New legal basis and framework for EU-Ukraine relations is established by the EU-Ukraine Association Agreement (AA).
An Association Agreement, including a Deep and Comprehensive Free Trade Area, was negotiated in 2007-2011 and initialled in 2012. On 10 December 2012, the Council of the European Union adopted Conclusions on Ukraine that affirmed the EU’s commitment to signing the Agreement as soon as Ukraine had taken determined action and made tangible progress towards achieving the benchmarks set out in the Conclusions.
The EU and Ukraine signed the political provisions of the Association Agreement on 21 March 2014, underlining committment to proceed with the signature and conclusion of the remaining parts of the Agreement. Following the completion of technical preparations, the EU and Ukraine signed the remaining provisions of the EU-Ukraine Association Agreement in Brussels on 27 June 2014. Provisional application of important parts of the EU-Ukraine Association Agreement began on 1 November 2014: on the respect for human rights, fundamental freedoms and rule of law; political dialogue and reform; justice, freedom and security; economic and financial cooperation. The AA will enter into force once all EU Member States and Ukraine have ratified it.
The EU-Ukraine Association Agreement replaced the EU-Ukraine Partnership and Cooperation Agreement as the legal basis and framework for EU-Ukraine relations. The AA constitutes a new state in the development of EU-Ukraine contractual relations, aiming at political association and economic integration. It provides for a shared commitment to a close and lasting relationship based on common values, in particular full respect for democratic principles, rule of law, good governance, human rights and fundamental freedoms.
The AA includes provisions for a Deep and Comprehensive Free Trade Area (DCFTA). The DCFTA offers Ukraine a framework for modernising its trade relations and for economic development by the opening of markets via the progressive removal of customs tariffs and quotas, and by an extensive harmonisation of laws, norms and regulations in various trade-related sectors. This will create the conditions for aligning key sectors of the Ukrainian economy to EU standards.
The implementation of the EU-Ukraine Association Agreement, including the Deep and Comprehensive Free Trade Area, while not constituting the final goal of EU-Ukraine cooperation, will bring opportunities for sustainable economic development and prosperity to all the regions of Ukraine, as well as to its neighbours.
The AA determines the institutional framework of the EU – Ukraine relations.
The highest level of political and policy dialogue between the Parties is at Summit level, which takes place once a year. The Summit provides overall guidance for the implementation of the AA as well as an opportunity to discuss any bilateral or international issues of mutual interest.
At ministerial level, regular political and policy dialogue takes place within the Association Council within the framework of regular meetings at least once a year. It supervises and monitors the application and implementation of the AA and periodically reviews the functioning of the AA in the light of its objectives. The Association Council consists of members of the Council of the European Union and members of the European Commission, on the one hand, and of members of the Government of Ukraine, on the other. It is chaired in turn by a representative of the Union and a representative of Ukraine.
For the purpose of attaining the objectives of the AA the Association Council has the power to take decisions within the scope of the AA, in the cases provided for therein. Such decisions are binding upon the Parties. The Association Council may also make recommendations.
In line with the objective of gradual approximation of Ukraine's legislation to that of the Union as laid down in the AA, the Association Council will be a forum for exchange of information on European Union and Ukrainian legislative acts, both under preparation and in force, and on implementation, enforcement and compliance measures. Moreover the Association Council may update or amend the Annexes to the AA, taking into account the evolution of EU law and applicable standards set out in international instruments.
In order to assist the Association Council in the performance of its duties the Association Committee is established. The Association Committee is composed of representatives of the Parties, in principle at senior civil servant level. The Association Committee shall meet at least once a year.
The Association Council may delegate to the Association Committee any of its powers, including the power to take binding decisions. The Association Committee shall meet in a specific configuration to address all issues related to Title IV (Trade and Trade-related Matters) of this Agreement. The Association Committee is assisted by sub-committees established under the AA.
