{"id":43507,"date":"2021-10-18T13:28:32","date_gmt":"2021-10-18T11:28:32","guid":{"rendered":"https:\/\/libmod.de\/?p=43507"},"modified":"2021-10-19T11:06:45","modified_gmt":"2021-10-19T09:06:45","slug":"eu-ukraine-summit-2021-relations-after-7-years","status":"publish","type":"post","link":"https:\/\/libmod.de\/en\/eu-ukraine-summit-2021-relations-after-7-years\/","title":{"rendered":"EU-Ukraine Summit 2021: What does it say about the state of EU-Ukraine relations after 7 years of the association?"},"content":{"rendered":"

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Foto: European Union<\/figcaption><\/figure>\n

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The consid\u00aderable break\u00adthroughs in the EU-Ukraine economic agenda have been harmed by sluggish political devel\u00adopment, partic\u00adu\u00adlarly concerning the rule of law. The judicial reform, anti-corruption efforts, independent and efficient law-enforcement insti\u00adtu\u00adtions and legally sound \u2018de-oligarchi\u00adsation\u2019 remain the top prior\u00adities, where Ukraine still has to do the homework and the EU enhance its monitoring and verifi\u00adcation efforts. Without progress in these critical areas economic integration risks to be stalled. <\/h2>\n

The 23rd<\/sup> EU-Ukraine Summit, held in Kyiv on October 12, 2021, marked the seventh anniversary of the Associ\u00adation Agreement (AA), the major game-changer in the relations between the parties. The Joint Statement following the Summit<\/a> is a good signboard for under\u00adstanding the status of the relations and the plans for the future.<\/p>\n

The EU has been the primary trade partner of Ukraine, and its role further strengthens in 2021. According to the customs data, in the first nine months of 2021, Ukraine\u2019s exports of goods to the EU reached USD 20 bn, so that annual figures will surpass the previous peak regis\u00adtered in 2019 (USD 21 bn). Likewise, imports of goods from the EU have also resumed its growth, although slower. As a result, the EU accounts for 42% of Ukraine\u2019s goods exports and 43% of imports.<\/p>\n

In the policy domain, the impor\u00adtance of trade with the EU trans\u00adlates into reducing tariffs and non-tariff barriers (NTBs) to trade as envisaged in the deep and compre\u00adhensive free trade area (DCFTA), the integral part of the AA.<\/p>\n

Although the DCFTA envisages signif\u00adicant tariffs liber\u00adal\u00adization<\/strong>, both partners preserved non-zero duties for selected, mostly agro-food, products. For this purpose, the EU estab\u00adlished tariff-rate quotas for 36 categories, while Ukraine used three tariff rate quotas and preserved some non-zero duties.  However, the Agreement allows tariff liber\u00adal\u00adization accel\u00ader\u00adation after five years since the launch. Ukraine has initiated consul\u00adta\u00adtions<\/a> regarding this liber\u00adal\u00adization already in early 2021. The current Summit Joint Decla\u00adration marks the next important step, welcoming the launch of \u201cnegoti\u00ada\u00adtions on broad\u00adening and accel\u00ader\u00adating the scope of the elimi\u00adnation of customs duties<\/em>\u201d. It is a signif\u00adicant break\u00adthrough, hoping to resolve Ukraine\u2019s most critical business concern regarding the AA\/\u200bDCFTA.<\/p>\n

Another essential element of the economic integration of Ukraine into the EU internal market is the elimi\u00adnation of non-tariff barriers to trade<\/strong>. To achieve that, the DCFTA envisages the conclusion of the Agreement on Conformity Assessment and Accep\u00adtance of indus\u00adtrial products (ACAA) for indus\u00adtrial goods, the recog\u00adnition of equiv\u00ada\u00adlence for food and related products, and trade facil\u00adi\u00adtation measured through the mutual recog\u00adnition of autho\u00adrized economic opera\u00adtions (AEO) and the integration of Ukraine into the European common transit system.<\/p>\n

Recently, the public focus has been on the conclusion of the framework ACAA incor\u00adpo\u00adrating three specific areas, namely machinery, low voltage equipment and electro\u00admag\u00adnetic compat\u00adi\u00adbility<\/a>. In mid-2021, the EU expert mission concluded a pre-assessment of Ukraine\u2019s legis\u00adlation related to the ACAA, confirming a relatively high, although still incom\u00adplete, degree of legal alignment. In September, the second phase of evalu\u00adating quality infra\u00adstructure began. If Ukraine imple\u00adments the mission\u2019s recom\u00admen\u00adda\u00adtions swiftly, we could expect the launch of the ACAA talks already in 2022.<\/p>\n

The Joint Decla\u00adration does not mention two other essential NTBs, namely food safety and customs proce\u00addures, where substantial progress has also been achieved. In particular, Ukraine has already aligned its legis\u00adlation and launched a parallel use of the NCTS, preparing to join the European common transit system, expected by 2023. In addition, the first Ukrainian company got the AEO status, paving the way for the mutual recog\u00adnition of the AEO between Ukraine and the EU. As for the food safety sphere, the first recog\u00adnition of equiv\u00ada\u00adlence for certi\u00adfi\u00adcation systems \u2013 for cereal seeds \u2013 was achieved in late 2020.<\/p>\n

