Ukrainian Think Tanks Liaison Office in Brussels

Ukraine has been fulfilling the Association Agreement over three years. Therefore, we can already talk about certain trends: successes, challenges, failures. Which fields after three years have become successful, which failure?

Recently, the Office of the Vice Prime Minister for European and Euro-Atlantic Integration of Ukraine presented the Report on the implementation of the Association Agreement between Ukraine and the European Union in 2017.

Notably, the Government for the first time has resorted to a quantitative measure of Ukraine’s European integration progress, reporting about 41% of successfully fulfilled tasks, but limited only to 2017 year.

Therefore, based on the results of the alternative monitoring carried out by the Ukrainian Center for European Policy within the framework of the “Navigator of the Agreement” system, we will answer the question:

How many of the whole range of government tasks can be considered fulfilled since the beginning of the provisional application of the Agreement from November 2014?

While splitting the sectors by groups we were implying the following logic:

  • Successes: at least nearly 30% and more of the implementation tasks are fulfilled or at least framework laws are adopted complemented with the first attempts of its implementation.
  • Failures (1stpriority to react): no or very little progress is tracked; approximation of legislation is blocked suspended for a long period of time for different reasons; push is needed to break the deadlock.
  • Challengers (2ndpriority to react): an intermediate category between the above two; comprise the sectors where the first signs of progress were tracked and which have good potential for success but need to be supported.

Let us consider the most indicative cases in the context of chosen sectors:

Technical barriers to trade. This sector shows the best results from the point of view of adaptation of legislation, and introduction of new norms into practice. The approval of new technical regulations and standards continues, as well as preparation for the signing of the ACAA (Agreement on Conformity Assessment and Acceptance of Industrial Products) in three sectors: machinery, low voltage equipment and electromagnetic compatibility.

Energy sector. Over the past three years, the greatest progress has been achieved in the sectors of gas, electricity and energy efficiency. In particular, Parliament adopted the framework legislation required for the implementation of the relevant EU rules. However, there are numerous problems: the separation of the vertically integrated company ‘Naftogaz of Ukraine’, the creation of an independent regulator, as well as the opening up of a retail segment of natural gas for competition and reforming the system of housing and utilities subsidies for the population.

Public procurement. The Public procurement sector is also one of the most successful adaptation cases to the EU norms since most of the obligations under the Association Agreement are implemented here without any breach of time or quality. Following the adoption of the Law ‘On Public Procurement’, the standards regulating the process of concluding state contracts were introduced, as well as the basic program document ‘Roadmap for Public Procurement’ was adopted.

In the field of taxation, when the current version of the Customs Code was adopted, most of the requirements of the EU on the exemption from value-added tax and duties on goods imported by persons traveling from third countries, as well as the requirements for the codification and collection of excise duty on tobacco products, have already been taken into account. However, in order to ensure the full harmonization of national norms with the requirements of the EU, it is necessary to adopt next amendments to the Customs Code.

Customs. The rates of implementation of customs obligations are the slowest among the other areas covered by the Association Agreement. However, legislative changes are still taking place, as in the Verkhovna Rada there are 5 European integration laws that are required to adapt the national customs legislation to the EU acquis. However, they have been ‘detached’ in Parliament for more than two years, although, according to preliminary estimates of experts, their quality is quite satisfactory.

Company law. The progress in fulfilling obligations in the field of the activities of companies can be classified as ‘partially successful’, although with some reservations. As of 2018, Ukraine’s legislation on accounting and auditing has been adapted through the adoption of amendments to the law on accounting and financial reporting in Ukraine, as well as the signing of a bill on audit of financial reporting and auditing activities.

The situation with the protection of shareholder rights is worse since the most important moments of the activities of joint stock companies regulated by Ukrainian legislation do not meet European requirements.

Consumers rights protection. The approximation of Ukraine’s legislation to the requirements of the European Union in the field of consumer protection was also not fully implemented. Although progress has been made in adapting the directive to products posing a threat to consumer health and safety, as well as directives concerning the protection of consumers’ rights when indicating prices for products offered to consumers.

Social policy. Positive trends are those issues in which Ukrainian legislation, prior to the signing of the Association Agreement, took into account the minimum standards stipulated by the EU acts.

However, there is a problem with the implementation of EU acts in the Ukrainian legislation on labour protection, where the standard of safety and hygiene of workers has not been adapted to the requirements of the EU. There are also difficulties in approving the draft Labor Code of Ukraine registered in the Parliament, which covers a significant range of issues that are subject to regulation by EU acts.

Environment. The framework legislation on environmental impact assessment has been adopted, which should improve the procedure for public access to environmental information, as well as a law and a number of by-laws that modify the water management mechanism based on the basin principle. However, in other sub-sectors of the environment, the process of adaptation almost does not move.

Sanitary and phytosanitary measures. Progress in this area was marked by the adoption by the Verkhovna Rada of the Law ‘On to state control, which is carried out to check compliance of the legislation on safety and quality of food and feed, animal health and welfare’ (No. 2042-VIII). It creates a legal basis for reforming the state control system for food safety. In addition, in December last year another important Law ‘On Safety and Hygiene of Feeds’ (No. 2264-VIII), which ensures the introduction of an equivalent European system of state control of feed safety.

Public health. Positive, at first glance, is the situation in the field of cell and tissue transplantation. Necessary bill (No. 2368а-1) submitted by the MPs passed the first reading. However, the profile committee of the VRU did not work out its text.

In the tobacco sector, the process is slowed down by the unwillingness to find a common agreement between the two authors of the two draft Laws (No. 2820 and No. 2430) due to different requirements for the production, advertising and sale of tobacco.

The sphere of blood is also in a state of incompleteness. Everything suspended at the stage of adopting the Strategy for the development of the national system of blood. As a result, the reforms necessary to create safe donation are not being promoted.

Transport. By January 1, 2018, Ukraine had to bring its legislation in the field of road transport closer to the requirements of the EU in order to enable Ukrainian carriers to obtain multiple permits for international carriage within the EU. However, this did not happen. At the same time, there are positive bills on road transport (No. 7386) and rail transport (No. 2475а).

The worst situation is with sea transport – no quality draft laws were prepared for this time.

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It is important that, finally, in the fourth year of implementation of the Agreement, the Government and Parliament plan to consolidate their efforts. This should stimulate the acceleration of the fulfillment of Ukraine’s commitments, since it is impossible to move without political leadership.

However, the problem of the lack of a global political motive-purpose remains, for example, a clear perspective of Ukraine’s membership in the EU. Therefore, this greatly affects the understanding of the need to implement the Agreement among various interest groups that are not interested in changing the old rules of the game. Only agricultural exporters and industrial groups that are exporters will benefit from the implementation of the Agreement.

In addition, most importantly, successful fulfillment of Agreement requirements can only be expected if there is a professional sectoral expertise at the level of the perpetrators/initiators of such changes, as well as the real desire of the Parliament and Government to make the European integration initiatives a priority in their work.

Authors: Liubov Akulenko, Dmytro Naumenko, Elena Stepanenko, Evgeniy Kovtun, NGO “Ukrainian Center for European Policy” (Kyiv, Ukraine)

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