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  January 6th, 2016 | Written by

Trade Part of EU-Ukraine Association Agreement Operational as of First of the Year

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  • EU-Ukraine agreement includes harmonizing Ukrainian law to EU legislation in competition, intellectual property.
  • EU-Ukraine legal harmonization offer an opportunity for Ukraine to attract foreign investment.
  • EU-Ukraine Deep and Comprehensive Free Trade Area is foreseen to be implemented over several years.
  • Studies: EU-Ukraine FTA will add 6% to Ukraine’s Gross GDP and 12 percent in increased welfare for Ukrainians.

As of January 1, 2016, the EU and Ukraine started applying the Deep and Comprehensive Free Trade Area (DCFTA) which forms part of the Association Agreement, signed in June 2014, and provisionally applied in parts since November 2014.

The application of the DCFTA of the EU-Ukraine Association Agreement constitutes a milestone in the bilateral relationship, as it will offer new economic benefits to both sides. Ukrainian businesses receive stable and predictable preferential access to the largest market in the world with 500 million customers, while EU businesses will be able to benefit from easier access to the Ukrainian market and build new relationships with Ukrainian suppliers and cooperation partners.

Ukrainian citizens will benefit from better access to high-quality products, while increased competition and the lowering of import tariffs should lead to lower prices.

The agreement also includes the goal of harmonizing Ukrainian law to EU legislation in areas such as competition, government procurement, and protection of intellectual property rights. That, said European trade commissioner Cecilia Malmström, will contribute to the modernization and diversification of the Ukrainian economy and offer an opportunity for Ukraine to improve its business climate and to attract foreign investment.

The DCFTA is foreseen to be implemented over several years, allowing gradual legislative alignment and time for all affected stakeholders to adjust.

“The entry into force of this trade area creates unique opportunities for Ukraine to stabilize, diversify and develop its economy to the benefit of all its citizens,” said Malmström. “Assistance from the EU will be made available to help Ukrainian small and medium enterprises seize these new opportunities, to grow, and thereby create jobs. EU businesses will benefit as well by gaining improved access to a market of 45 million people. The change will not occur overnight, but gradually the DCFTA will contribute to a prosperous Ukraine and to stronger economic integration with the EU.”

The EU continues to stand by Ukraine by providing assistance and making available advice and expertise, notably to help small businesses grow and to take advantage of the opportunities granted by the DCFTA, in particular regarding the progressive alignment with EU rules. The DCFTA Facility for SMEs will complement existing EU programs enabling SMEs to be better equipped to the changes in the domestic business environment.

With the DCFTA new opportunities are opening up for Ukraine in the EU and beyond, since European standards are often international standards,” said European Commissioner Johannes Hahn. “The EU will continue to support Ukraine and help with the necessary adjustments. We want to see Ukraine succeed and make use of the full potential of the DCFTA”.

EU exports to Ukraine amount to $18 billion and Ukrainian exports to the EU equaled $15 billion in 2014. The main EU exports to Ukraine are machinery and appliances, transportation equipment, chemicals, and manufactured goods. Ukraine’s main exports to the EU are base metals, vegetable products, minerals, and machinery.

Studies suggest that implementation of the DCFTA would add six percent to Ukraine’s Gross Domestic Product over the medium term and 12 percent in increased welfare for Ukrainians.