The Joint Decla\u00adration also marked the vital break\u00adthrough in the AA\/\u200bDCFTA modern\u00adization in the trade of services<\/strong>. The parties reported on the update of Annex XVII of the AA for telecom\u00admu\u00adni\u00adcation, postal and courier and inter\u00adna\u00adtional maritime transport services. Moreover, the Summit reiterated AA commit\u00adments regarding the internal market treatment for telecom\u00admu\u00adni\u00adcation services confirming Ukraine\u2019s efforts to achieve it and the EU readiness to provide it. Other forth\u00adcoming integration elements could be the mutual recog\u00adnition of electronic trust services, signif\u00adi\u00adcantly simpli\u00adfying business opera\u00adtions between Ukraine and the EU. The Decla\u00adration also mentions Ukraine\u2019s efforts to align with the EU Digital Single Market, but without the explicit commit\u00adments regarding Ukraine\u2019s accession.<\/p>\n

In transport<\/strong>, the key achievement of the Summit is the conclusion of the Common Aviation Area (CAA) Agreement, the well overdue event as the document was initialled back in 2013. The market opening will happen in several stages, linked to the speed of Ukraine\u2019s approx\u00adi\u00admation efforts. The progress in inland waterways and railway transport are also mentioned. However, the Decla\u00adration omits road transport, where the deficit of transit permits has already created tangible barriers for trade in goods \u2013 for both Ukraine and its EU counter\u00adparts. The resolution of this bottleneck should remain in the focus of the EU-Ukraine relations.<\/p>\n

Given the vital impor\u00adtance of energy security for both the EU and Ukraine, the parties have always focused on energy issues<\/strong>. Over the last seven years, Ukraine has trans\u00adformed its gas and electricity markets in line with the EU norms. That has allowed the country to deepen inter\u00adcon\u00adnection with the European gas market<\/a> through agree\u00adments on the cooper\u00adation of operators of gas trans\u00admission networks of Ukraine and neigh\u00adbouring EU member states. It has also paved the way for the forth\u00adcoming synchro\u00adnization with the ENTSO\u2011E power grid, the prepa\u00adra\u00adtions for which are ongoing. The Summit confirmed the mutual interest in further integration based on the EU norms and the impor\u00adtance of Ukraine\u2019s gas transit system for the European energy security and agreed to \u201cconsult and co-ordinate, as appro\u00adpriate, on [energy] infra\u00adstructure devel\u00adop\u00adments<\/em>\u201d.<\/p>\n

As a sign of the future, the Joint Decla\u00adration has also covered the Green Deal<\/strong>, partic\u00adu\u00adlarly welcoming the launch of the EU-Ukraine dialogue on the European Green Deal and Ukraine\u2019s Green Transition. However, although the EU promised to support Ukraine in devel\u00adoping its carbon pricing policy in the context of the Carbon border adjustment mechanism (CBAM), no exemp\u00adtions for Ukraine have been mentioned. Accord\u00adingly, certain Ukrainian export products will be imposed with additional certifi\u00adcates to adjust to the carbon price level of the EU Emission trading system.<\/p>\n

The consid\u00aderable break\u00adthroughs in the EU-Ukraine economic agenda have been harmed by sluggish political devel\u00adopment, partic\u00adu\u00adlarly concerning the rule of law. The judicial reform, anti-corruption efforts, independent and efficient law-enforcement insti\u00adtu\u00adtions and legally sound \u2018de-oligarchi\u00adsation\u2019 remain the top priority for the relations, as highlighted in the Joint Decla\u00adration. Regret\u00adfully, in this sphere, Ukraine is still lagging with multiple challenges to resolve<\/a>. Before the Summit, experts called<\/a> for identi\u00adfying the G7\u2019s roadmap for judicial and anti-corruption reforms in Ukraine as a tool for imple\u00admenting the political associ\u00adation and initi\u00adating talks on joint border control. Unfor\u00adtu\u00adnately, though, the Joint Decla\u00adration does not contain these provisions.<\/p>\n

Summing up, Ukraine and the EU signif\u00adi\u00adcantly deepened their economic and especially trade integration against the background of Ukraine\u2019s gradually progressing legal and insti\u00adtu\u00adtional approx\u00adi\u00admation over the last seven years. However, for further progress, it is essential to have the EU-Ukraine join work on monitoring and verifi\u00adcation that these efforts are compliant with the EU norms and practices as it is the prereq\u00aduisite for integration to the EU Internal Market. Therefore, it is very encour\u00adaging that the Joint Decla\u00adration confirms this mutual commitment.<\/p>\n

However, some of Ukraine\u2019s state funda\u00admentals, partic\u00adu\u00adlarly the rule of law, remain fragile, hampering the economic progress and European integration perspec\u00adtives. It is the locus of the battle for the European future of Ukraine now.<\/p>\n

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Veronika Movchan is an Academic Director at the Institute for Economic Research and Policy Consulting \u2014 IER (Kyiv). Her main research interests lie in the sphere of trade policy, including WTO-related issues, regional integration, non-tariff measures, quantifi\u00adcation of trade policy instru\u00adments, and modeling of policy changes, including the CGE modelling. She worked as research fellow at Stanford University (USA) and the DIW-Berlin, Germany, as well as a consultant at the World Bank Resident Mission in Kyiv and the Harvard Institute for Inter\u00adna\u00adtional Devel\u00adopment (Ukraine).<\/em><\/p>\n

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