Ukraine's Quest for Mature Nation Statehood Roundtable VIII:
The EU – Ukraine Action Plan and the New Enhanced Agreement: Instruments for Reform
Speaking points of the presentation of Deputy Head of the Delegation of the European Commission to the United States Angelos Pangratis delivered during Ukraine's Quest for Mature Nation Statehood Roundtable VIII: "Ukraine-EU Relations" Ronald Reagan Building and International Trade Center, Washington DC, October 17, 2007.
- Thanks for the opportunity to talk about EU-Ukrainian relations as we see them at the Commission
- This two-day round table is analysing developments in Ukraine from a number of perspectives, and outlining a number of scenarios as Ukraine continues down the path of reform
- One cross-cutting theme wherever you look across the Ukrainian political landscape is the desire for closer ties with EU
- We’ve seen this in the recent campaigning in the September 30 elections in Ukraine
- Getting closer to the EU is a strategic choice for Ukraine
- Getting closer to Ukraine is also a strategic choice for EU
- But the desire for closer ties is not new, so perhaps a short historical overview
- In the aftermath of the collapse of the Soviet Union, EU began building a network of contractual ties with former Soviet republics: the Partnership and Cooperation Agreements
- At the same time, EU and other international partners injected massive grant aid to assist the transition from planned economy to market economy, from a one-party system towards an open, participatory democracy
- Trade flows saw steady expansion.
Trade And Investment
- The EU is Ukraine’s largest trading partner
- A significant proportion of Ukrainian goods entering the EU market benefit from the General System of Preferences (GSP).
- Investment is also up. FDI flows to Ukraine have been rising rapidly in the last couple of years and the EU is by far the largest foreign investor in Ukraine with its share growing every year (71.7% by the end of 2005).
- FDI flow from EU25 amounted to €5.8 billion in 2006 compared to just above €230 million in 2003.
- But there is potential for more growth, amid concerns over the investment climate in Ukraine
- Among issues are: legislative inconsistencies, i.e. between Commercial and Civil Codes; lack of company law framework; excessive and burdensome licensing, certification and inspection system; ineffective judiciary system; and long delays in VAT refunds.
- The privatisation programme is behind schedule, and recent privatisation auctions have sparked criticism as regards the lack of transparency and fairness of procedures.
Post-Orange Revolution: a New Dynamic
- The Orange Revolution brought a radically different political landscape and a greater impulse to expanding ties with the EU
- In early 2005 we agreed an Action Plan with Ukraine that would guide our work in key areas of our trade and economic relations, but also in new policy areas, like justice and home affairs, or the common foreign and security policy, where we saw an interest on both sides in moving our co-operation up a gear, as part of a process to bring both sides closer
- The AP, which outlines steps to be taken in different policy areas, has acted as a powerful catalyst for reform
- It is backed by aid to support the continuing political and economic reforms
- Following the Orange Revolution, the EU committed itself to starting consultations on a new agreement as soon as the main political priorities of the Action Plan, among them free and fair elections, were met.
- This condition was fulfilled in the elections of March 2006.
A New Contractual Relationship
- As the 10th anniversary of the Partnership and Cooperation Agreement draws near, it was clear on both sides that we needed to take a fresh look at the contractual basis of our relations
- The EU and Ukraine are very different places 10 years on!
- The Partnership and Cooperation Agreement does not fully take into account some of the big policy changes that have taken place inside the EU: in the area of CFSP or interior affairs, to mention two areas
- In both areas, our co-operation has seen a dramatic expansion, with Ukraine aligning itself with the bulk of EU foreign policy statements, and with a specific, mutually-agreed action plan in the area of justice and interior affairs.
- Important that new agreement matches the level of ambition on both the Ukrainian side and the EU side
- We seek to develop a comprehensive agreement, that goes above and beyond existing commitments made under the Partnership and Cooperation Agreement
- It should be built on our firm joint commitment to common values
- Not about membership of the EU, but about bringing Ukraine as close to the EU as possible, without prejudging any possible further developments in the future.
- Talks began on a new enhanced agreement in March 2007
- We’ve held four negotiating rounds since then, and the 5th is taking place in Brussels as we speak!
- Agreement will be talking about our ties across a whole range of policy areas: from political dialogue to justice and home affairs issues, from enhanced co-operation in all areas of our economic co-operation, and it will also cover trade issues
- An important part of the agreement will be a deep and comprehensive free trade area
- We will start work on this part of the agreement as soon as Ukraine has completed the accession process to the WTO
- We hope this will be in the nearest future
- There are some issues we still need to work on, but we believe an early accession to the World Trade Organisation, provided relevant legislation is passed, is possible
- We welcome this and salute Ukraine’s commitment to the WTO process
- EU has been a steady supporter of Ukraine’s accession to the World Trade Organization, finalizing a bilateral deal in 2003.
Boosting People-to-People Links
- At the same time, we are working on specific arrangements in specific domains
- Easing the rules to apply for visas to the EU who need to travel most often is one area that we have worked on
- We hope the new rules will be in force by the end of the year
- This is an important and tangible result of our co-operation
- At the same time as we want to encourage those who are travelling for legitimate reasons we want to step up our fight against illegal movements of people
- This is why we concluded a bilateral readmissions agreement that will come into force at the same time as the visa facilitation agreement
- Energy is another key area of cooperation.
- Since 2005, we have worked on boosting our co-operation in this area
- The EU-Ukraine Memorandum of Understanding on energy commits us to working more closely on four key areas: nuclear safety, integration of markets, security of supplies and transit, and the coal sector
- To pick up on some of the things we’ve been doing, we’re very happy that we’ll soon be starting a project on the joint evaluation of the nuclear safety of nuclear power plants in Ukraine in collaboration with Ukrainians and with the IAEA
- We’ve also been making good progress on a Euratom loan on the modernization of two reactors
- On gas transit in Ukraine, investment needs have been identified at 2.5 billion euros for the period 2007-2013
- Commission is very much backing the idea of a pledging conference that would involves International Financial Insti
tutions, the private sector, and national funding bodies from both EU Member States and non-Member States
Co-operating on Regional Conflicts in Europe
- EU and Ukraine also engaged on finding solutions to the long-running conflict in Moldova
- Our co-operation on border management and customs, through the EU Border Assistance Mission, is delivering results, with more and more firms based in the breakaway republic of Transdnistria choosing to register in Chisinau so as to reap the benefits of the preferential trade regime that Moldova enjoys with the EU
- We recently decided to extend our co-operation on the border management and customs issues on the Ukraine-Moldova border for two more years
- You’ll see that the EU is delivering on its commitments made to Ukraine and to its neighbours in Europe to work towards bringing them as close to the EU as possible
- Of course, COM is aware of Ukraine’s European aspirations, and respects this choice
- The New Enhanced Agreement and the European Neighbourhood Policy is not about membership
- But neither does it rule membership out for the future
- We see the New Enhanced Agreement as establishing the basis for a long-term relationship, but without prejudging Ukraine’s future relations with the EU