Financial and IP Risks of Arms Export under Resolution No. 875

The implementation of Cabinet of Ministers Resolution No. 875 represents a pivotal moment for the Ukrainian defence industry. While the simplification of procedures and the reduction of application review periods to 30 days for Drone Deal participant countries is an undeniable achievement, manufacturers must recognize that this export liberalization is accompanied by heightened oversight of intellectual property (IP) and new financial burdens.

The Financial Export Model: Considerations for Pricing

One of the most critical aspects of the Resolution is the establishment of fees for export permits. Rates of 20% for finished goods and 30% for components significantly impact contract margins. Manufacturers must integrate these expenses into their financial model during negotiations with foreign customers, as a failure to do so may lead to the unprofitability of export operations.

IP Protection as a Condition for Export Admission

The state requires exporters to provide guarantees that transferred technologies will not be alienated or modified without authorization. This mandates that every export contract must include a clear IP architecture. Manufacturers must move beyond simple product sales to provide legal oversight of technology usage, including an explicit prohibition on re-export without SSECU consent.

• Conduct a comprehensive audit of IP rights for technologies prior to filing an application with the SSECU.
• Integrate clauses into international trade contracts requiring mandatory notification of any product modifications.
• Formalize permit payment conditions as a distinct budget item within project planning.
• Verify product compliance with Ministry of Defence codification criteria to ensure eligibility for simplified procedures.

Exporting under Resolution No. 875 is not merely a commercial sale; it is a strategic partnership where the Ukrainian manufacturer acts as the guarantor of technology security at the international level.

The Global Miltech Legal team specializes in providing comprehensive legal support for defence companies regarding export compliance. We assist in structuring export contracts, calculating financial obligations, and securing your intellectual property rights. Contact us today for a free initial case assessment to effectively navigate and mitigate your regulatory risks.