BSR: We give new trade opportunities for Ukrainian farm producers - Dacian Ciolos
A number of senior meetings have taken place in Brussels this week between members of the Commission and the Ukrainian Government.
Commissioner for Agriculture, Dacian Cioloş published on its official Facebook page a short comment after meeting with Agriculture Minister of Ukraine Igor Shvaika:
"Yesterday, I had a lengthy discussion with the Ukrainian minister of agriculture, Igor Shvaika on concrete measures to step up our cooperation for the benefit of Ukrainian farmers and for all those who live in Ukraine’s rural areas. Minister Shvaika is clearly committed to achieving tangible results and I am committed to help. A first step has already been taken, by opening major new trade opportunities for Ukrainian producers exporting onto the EU market."
A number of senior meetings have taken place in Brussels this week between members of the Commission and the Ukrainian Government.
President of the European Commission Jose Manuel Barroso and Prime Minister of Ukraine Arseniy Yatsenyuk signed today [13 May 2014] a new programme to support the transition process in Ukraine as part of the EU practical assistance for urgently needed reforms in the country.
The new “State Building Contract” programme, worth €355 million, and complemented by a 10 million programme aimed at support the civil society, will help the government of Ukraine to address short-term economic stabilisation needs and implement governance reforms in order to promote good governance, more accountability and inclusive socio-economic development. The “State Building Contract” includes concrete steps towards building transparency and fighting against corruption, and will help to increase the government’s ability to respond to citizens’ demands and needs.
Together with the Macro Financial Assistance loan programme to Ukraine, the Financing Agreement on the “State Building Contract” is another major deliverable of the €11 billion package to support Ukraine, announced by the President of the European Commission on 5 March.
Disbursement of the money from this contract will be conditional on the progress of reforms in the following areas: anti-corruption, public finance management, civil service, constitutional reform, electoral legislation and justice.
The "State Building Contract" in the form of budget support will provide financial assistance in the short term to support the process of transition and preparing reforms in the context of the Association Agreement/Deep Comprehensive Free Trade Area through support to improved governance, the fight against corruption, judiciary reform and public administration reform.
There will be a first fixed disbursement of €250 million, and a second, variable tranche (the amount of this tranche will depend on the progress achieved), also funded by the present action, payment of which is linked to results. The main expected results in the area of anti-corruption, which will be linked to preparations for the reform of the justice sector, are the enforcement of provisions against illicit enrichment, effective verification of declarations of interest, access to information of public interest, and transparency and competitiveness of public procurement.
In the area of public administration reform the main expected result is a career-based civil service reflected in the separation between political and administration positions, separation between public and private sphere, merit-based, non-political recruitment and promotion of senior and middle level civil servants, sufficient employment stability and protection against discretionary dismissals.
In the area of constitutional and Judiciary reform, as well as electoral legislation, the main result is expected to be an inclusive and participatory process towards reform, in line with international recommendations.
MACRO FINANCIAL-ASSISTANCE (MFA)
Today, the Ukrainian Minister of Finance, Mr Oleksandr Shlapak, signed the Memorandum of Understanding (MoU) on the new €1 billion Macro-Financial Assistance (MFA II) loan programme to Ukraine, paving the way for its ratification by the Ukrainian Parliament. This follows the signing of the Memorandum of Understanding by European Commission Vice-President Siim Kallas on 28 April and by the Chairman of the National Bank of Ukraine Mr Stepan Kubiv on 12 May. Following ratification, the first tranche of the loan will be able to be disbursed to Ukraine as soon as possible.
The new MFA programme (also called MFA II) is designed to help Ukraine cover part of its urgent external financing needs in the context of the stabilisation and reform programme recently prepared by the Ukrainian authorities with the help of the International Monetary Fund (IMF). The assistance is aimed at reducing the economy’s short-term balance of payments and fiscal vulnerabilities.
The disbursement of the assistance will be conditional on specific economic policy conditions outlined in the MoU and on the successful implementation of the IMF Stand-By Arrangement (SBA), which was approved by the IMF Executive Board on 30 April. The policy conditions focus on public finance management and anti-corruption, trade and taxation, energy sector and financial sector reforms.
The new €1 billion programme will be implemented in parallel with the programme of €610 million, which was approved in 2002 and 2010, but not released because of non-compliance with the necessary conditions by the Ukrainian authorities at the time.
