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The EU-Ukraine Association Agreement

The EU-Ukraine Association Agreement

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. 

EU – Ukraine Deep and Comprehensive Free Trade Area

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 EU-Ukraine Association Agenda 

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:

  • Constitution;
  • Judiciary;
  • Electoral laws and legislation;
  • Fight against corruption;
  • Public administration;
  • Energy;
  • Deregulation;
  • Public procurement;
  • Taxation;
  • External audits.

Annual evaluation of the Association Agenda and amendments to it, including adjustment of priorities, entrusted to the Association Committee.