Interparliamentary coordination is provided in the framework of Parliamentary Association Committee. It is a forum for Members of the European Parliament and of the Verkhovna Rada of Ukraine to meet and exchange views. The Parliamentary Association Committee may request relevant information regarding the implementation of the AA from the Association Council, which shall then supply the Committee with the requested information. The Parliamentary Association Committee may make recommendations to the Association Council.
The Parties also promotes regular meetings of representatives of their civil societies, in order to keep them informed of, and gather their input for, the implementation of the AA Agreement. For this purpose a Civil Society Platform is established. It consists of members of the European Economic and Social Committee (EESC) on the one hand, and representatives of civil society on the side of Ukraine, on the other, as a forum to them to meet and exchange views. The Civil Society Platform may make recommendations to the Association Council. On the other hand the Association Committee and Parliamentary Association Committee support regular contacts with representatives of the Civil Society Platform in order to obtain their views on how to attain the objectives of the AA.
The EU-Ukraine Association Agreement (AA) constitutes the next stage in EU-Ukraine contractual relations, aiming at political association and economic integration and leaving open the way for further progressive developments. The AA provides for a shared commitment to a close and lasting relationship, based on common values, in particular full respect for democratic principles, rule of law, good governance, human rights and fundamental freedoms.
In Preamble are determined the most important areas/facts pertinent to EU-Ukraine Relations. It sets out the ambition for a close and lasting relationship. The elements which are set out in the Preamble include among others:
- A reference to common values on which the EU is built namely democracy, respect for human rights and fundamental freedoms, and rule of law and which are shared by Ukraine.
- A reference that Ukraine is recognised as a European country which shares a common history and common values with the Member States of the EU.
- A reference to the European aspirations of Ukraine. The EU welcomes Ukraine’s European choice, including its commitment to build deep and sustainable democracy and a market economy.
- An acknowledgement that the political association and economic integration of Ukraine with the EU will depend on progress in the implementation of the Association Agreement as well as Ukraine’s track record in ensuring respect for common values, and progress in convergence with the EU in political, economic and legal areas.
The AA comprises of Titles which concern General Principles; Political Cooperation and Foreign and Security Policy; Justice Freedom and Security; Trade and Trade related matters (DCFTA); Economic and Sector Cooperation; Financial Cooperation with Anti-Fraud Provisions, as well as Institutional, General and Final Provisions.
It covers wide range of sector cooperation such as energy, transport, environment protection, industrial and small and medium enterprise cooperation, social development and protection, equal rights, consumer protection, education, training and youth as well as cultural cooperation.
The central part of the AA constitutes Trade and Trade related matters: closer economic integration through the DCFTA.
It also includes Mobility as one of the most priority spheres of the EU-Ukraine relations. The importance of the introduction of a visa free travel regime for the citizens of Ukraine in due course, provided that the conditions for well - managed and secure mobility are in place is recognised in the Agreement.
The Deep and Comprehensive Free Trade Area (DCFTA) is part of the Association Agreement (AA) between the EU and Ukraine, one of EU's the most ambitious bilateral agreements. The DCFTA offers Ukraine a framework for modernising its trade relations and for economic development by the opening of markets via the progressive removal of customs tariffs and quotas, and by an extensive harmonisation of laws, norms and regulations in various trade -related sectors, creating the conditions for aligning key sectors of the Ukrainian economy to EU standards.
The key elements of the DCFTA:
Market Access for Goods
It aims to remove customs duties on imports and exports. The vast majority of customs duties on goods will be removed as soon as the Agreement enters into force. For industrial goods it foresees the immediate removal of existing tariffs on most products, with exceptions for a few for which a transition period exists. For agricultural goods, ambitious concessions have been made taking into account specific sensitivities. Thus, duty-free tariff rate quotas been granted to the Ukraine for cereals, pork, beef, poultry and a handful of additional products, while for others the progressive elimination by the EU of the custom duties will occur over a longer transition period (generally 10 years). This means that for particularly sensitive sectors, the DCFTA gives producers more time to adapt to a more competitive environment while offering consumers a wider choice of products at lower prices.