MFA is an exceptional EU crisis-response instrument available to the EU's neighbouring partner countries experiencing severe balance of payments problems. It complements assistance provided by the IMF. MFA loans are financed through EU borrowings on capital markets. The funds are then on-lent with similar financial terms to the beneficiary countries.
REMOVAL OF CUSTOM DUTIES
The European Commission proposed on 11 March to temporarily remove customs duties on Ukrainian exports to the EU. The Commission very much welcomes the entry into force of this regulation on 23 April, following support shown by the European Parliament on 3 April and the Council's adoption of this proposal on 14 April. With this rapid response, the European Commission has shown that it stands shoulder to shoulder with the people of Ukraine. The benefit of the measures is that they advance the implementation of the tariffs section of the Association Agreement's (AA) provisions on a Deep and Comprehensive Free Trade Area (DCFTA) instead of awaiting its entry into force. The preferences are thus not a substitute for the DCFTA and will be granted for a limited period only: until 1 November 2014.
Ukraine does not have to provide extra access to EU exports in return. The temporary elimination of customs duties is total or partial, depending on the sector. The EU's unilateral trade opening requires Ukraine to fully co-operate with the EU in its implementation and ensure that Ukraine does not change in any way its tariffs towards the EU during this period. In addition, a number of safeguard controls are put in place to prevent market-distorting surges impacting adversely on European companies and industry including the agricultural sector.
The annual value of this support measure will be nearly €500 million in tariff reductions, of which almost €400m accrue to the agricultural sector. For industrial goods, the calendar for liberalisation in the DCFTA foresees the immediate removal of existing tariffs on most products, with exceptions for a few for which a transition period exists, in particular for the automotive sector in the case of Ukraine. For agricultural goods, ambitious concessions have been made taking into account specific sensitivities. Thus, duty-free tariff rate quotas have been granted to the Ukraine for cereals, pork, beef, poultry and a handful of additional products. Even for these sectors, particularly sensitive in the EU, the ATM grant Ukrainian exporters significant opportunities.
ENERGY SECURITY
Energy and energy security, and affordable prices, are essential for the stability and security of Ukraine. The EU is working with the new government in Ukraine, including through budget support, to ensure long term diversification of supplies and to make sure that the Ukrainian gas transmission system continues to be an essential transit route for gas supplies to Europe. As such, the Commission will continue to work with the government in Ukraine to modernise its gas transmission system in co-operation with the EIB, EBRD and World Bank, as gas sector reforms in line with the Energy Community commitments are carried out. Significant progress has recently been made and provided that certain conditions are fulfilled, an initial loan could be possible in the near future.
In the short term, the Commission is ready to assist Ukraine in diversifying its gas supply routes, notably by ensuring that gas flows from the EU to Ukraine, particularly via Slovakia can be operationalized soon.
To this end, on 28 April a Memorandum of Understanding (MoU) enabling gas flows from Slovakia to Ukraine was signed by the pipeline operators concerned, the Slovakian company Eustream and the Ukrainian company Ukrtransgaz. The Commission acted as a facilitator in the negotiations that led to the breakthrough. Along with the MoU the companies signed a Framework Interconnection Agreement laying out the technical details of the foreseen solution.
Based on the solution which is presented in the MoU, the existing and unused Vojany pipeline at Veľké Kapušany on the Slovakian side will be modernised during a short construction period. There is a clear perspective that 22 million cubic meters of gas a day can flow from Slovakia to Ukraine via the Vojany pipeline as from autumn 2014. This corresponds to approximately 8 billion cubic meters a year.
However, the solution which has been sealed on 28 April is only a first step in enabling gas flows from Slovakia to Ukraine. Further options besides using the Vojany pipeline will be are legally and technically assessed in due course.
Currently, it is possible to ship gas via Poland and Hungary to Ukraine. Last year Ukraine imported around 2 billion cubic meters of gas from EU Member States.
Moreover, Commissioner Oettinger is engaging in trilateral talks with Energy Minister Novak of the Russian Federation and Ukrainian Energy Minister Prodan. The aim is to ensure security of gas supply and transit from Russia via the Ukraine to the EU as well as to discuss the concerns about the outstanding debt of Ukraine and the gas price for supplies to Ukraine.
FACILITATING MOBILITY
As regards the support measures in the area of mobility the Commission has proposed to work on three different strands:
(1) the optimal use of the existing framework (the bilateral Visa Facilitation Agreement and the relevant provisions of the Visa Code)
Schengen visas are issued to Ukrainian citizens in line with applicable legislation: the provisions of the upgraded Visa Facilitation Agreement and of the Visa Code.
