***** 1 - European Business Association

EBA - Working meeting on the EUUkraine Association Agreement implementation

1. The DCFTA structure • Association agreement (486 articles) – PREAMBLE – Title I GENERAL PRINCIPLES – Title II POLITICAL DIALOGUE AND REFORM, POLITICAL ASSOCIATION, COOPERATION IN THE FIELD OF FOREIGN AND SECURITY POLICY – Title III JUSTICE AND FREEDOM – Title IV TRADE AND TRADE RELATED MATTERS (art 25-336) – Title V ECONOMIC AND SECTOR COOPERATION – Title VI FINANCIAL COOPERATION – Title VII INSTITUTIONNAL, GENERAL AND FINAL PROVISIONS – …and lots of annexes!

1. The DCFTA structure • Title IV TRADE AND TRADE RELATED MATTERS – – – – – –

Chapter 1 – National treatment and market access for goods Chapter 2 – Trade remedies Chapter 3 – Technical barriers to trade Chapter 4 – Sanitary and phytosanitary measures Chapter 5 – Customs and trade facilitation Chapter 6 – Establishment, trade in services and electronic commerce – Chapter 7 – Current payments and movement of capital

1. The DCFTA structure • Title IV TRADE AND TRADE RELATED MATTERS – – – – – – –

Chapter 8 – Public procurement Chapter 9 – Intellectual property Chapter 10 – Competition Chapter 11 – Trade related energy Chapter 12 – Transparency Chapter 13 – Trade and sustainable development Chapter 14 – Dispute settlement

2. DCFTA – Tariff part • "FTA part" of the DCFTA: – Liberalizes most tariffs both ways, in line with the provision of the WTO / GATT (elimination on "substantially all the trade") – With delays for many products – In an asymmetrical manner: Ukraine has usually more time to adapt – With quotas (tariff rate quotas / TRQs) for certain agricultural products – All this being specified in the AA/DCFTA (in two annexes, one for Ukraine, one for the EU) – A rather usual FTA (with the exception for the asymmetry) – whereas the "Deep and comprehensive" part is very specific to Ukraine

2. DCFTA – Tariff part • Where to get information on tariffs? – Texts of the AA/DCFTA

http://eeas.europa.eu/ukraine/assoagreement/assoagreem ent-2013_en.htm – European Commission "Export Helpdesk"

http://exporthelp.europa.eu/thdapp/index.htm

2. DCFTA – Tariff part • How to use the annexes? There are several possible cases for tariff: – – – – –

Set at 0 from day 1 Set at 0 progressively Partial reduction from day 1 (and no further reduction) Partial and progressive reduction Set at 0 for a limited quota (TRQ) (and usual tariff beyond quota)

This is fully detailed in the Annexes(one for the EU, one for Ukraine) http://eeas.europa.eu/ukraine/assoagreement/assoagreement2013-annexes-to-title-iv_en.htm

2. DCFTA – Tariff part

2. DCFTA – Tariff part

3. Autonomous trade measures • Autonomous trade measures - what is it about? – Key issue with the AA / DCFTA: this is an international treaty, which means that before entry into force it must be signed (e.g. by heads of states or any appointed authority) and then ratified by 30 parliaments (Ukraine, EU, Member States), which may take years… – One option: provisional implementation (with consent of the European Parliament), which may reduce the delay to a few months. – One other option: unilateral implementation by the EU of the trade part. – We call this "autonomous trade measures"

3. Autonomous trade measures REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the reduction or elimination of customs duties on goods originating in Ukraine – 22 April 2014: Article 1 Preferential arrangements Customs duties on goods originating in Ukraine shall be reduced or eliminated in accordance with Annex I.

3. Autonomous trade measures • When and For how long? It is into force already, and will be until 1st November: Article 7 Entry into force and application This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

It shall apply until Title IV of the Association Agreement enters into force or, where appropriate, is applied provisionally, and until 1 November 2014 at the latest. The Commission shall publish in the Official Journal of the European Union a notice in the event that this Regulation ceases to apply before that date.

3. Autonomous trade measures • In exchange of what? Nothing: this is an autonomous EU regulation, Ukraine did not have to do anything beyond some administrative adaptation (in order to make sure that, through the system of rules of origin only Ukrainian goods benefit) • And then what's next? By the 1st of November, we expect the AA/DCFTA to be provisionnally applied so this regulation would become redundant • What about territorial application and Crimea? One key issue is to avoid that goods originating from Russia benefit form duty free access to the EU market, through Crimea.

4. Adressing non-tariff barriers in the DCFTA • Industrial goods - Technical Barriers to Trade (TBTs) – One of the most important problems that Ukrainian and European exporters face on a day-to-day is the problem of different technical norms and standards – The DCFTA foresees widespread alignment between Ukrainian and EU standards, both for industrial goods and agricultural products. – In 2005-2006, Ukrainian companies wishing to export to the EU faced additional production costs of about 14% on average in order to ensure that their products met EU standards – The use of EU standards will not only make Ukrainian products more competitive on the EU market but also in the rest of the world – the growing markets of the Far East, Middle East, Africa and America

4. Adressing non-tariff barriers in the DCFTA • Animals, animal products, plants and plant products – SPS – In parallel with its commitments on technical barriers to trade, Ukraine also commits itself in the DCFTA to align with EU legislation and standards on all animal health, food safety and plant health measures – In addition, a special cooperation mechanism is foreseen to monitor progress and make recommendations on changes to UA's legislation in this field – A number of trade facilitation measures are foreseen, e.g. relating to listing of establishments, verification procedures etc.

4. Adressing non-tariff barriers in the DCFTA • Services – In the field of services, the DCFTA is unprecedented in the extent of its liberalisation. – The services chapter is based on the services part of the association agreements that were concluded with countries acceding to the EU – for example with Croatia. – It provides for a complete freedom of establishment in all services and non-services sectors (with a limited number of reservations). In other words, EU and Ukrainian service providers will be able to set up businesses in each others' territories and be treated like domestic service providers. – Furthermore, the DCFTA foresees gradual legislative alignment in financial services, telecom services, postal and courier services, and maritime services

4. Adressing non-tariff barriers in the DCFTA • Other fields (1/2) – Provisions on freer capital movement will help to enhance economic growth by allowing easier access to capital and better allocation of capital to its most productive use – There will be gradual alignment of UA's legislation on public procurement with that of the EU. With the sole exception of the defence sector, this would allow mutual unrestricted access of EU and UA suppliers and service providers to each others public procurement markets – Competition policy is another area which should see major improvements. UA has agreed to progressively align its legislation with that of the EU in a number of fields, including on state aid, subsidies, and transparency of decisions

4. Adressing non-tariff barriers in the DCFTA • Other fields (2/2) – There are very detailed provisions in the DCFTA regarding intellectual property rights, including a strong section on enforcement of legislation based on EU rules and detailed provisions on so-called geographical indications (GIs) – Regarding customs, we already have relatively good cooperation but the DCFTA enhances this by establishing a framework for mutual administrative assistance to ensure the correct application of customs legislation, cooperation on customs irregularities and fraud etc. – There are a number of trade related energy provisions which will establish rules on the pricing of energy goods (to let market prices prevail and to prohibit dual pricing)