As regards non-tariff barriers (NTB) on trade in goods, the Agreement incorporates fundamental WTO rules on NTBs.
Trade Remedies
It covers traditional trade defence instruments (anti-dumping, anti-subsidy and global safeguard). WTO rights and obligations will be applied to ensure fair treatment.
Technical barriers to trade
It aims to reduce obstacles to trade arising from Technical Barriers to Trade (TBT): technical regulations, standards, conformity assessment procedures and similar requirements. Ukraine has progressively adapt its technical regulations and standards to those of the EU.
Sanitary and phytosanitary (SPS) measures
It covers facilitation of trade in SPS related goods including animals, animal products, plants and plant products, whilst safeguarding the Parties' level of protection.
Customs and trade facilitation
This chapter seeks to enhance cooperation in customs and customs-related matters and to simplify customs requirements and formalities, while at the same time preventing fraud.
Establishment, trade in services and electronic commerce
The chapter aims to integrate Ukraine as much as possible into the
EU market. Unlike classical FTAs, it provides for both the freedom of establishment in services and non-services sectors, subject to limited reservations, and the expansion of the internal market for a set of key services sectors once Ukraine effectively implements the EU - acquis.
Current payments and movement of capital
Provisions on free movement of capital will include standard safeguards with a possibility to apply measures to ensure the stability of the financial system.
Public procurement
Ukraine will, over several years, adopt current and future EU legislation on public procurement. With the exception of defence procurement, Ukrainian suppliers and service providers will have full access to EU public procurement markets, and EU suppliers and service providers will have the same to the Ukrainian procurement market. The chapter is an unprecedented example of the integration of a Non-EEA-Member into the EU Single Market.
Intellectual property
This chapter includes provisions on particular copyright, designs (including unregistered ones), patents and geographical indications (GIs) which complement and update the TRIPS Agreement. The chapter has a strong section on enforcement of IPRs based on the EU's internal rules.
Competition
Here, the Parties prohibit and sanction certain practices and transactions which could distort competition and trade. Anti-competitive practices such as cartels, abuse of a dominant position and anti-competitive mergers will be subject to effective enforcement action.
Trade-related energy
This is the first FTA to include specific provisions on trade related energy issues. The chapter takes into account that Ukraine is already a member of the Energy Community Treaty (EnCT), which imposes an obligation to implement the most relevant EU energy acquis on electricity and gas. The chapter covers electricity, crude oil and natural gas (in gaseous state or as LNG), its provisions being subject to dispute settlement procedure.
Transparency
The Chapter sets out:
- Commitments allowing interested parties to comment on proposed regulations.
- The establishment of enquiry or contact points to respond to questions arising from the application of regulations.
- Due process requirements regarding administrative proceedings, including the review or appeal of administrative actions in areas covered by the FTA.
Trade and sustainable development
Key elements of the Trade and Sustainable Development Chapter include for instance: Shared commitment to the core labour standards of the International Labour Organisation (ILO) and the ILO Decent Work Agenda; Commitment to implement all multilateral environment agreements to which the EU and Ukraine are party, and to promote sustainable management of forestry and fisheries.
Dispute Settlement
The Dispute Settlement mechanism is based on the model of the WTO Dispute Settlement Understanding, but with faster procedures.
Mediation mechanism
A mediation mechanism allows Parties to tackle adverse effects on trade in goods. The aim is not to review a measure's legality, but to find a quick and effective solution to market access problems. The Parties will be assisted by a mediator they have jointly chosen or selected by lot from an agreed list.
Protocol I - Rules of origin
Rules of origin define the 'economic nationality' of products needed to determine the duties applicable to them when traded. In the DCFTA, the rules are based on the usual criteria.
Protocol II-Mutual administrative assistance in customs matters
It sets out a legal framework for cooperation between the Parties' competent authorities in tackling customs irregularities and fraud.