Following the Foreign Affairs Council on 20 February, Commission services have examined in detail the flexibility offered by the upgraded Visa Facilitation Agreement and the Visa Code that allows for issuing Schengen visas to Ukrainian applicants in a facilitated manner and to lower or waive the visa fees. This is in line with the Statement of the Heads of State or Government on Ukraine of 6 March, which reiterated the EU's commitment to enhance people to people contacts between the citizens of the EU and Ukraine.
On 7 May Commissioner Malmström sent a letter to the Interior Ministers of the Member States, recommending the full use of the flexibility offered by Article 5 of the Visa Facilitation Agreement with Ukraine, to issue to eligible Ukrainian visa applicants Schengen multiple-entry visas with the maximum authorized term of validity of 5 years.
The Commission services are in close contact with the Member States' consulates in Kyiv to oversee any need for special procedures to be applied.
(2) accelerating the on-going visa liberalisation process, and thereby supporting the reform process in all sectors covered by the Visa Liberalisation Action Plan.
Member States have repeatedly confirmed (Foreign Affairs' Council Conclusions of 20 February and 3 March) their commitment to enhance people-to-people contacts between the EU and Ukraine, i.a. through the visa liberalisation process, along with agreed conditions in the framework of the Visa Liberalisation Action Plan.
The European Commission's support package for the Ukrainian stabilization was supported by the extraordinary meeting of the EU Heads of State and Government of 6 March. The mobility part of this package committed to support the Ukrainian efforts to move forward the visa liberalisation process as quickly as possible in line with the agreed conditions of the Visa Liberalisation Action Plan. While noting that progress depends on how the new authorities are able to tackle the most important outstanding issues, it stated that the Commission will do its outmost to help solve the remaining issues in an accelerated manner.
The Commission remains in close contact with the Ukrainian authorities to monitor the latest progress towards the benchmarks in the first phase of the Action Plan.
(3) offer cooperation under the umbrella of a Mobility Partnership.
The offer to conclude a Mobility Partnership can be a further means to strengthen the ties between Ukraine and the European Union. It provides the overarching framework to improve the management of migration and mobility of people. It allows for reinforced cooperation and practical support to the Ukrainian authorities in areas such as legal migration, migration and development and in dealing with requests for asylum and international protection as well as tackling irregular migration.
FIGHT AGAINST CORRUPTION
The fight against fraud and corruption is a priority for the Ukrainian authorities, and the setting-up of a national anti-fraud/anti-corruption authority is currently underway. Such an institution will deal with the detection, investigation and deferral to the judicial authorities of cases of fraud/corruption.
The Commission (OLAF as lead service) is ready to supply the necessary expertise to support the Ukrainian authorities in this respect and work with them towards curbing fraud and corruption at national level.
Furthermore, the EU will monitor the effective disbursement of EU aid and other budgetary resources to ensure that EU funding reaches the intended projects and purposes.
In light of the extraordinary efforts of the EU to assist Ukraine and of the need to protect EU funding from fraud, the Commission is discussing with Ukrainian authorities about the creation of a joint, independent body to investigate on fraud and corruption-related matters.
EU–UKRAINE AVIATION AGREEMENT
The Commission is fully committed to signing a comprehensive EU–Ukraine air services agreement to strengthen transport connections. This agreement would open the way to a "common aviation area" between the EU and Ukraine, based on common standards. The agreement would offer further opportunities, more direct connections and economic benefits on both sides. All limitations to weekly flights between Ukraine and the EU would be removed, while free and fair competition would help in establishing market prices for all flights. To attain these objectives, Ukraine would align its legislation with EU aviation standards and enforce EU requirements in areas such as: aviation safety, air traffic management, environment, economic regulation, competition, consumer protection and social aspects.
Air transport of passengers and cargo between Ukraine and the EU has been growing steadily in recent years, and new investment opportunities for airlines would open up by allowing reciprocal majority ownership, facilitating the development of airlines and consolidation of the aviation sector. The comprehensive air services agreement was initialled by EU and Ukraine in November 2013. It is now in the hands of the Council. The Commission urges a signature of the agreement as soon as possible. Following signature, the ratification process will begin for both EU and Ukraine. Similar comprehensive air transport agreements have already been signed with other neighbouring countries: the Western Balkans, Morocco, Georgia, Jordan, Moldova and Israel.
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