Antimonopoly and energy reforms, changes to public procurement are leading among implemented criteria for DCFTA, overall dynamics is slow – “Stronger Together” monitoring

Antimonopoly and energy reforms, changes to public procurement are leading among implemented criteria for DCFTA, overall dynamics is slow – “Stronger Together” monitoring
December 01, 2015.

Kyiv, December 1, 2015. Antimonopoly and energy reforms, public procurement are 2015 leaders among compliance criteria for the EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA). The results of the monitoring were presented by Lyubov Akulenko, coordinator of “Stronger Together” information campaign during the discussion “Launching the Free Trade Area – 2016: mission possible?” that was held at Ukraine Crisis Media Center (UCMC) in the framework of the Ukraine Reforms Communications Taskforce project. According to the monitoring results Ukrainian customs is the slowest institution to adjust to the working conditions based on the EU standards.

The overall implementation of all DCFTA conditions is quite slow. “In my opinion we are considerably legging behind. Draft laws designed to implement DCFTA conditions are introduced into the agenda and are passed from the fifth-sixth attempt. We cannot be implementing DCFTA like this! We have committed to implement DCFTA within 10 years – by 2026. However, based on the dynamics I am observing in 2015 this term can be multiplied by two,” noted Akulenko.

Considering each area separately Mariya Nizhnyk, First Deputy Chairman of the Committee – state commissioner of the Antimonopoly Committee of Ukraine (AMCU) said that competition and transparent rules are important issues in the context of establishing the DCFTA. “It is the effective system for competition protection that is a pre-requisite for trade liberalization between Ukraine and the EU,” noted AMCU representative. At the same time there is a separate section in the Ukraine-EU Association Agreement that introduces the monitoring and control system over provision of state assistance which is new to Ukraine.

Lana Sinichkina, partner at “Arzinger” lawyers’ association, Co-Head of antitrust and competition law practice noted that it is currently important that courts start exercising the new practice of reconsidering the amounts of fines. “Reconsidering AMCU decisions in courts is part of the Ukraine-EU Association Agreement. It is an ordinary widespread European practice of antimonopoly regulation. An institution cannot be reconsidering its own decisions, it creates pre-requisites for corruption development,” emphasized the Co-Head of antitrust and competition law practice.

Despite the two important laws – on natural gas market (no.2250) and on extraction transparency (no.2591) have been adopted reforming of the energy sector is not completed. It is going to happen only after a truly independent regulator will appear on the market. “We are currently waiting for political will that will introduce the draft law prepared by the government for MPs’ voting (approval in the first reading – UCMC note) as well will make a decision on additional work over it in the parliamentary committee (preparation for the second reading – UCMC note),” said Roman Nitsovych, program coordinator at analytical center DiXi Group. Adoption of the draft law on energy efficiency of buildings is also an important step. It will make construction companies take it into account and will motivate ordinary people to save energy resources.

Reforming the food safety sector requires adoption of 10 draft laws that have been already prepared by the government. However, according to Vladyslava Rutytska, Ukraine’s Deputy Minister of Agrarian Policy and Food on European Integration, MPs are not paying the necessary attention to them. In order not to be wasting time the government is seeking other ways to help the agrarians who would like to enter the European market. Thus the Ministry of Agrarian Policy and Food of Ukraine has recently signed a memorandum with the German government. Based on the document the center for support of small and middle business has started operating in Kyiv. “It helps discover what needs to be done to enter European markets, how to cooperate with them or what partners can be found on the European market. On the other hand the center is ready to give all necessary information on the Ukrainian market to representatives of the European agrarian sector,” explained Rutytska.

The main success on the way towards the DCFTA is Ukraine’s progress in exports, emphasized Taras Kachka, Ukraine Reforms Communications Taskforce teamleader. “Ukrainian business without waiting for initiative from the government goes to the EU markets. It is already an incredible success,” the expert is convinced. At the same time Kachka also admitted that slow reforming of customs creates problems for exporters. For example, they are concerned with the fact that on January 1, 2016 certificates of origin will be issued by the customs instead of the Trade and Industrial Chamber. Business is not sure that the customs is ready for such a transition and that the transition itself is not going to lead to confusion. Kachka is of the opinion that daily implementation of the adopted laws is the most problematic issue, that’s why coordination among the three actors – government, business and the European Commission is a guarantee of effective adaptation to the work under new conditions.

Hanna Bogatyryova, spokeswoman at BORIKA company, that specializes in exporting equipment for water transport and has entered the European market with own efforts is convinced that establishing a unified state-supported information resource that would accumulate exhaustive information for the companies planning to enter the European market would be really helpful. The representative of the business community is also convinced that the state needs to reinforce its efforts in informing the European community on Ukrainian producers.

Ukraine’s progress on the way to the DCFTA was acknowledged by Judith Gough, Extraordinary and Plenipotentiary Ambassador of Great Britain to Ukraine. At the same time she noted that many things still need to be done including the fight with corruption and improving citizens’ awareness on the changes. “One of the key challenges when you’re delivering reform is communicating it to people, so they understand why it is necessary and why in the short term it may be difficult and what the longer-term perspectives are,” emphasized Judith Gough. Nicholas Burge, Head of Trade and Economic Section of the EU Delegation to Ukraine in his turn said that the EU is ready to introduce the DCFTA with Ukraine and will be encouraging European companies to work with Ukrainian ones. That’s why careful work needs to be conducted so that Ukrainian products comply with the EU standards and that their competitiveness is improved. “The main changes on January 1 will be in the area of tariff liberalization. There will be small lowering of import tariffs on both sides which will improve market access. But the big changes in the DCFTA will take five to seven years, it’s a longer term program,” underlined Nicholas Burge.

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