Development
Inefficient customs procedures at Ukrainian borders represent another serious problem for aquaculture producers. First, laboratories responsible for controls and examination of imported goods use obsolete equipment and technologies. This, plus the State Customs Service of Ukraine's failure to distinguish between living and nonliving products, and widespread corruption,71 causes significant delays with fries on their way to their destination.72 In other words, it is not uncommon for fries, fish eggs and other hydrobionts 73 to die during the prolonged customs inspection and laboratory examination. The Customs Code of Ukraine 74 provides for "priority" customs clearance of goods such as live animals or goods with special qualities with a limited shelf life.75 But priority customs clearance in Ukraine does not mean expedient clearance. Given that the veterinary inspection and sometimes food safety control must take place at the customs facilities, priority clearance remains a nothing more than a stated norm; it is not a warranty for an aquaculture importer.76 Aquaculture producers often confess that they have to resort to smuggling instead of acting lawfully.77 Aquacultural producers often must feed the products they produce. Ukraine does not have good facilities for feedstuffs production; therefore, aquaculture producers must buy foreign feed. Importing this feed increases their costs because a 10 per cent customs duty is imposed on imported fish feed. Aquaculture producers complain that feedstuffs represent their main expenditure, often accounting for 50-60 per cent of their total operating expenses.78 Nevertheless, even after numerous individual businesses and business associations complained in 2017 and 2018, the government of Ukraine increased the rate from 7.5to its current 10 per cent. Aquaculture producers feel discriminated against compared to importers of frozen fish whose imports are charged at 0 per cent rate. The imported feed is not a product for final consumption. Instead, it represents the necessary material for further production of a final aquaculture Since most of Ukraine's aquaculture facilities were constructed more than 30 years ago, the renovation of existing facilities or the construction of new ones and the, introduction of new technological solutions is an ever-present concern for producers. Lease payments for the rent of hydrotechnical facilities, technological reservoirs, and other water bodies are rather high but still they cannot cover the necessary renovation and maintenance costs, not to mention new construction.82 Cheap bank loans are not available for aquaculture producers, bank loan interest rates are as high as 25 per cent and no insurance available.83 Thus, potential investors see no incentives to contribute their available capital, and banks are unwilling to provide loans since aquaculture businesses cannot get insurance. During the Soviet, those problems were solved through strong state aid. Today, however, Ukrainian businesses cannot hope to successfully face the challenge alone.

(4) State Support: Theory and Practice
By signing the Association Agreement, Ukraine committed itself to adjust its national laws on state aid with the EU acquis. By analogy with the Treaty on Functioning of the European Union (TFEU),84 the Association Agreement states that any aid granted by Ukraine using state resources that distorts or threatens to distort competition by favoring a certain undertaking or the production of certain goods is incompatible with the proper functioning of the association if it may affect trade between Ukraine and the EU.85 In other words, state aid to businesses is treated per se as distorting free market and competition and is therefore prohibited. There are exceptions, such as aid to compensate for damage caused by natural disasters or exceptional occurrences; 86 aid to promote the execution of important projects in the common European interest or to remedy a serious disturbance in the economy of Ukraine; aid to facilitate the development of certain economic activities or of certain economic areas where such aid does not adversely affect trading conditions contrary to the interest of the EU and Ukraine; aid to promote culture and heritage conservation; aid to promote objectives allowed under the EU horizontal block exemption regulations and horizontal and sectoral state aid rules granted in line with the conditions stated therein; and aid for investment to comply with the mandatory standards of the EU directives listed in annex XXIX to Chapter 6 (Environment) of Title V of the Association Agreement.87 Within three years of that Agreement's entry into force,88 Ukraine was required to adopt national state aid legislation and to establish an operationally independent authority entrusted with the powers necessary for the full application of its treaty obligations.89 In short, Ukraine had to create a domestic analogue of the EU Commission to deal with state aid cases based on Article 108 of the TFEU. All new state aid in Ukraine had to comply with the requirements set out in the Association Agreement.90 Unlike other parts of that Agreement, its provisions on state aid do not contain detailed lists of the EU acquis to be implemented by Ukraine. Nevertheless, provisions on state aid must be applied using as sources of interpretation the criteria arising from the application of TFEU Articles 106, 107 and 93, including the relevant jurisprudence of the Court of Justice of the EU, as well as secondary legislation, frameworks, guidelines and other administrative acts in force in the EU.91 The Association Agreement's provisions on state aid 92 did not become an absolute copy of the TFEU. The Association Agreement applies to goods and services that have been listed therein in accordance with the mutually agreed decision on market access, with the exception of subsidies to products covered by Annex 1 to the World Trade Organization (WTO) Agreement on Agriculture 93 and other subsidies covered by the Association Agreement.94 Thus, unlike the EU acquis, state aid to agricultural producers was excluded from the scope of Association Agreement in particular and from the state aid laws in general.  