Protocol III-Protocol on a Framework Agreement between the European Union and Ukraine on the General Principles for the Participation of Ukraine in Union Programmes.
It sets out core principles for Ukraine's financial contribution and participation in monitoring current and future EU programmes.
The Association Agenda had been approved by the Cooperation Council between Ukraine and the EU in 2009. In order to update it, the document was amended twice (in 2012 and 2013). Cooperation Council presented three consecutive reports on the Association Agenda (2010, 2012 and 2013) which highlights its progress.
On March 16, 2015 the Association Council between Ukraine and the EU approved the renewed Association Agenda (by exchange of letters).
The aim of the present Association Agenda is to prepare and facilitate the implementation of the Association Agreement, by creating a practical framework through which the overall objectives of political association and economic integration can be realized and by providing a list of priorities for joint work on sector by sector basis.
The Document identified ten short-term priorities crucial for Ukraine’s progress in particular reforms relating:
Annual evaluation of the Association Agenda and amendments to it, including adjustment of priorities, entrusted to the Association Committee.
The Eastern Partnership represents the Eastern dimension of the European Neighbourhood Policy (ENP). It is based on shared values of liberty, democracy, respect for human rights and the rule of law.
The EU is proposing to its partners: new association agreements including deep and comprehensive free trade agreements with those countries willing and able to enter into a deeper engagement, gradual integration in the EU economy and easier travel to the EU through gradual visa liberalisation, accompanied by measures to tackle illegal immigration.
The Partnership aiming at promoting democracy and good governance; strengthening energy security; promoting sector reform and environment protection; encouraging people to people contacts; supporting economic and social development; offering additional funding for projects to reduce socio-economic imbalances and increase stability.
The initiative covers both bilateral EU relations with partner countries and multilateral format.
Bilateral involves negotiations between the partner country and the EU on the tasks in the areas of political association and economic integration with the EU (the Association Agreement and DCFTA), mobility (liberalization of the visa regime), sectoral cooperation (energy security, agricultural development, environment, social policy, etc.).
The multilateral format is a complementary to the bilateral and through its mechanisms (summits of Heads of State, Foreign Ministers' meetings, the meetings of experts) offers to partner countries the opportunity to exchange of experiences on the implementation of internal reforms. The multilateral format is also designed to promote stability and confidence-building in the region (it is a "protracted conflicts").
The multilateral dimension operates at the following levels: summits involving Heads of State and Government, Foreign Ministers' meeting, the meeting of experts in the four EaP thematic platforms: democracy, good governance and stability; economic integration and convergence with EU policies; energy security; contacts between people. In addition, the EaP multilateral dimension with the support of the European Commission implemented a number of practical projects (flagship initiatives) in the following areas: integrated border management, promotion of small and medium enterprises, energy efficiency, environmental management and prevention of natural and man-made disasters.
The multilateral dimension includes meetings in the format of the informal dialogue at the level of Foreign ministers and sectoral Ministers of partner countries and European Commissioners. During the informal meeting the issues of multilateral sectoral cooperation and development of the Eastern Partnership are discussed.
The parliamentary dimension of the Eastern Partnership provides with the Euronest Parliamentary Assembly.
The Eastern Partnership also involves non-governmental sector within Civil Society Forum (CSF). The purpose of the Forum is to develop contacts between non-governmental organizations and to facilitate their dialogue with public authorities.
Joint Declaration of the Eastern Partnership Summit (Riga, 21-22 May 2015)
Ukraine-EU trade and economic cooperation
The EU is Ukraine's largest trading partner, accounting for more than a third of its trade. It is also its main source of Foreign Direct Investment.