On July 1, 2014, the Verkhovna Rada of Ukraine adopted the Law on State Aid to Businesses 95 that entered into force on August 2, 2017. The Anti-Monopoly Committee of Ukraine has been nominated to serve as an operationally independent authority entrusted with the powers to monitor state aid, to conduct investigations and to make final decisions on such aid.96 State aid to agriculture and fisheries was excluded from the scope of the Law, and the Anti-Monopoly Committee does not deal with those sectors.97 This is more than controversial. In my opinion, it contradicts Ukraine's obligations under the Association Agreement. Whereas fish and fish products are explicitly excluded from Annex 1 to the WTO Agreement on Agriculture, the wording of the provisions of the Law on State Aid to Businesses does not correspond with the wording of the Association Agreement.98 According to the official commentaries provided by the Anti-Monopoly Committee on the question whether the Law on State Aid to Businesses covers cases of state aid granted to agricultural producers, fisheries and aquaculture producers had been excluded from the scope of the Law based on the provisions of the Association Agreement's Article 410 because "fish products have special regime in the TFEU as agricultural products." 99 Reference to the Agreement's Article 410 is questionable since the latter determines that Ukraine and the EU will support initiatives, such as mutual exchange of experience and providing support, designed to ensure the implementation of a sustainable fisheries policy based on priority areas in the EU acquis in this field, including: (a) management of living aquatic resources, fishing effort and technical measures; (b) inspection and control of fishing activities, using the necessary surveillance equipment, including a vessel monitoring system, as well as development of corresponding administrative and judicial structures capable of applying appropriate measures; (c) harmonised collection of catch, landing, fleet, biological and economic data; (d) management of fishing capacity, including a functioning fishing fleet register; (e) improving the efficiency of the markets, in particular by promoting producer organisations, providing information to consumers, and through marketing standards and traceability; [and] (f) development of a structural policy for the fisheries sector, paying particular attention to the sustainable development of coastal communities.100 Where and how the Association Agreement's Article 410 excludes fisheries and aquaculture products from it and how the TFEU contains a similar exclusion related to state aid remains a mystery known perhaps to the Anti-Monopoly Committee of Ukraine only. In the EU, state aid to aquaculture and fisheries is subject to the rules on state aid to the extent determined by the European Parliament and the Council in line with TFEU Articles 42 and 43. In practical terms this means that any funding granted by an EU Member State to the aquaculture and/or fishery industry other than co-financing under the framework of the European Maritime and Fisheries Fund (EMFF) shall be considered state aid. Therefore, the applicable rules of the EU acquis shall apply, and, upon notification regarding each state aid measure, the European Commission delivers the final decision to the Member State in question. The EU block exemption regulation for the fisheries and aquaculture industry 101 exempts from the general rules on state aid certain kinds of aid (e. g. loans, guarantees, tax measures, and, in particular, repayable advances) granted to small and medium-sized enterprises (SMEs) active in the production, processing or marketing of fishery and aquaculture products. Also exempted is any aid granted to undertakings active in the production, processing, or marketing of fishery and aquaculture products to compensate for damage caused by natural disasters independently of the size of the aid's beneficiary.102 State aid not exceeding EUR 30,000 to one recipient for any period not exceeding three years (de minimis aid) is allowed based on the so-called De Minimis Regulation.103 Notwithstanding the exceptions, EU Member States must submit annual reports to the European Commission and disclose all state aid measures (including those granted as exceptions). Detailed analysis of Ukraine's obligations on state aid arising from the relevant provisions of the Association Agreement, the WTO Agreement on Agriculture, and other international treaties that might apply is beyond the scope of this article. It will suffice to say, however, that Ukraine's current state aid to aquaculture producers is so insignificant that it can hardly affect trade between the EU and Ukraine and trigger any consequences for non-compliance with the Association Agreement and the applicable acquis.
Since agriculture and aquaculture in particular are excluded from the scope of application of the Law on State Aid to Businesses, they are covered by the framework Law on the State Support of Agriculture of Ukraine.104 The Law explicitly mentions fish farmers and breeders among the potential recipients of state aid.105 The Law itself is obsolete and no longer grants any specific aid to producers. However, it describes various possible instruments that can be used by the central Ukrainian government and/ or local authorities as state aid measures. Funds for state aid to agriculture producers are normally allocated by the state budget that is approved annually by the Verkhovna Rada, while the Cabinet of Ministers of Ukraine deals with the rules on distribution of the funds allocated.106 The respective ministry in charge of agricultural sector, the MDETA, deals with individual cases of granting state aid based on applications submitted by potential recipients.
As explained above, the aquaculture industry has never been regarded as a priority in Ukraine's total agriculture production. Unlike farmers engaged in livestock breeding, growing various crops, and honey producers, Ukrainian aquaculture businesses have never been recipients of state aid until recently. The very word "aquaculture" first appeared in the state budget and applicable by-laws on state aid only in 2018. But the possibility for an aquaculture producer to receive state aid has been finally embedded in two governmental resolutions, namely the Resolution of the Cabinet of Ministers No. 106 Article 20 (7)   .108In 2018, the Ukrainian Parliament allocated funds amounting to UAH 4.2 billion, and state aid could be granted based on one of the following support schemes: 1) state support to livestock farming, storage and processing of agricultural products, aquaculture; 2) financial support to agriculture producers; 3) financial support for the development of farms; 4) state support for the development of hop growing, young gardens, vineyards and berry plantations; and 5) financial support aimed at cheaper bank loans (up to 17 per cent of the bank loan interest could be compensated by the state).
In 2019, the amount was increased to UAH 5.9 billion (about EUR 203.45 million), and the list of the support schemes was extended to include loans to farms.109 The impressive amount of the allocated funds centered on the state support to livestock farmers and farms engaged in growing various crops,110 and, as of mid-November 2019, the state paid 45.7 per cent of the total amount allocated by the scheme.111 Given the bureaucratic complications related to the filing of applications to the MDETA, amendments made to resolutions No. 106 and No. 107,presidential  the declared programs of state support. Some of the support schemes were only onethird complete. For example, financial support to agriculture producers (including compensations for the purchased equipment) was only 28.8 percent complete.112 Aquaculture producers complained that receiving aid was next to impossible for them.113 To make things even worse, in August 2018, an NGO named "The All-Ukrainian Agricultural Council" filed an administrative suit with the Circuit Administrative Court of the City of Kyiv demanding to invalidate the Resolution No. 106 and the Resolution No. 107. After more than a year of court proceedings, on December 10, 2019, the Sixth Appellate Administrative Court invalidated both of the resolutions effective as of the moment of their adoption on February 7, 2018.114 The court justified its decision by pointing out violations of the Rules of Procedure (Rehlament) of the Cabinet of Ministers of Ukraine during the adoption of both resolutions.115 The MDETA appealed, and the case is pending at the Supreme Court of Ukraine. In practical terms, according to MDETA reports, the court decision of December 10, 2019, resulted in about UAH 1 billion being blocked on the treasury accounts (UAH 830 million for state support to livestock farming, storage and processing of agricultural products, aquaculture and UAH 186 million of financial support for the development of farms), and the ministry had to suspend all payments. The Supreme Court, however, unblocked the funds in late December 2019, and payments were resumed.116 The MDETA reported that in 2019 a total of UAH 4.34 billion had been used by the recipients of state aid.117 In 2020, the Law on the State Budget for 2020 allocated UAH 4.2 billion for state aid to agriculture, making the following state aid schemes possible: 1) financial support for the development livestock farming and processing of agricultural products (UAH 1 billion); 2) financial support for the development of agricultural farms (UAH 400 million); 3) partial refund of costs paid for agricultural machinery and equipment made in Ukraine (UAH 1 billion); 4) financial support aimed at cheaper bank loans (UAH 1.5 billion); and 5) state support for the development of hop growing, young gardening, and vineyards (UAH 400 million).
In February 2020, the MDETA announced that payments would start in mid-2020 based on approved applications submitted by potential recipients to the MDETA Ministerial Commission on State Aid.118 The government still needs to adopt by-laws similar to resolutions No. 106 and No. 107. The COVID-19 pandemic could have required adjustments to the state aid for Ukrainian agriculture producers because different versions of the draft law on amending the state budget for 2020 contained proposals to cancel the allocation of any funds for state aid to agriculture producers. Luckily for these producers, on April 13, 2020, amendments were adopted without funding reductions for agriculture.119 However, given the fragile situation in the Ukrainian economy due to the pandemic lockdown and the "national tradition" of frequent amendments and adjustments of the budgetary expenditures, it remains unknown what the future holds for state funding and other support for aquaculture producers.