Ukraine-EU “trade in goods and services” statistics (in millions of USD):
|
|
2014 рік |
2013 рік |
2014/2013 |
|
|
MUSD |
Share (%) |
|||
|
Ukraine TiG turnover |
123 897,3 |
158 178,9 |
-34 281,6 |
78,3 |
|
Including UA-EU TiG turnover |
44 297,4 |
51 128,6 |
-6 831,2 |
86,6 |
|
Share from the total volume |
35,8% |
32,3% |
|
|
|
Ukraine TiG export |
63 890,5 |
74 832,3 |
-10 941,8 |
85,4 |
|
Including Ukrainian export to the EU |
20 302,1 |
20 159,0 |
143,1 |
100,7 |
|
Share from the total volume |
31,8% |
26,9% |
|
|
|
Ukraine TiG import |
60 006,8 |
83 346,6 |
-23 339,8 |
72,0 |
|
Including import from the EU |
23 995,3 |
30 969,6 |
-6 974,3 |
77,5 |
|
Share from the total volume |
40,0% |
37,2% |
|
|
|
Ukraine TiG balance |
+3 883,7 |
-8 514,3 |
12 398,0 |
|
|
Ukraine –EU TiG balance |
-3 693,2 |
-10 810,6 |
7 117,4 |
|
Among EU member states the major trading partners of Ukraine in 2014 were Germany (17.9%), Poland (13.5%), Italy (9.3%), Hungary (7.0%), Great Britain (5.8%) and the Netherlands (5.1%).
During 2014, the most exported types of goods from Ukraine to the EU countries were ferrous metals, electrical machinery and equipment, ores, slag and ash, energy materials and agricultural products.
The most imported types of goods from EU to Ukraine were energy materials, oil and oil refining products, boilers, machines, instruments and mechanical devices, pharmaceuticals, polymers, plastics, electrical machinery and equipment, land vehicles except railway, paper and cardboard.
The EU and Ukraine signed the Deep and Comprehensive Free Trade Area (DCFTA) on 27 June 2014 as part of their broader Association Agreement.
Since 23 April 2014 Ukraine benefits from the EU Autonomous trade preferences (ATP) which have been introduced by the Regulation (EU) No 374/2014 of the European Parliament and of the Council of 16 April 2014 as an element of a broad package of the EU economic and financial support of Ukraine.
In October 2014 the period of validity of the ATP has been extended to 31 December 2015 by the Regulation (EU) No 1150/2014 of the European Parliament and of the Council of 29 October 2014.
The abovementioned preferences eliminate EU import duties on 94.7% of industrial goods and 83,4% of agricultural goods and foodstuff originating in Ukraine. It also foresees the application of the duty-free tariff quotas towards a number of agricultural products.
There are two options of managing duty-free tariff quotas for Ukrainian imports.
Annex II of the mentioned Regulation sets the list of goods and quota volumes which will be managed by the principle “first come – first served” pursuant to the articles 308a, 308b and 308c of the Commission Regulation 2454/93 of 2 July 1993.
Annex III of the Regulation establishes categories of goods and respective quota volumes which are subjects to licensing procedures (all interested EU importers must obtain appropriate licenses to use quotas). These procedures are being carried out by the relevant EU Member States’ authorities with a general supervision by the DG “AGRI”. More detailed information on licensing can be found in relevant Implementing Regulations of the European Commission (No 1164/2014, 1165/2014, 1166/2014, 1167/2014, 1168/2014 and 1169/2014 of 31 October 2014).
To benefit from the EU Autonomous trade preferences one must have the certificate of origin “Eur.1” issued by one of territorial branches of the Ukrainian Chamber of Commerce and Industry.
Cooperation between Ukraine and the EU in energy
The strategy of cooperation between Ukraine and the EU in energy is outlined in the Memorandum of Understanding on Co-operation in the Field of Energy between Ukraine and the EU (MoU), concluded on December 1, 2005.
The MoU envisages implementation of 5 road maps:
• nuclear safety;
• integration of electricity and gas markets;
• enhancing security of energy supplies and transit of hydrocarbons;
• enhancing safety and environmental standards in the coal sector;
• energy efficiency.