On March 19, 2020, to enable EU Member States to use the full flexibility foreseen by the TFEU and state aid rules, the European Commission adopted a Temporary Framework for State Aid Measures to Support the Economy in the Current COVID-19 Outbreak.120 The Commission especially focused on agriculture (including businesses 118 Derzhpidtrymka agrariiv 2020: kredyty, tvarynnytstvo, fermerstvo, tekhnika, sadivnytstvo  aid measures to support the economy in the current COVID-19 outbreak 2020 (2020) OJ C91, 1; Communication from the Commission of April 3, 2020 on Amendment to the Temporary engaged in fisheries and aquaculture) and provided for the following types of aid that can be granted by Member States to aquaculture producers until December 31, 2020: i) Direct grants, equity injections, selective tax advantages and advance payments of up to EUR 120,000 per company to address urgent liquidity needs. Member States can also give, up to the nominal value of EUR 120,000 per company, zerointerest loans or guarantees on loans covering 100 per cent of the risk; 121 ii) State guarantees for loans to companies to ensure that banks keep providing loans to the customers who need them. These state guarantees can cover up to 90 percent of the risk on loans to help businesses cover immediate working capital and investment needs; 122 iii) Subsidized public loans to companies atfavorable interest rates. These loans can help businesses cover immediate working capital and investment needs; 123 iv) Safeguards for banks that channel state aid to the real economy that such aid is considered as direct aid to the banks' customers (aquaculture producers), not to the banks themselves, and guidance on how to ensure minimal distortion of competition between banks; 124 v) Public short-term export credit insurance for all countries, without the need for a Member State to demonstrate that the respective country is temporarily "nonmarketable"; 125 vi) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions for those sectors, regions, or types of companies that are hit the hardest by the outbreak; 126 vii) Targeted support in the form of wage subsidies for employees for those companies in sectors or regions that have suffered the most from the coronavirus outbreak and would otherwise have had to lay off personnel.127 An extraordinary situation with the COVID-19 pandemic, however, does not relieve Member States intending to introduce a respective state aid scheme from an obligation to notify the Commission accordingly, and the Commission can still decide that such a scheme is incompatible with the TFEU.128 In April 2020, the Commission approved EUR 4 million for Croatian and EUR 20 million for Portuguese state aid schemes designed to support aquaculture and fisheries businesses.129 In the summer of 2020, Italy and Lithuania followed suit with their support schemes for EUR 1.2 billion and EUR 47.5 million, respectively.130 The list of possible state aid measures is more extensive than is possible than Ukraine's financial capabilities will allow. Ukrainian aquaculture producers cannot expect similar aid from their government any time soon, and yet there is much to be learned by Ukrainian law and policymakers from the EU experience.

Conclusions
Aquaculture producers in Ukraine are challenged by various policy inconsistencies and legal problems. The government's general attitude toward the industry cannot be called favorable. The Fall 2019 "optimization" within the structure of bodies of executive power did not make state management of the sector any easier or more transparent. Instead, it created new problems for the industry. Obtaining the necessary permits represents a significant obstacle for businesses intending to cultivate aquaculture. They have to deal with numerous authorities responsible for various permits, approvals, and certifications -the State Water Resources Agency, the State Agency of Fisheries, the Cabinet of Ministers of Ukraine, local municipal authorities, owners of land plots, various state enterprises, veterinary control, the State Service of Ukraine on Food Safety and Consumer Protection, to name but a few. Inconsistencies in the existing legislation and the impossibility of rent a part of a water body are among other problems faced by the aquaculture industry. The greedy "appetites" of veterinary and food-safety control agencies once the producer has managed to obtain the final product and wants to sell it to a consumer, expensive feeds and problems with the State Customs Office, and difficulties with obtaining much-needed state aid can explain why aquaculture's output has dropped so dramatically compared to the 1980s and why poaching and black aquaculture markets are thriving in Ukraine. In 2019, the total aquaculture output in Ukraine dropped by 1,589 tons (see Table 1  5.2 per cent compared to 2018, 400 aquaculture businesses ceased to exist in 2019.131 And all this happened despite aquaculture's vital role in replenishment of the national water biological resources.132 This could have served as an additional argument for the necessity of state support of aquaculture and would have counterbalanced the environmental concerns that started to emerge in other countries in relation to aquaculture.133 It is too early to claim that Ukraine's aquaculture is dying, but the trend toward this in the available statistics should not be underestimated.
It would be naïve to expect that the government of Ukraine can drastically change the situation any time soon, for it requires complete revision of the existing legal base, professional competence and stability of the executive bodies responsible for the state policy in the field, special state aid programs aimed specifically at aquaculture producers, and the complete renovation of aquaculture infrastructure. And yet it is possible to start helping aquaculture now. First, this can be done by adopting amendments to the Law on Aquaculture together with the adoption of by-laws that would allow renting parts of water bodies for the needs of aquaculture. Second, a "single window" can be introduced to facilitate issuance of various permits and approvals so that to reduce bureaucracy, delays, and corruption. Third, abolishing of import duties on feeds will significantly reduce costs for producers and eventually reduce prices for consumers. Fourth, much needed EU standards for laboratory examination of aquaculture products can be introduced. Finally, more attention to aquaculture and its specifics needs compared to other agricultural producers should be considered when distributing state aid. If done properly, these measures will revive the industry, improve the national economy, restore biological resources, and contribute to Ukraine's general response to COVID-19 challenges.