An Introduction to the AA/DCFTA

Transcription

1 An Introduction to the AA/DCFTA Basic Principles and Understanding Mark Hellyer A4U STE on DCFTA Policy Implementation March 2017

2 Contents (3 Parts) Overview and Content The Scope and Benefit of the DCFTA BREAK Delving into the Principles of the DCFTA Understanding of the policy objectives and motivations (perspective for why legal approx. and sector policy) Broad understanding of the content of DCFTA Start to see the detail/topic and work of government in DCFTA LEVEL LEARNING Different levels of participants

3 Overview What is the AA/DCFTA? EU Policy Perspective To Understand what the EU wants from this Agreement AA and Policy Match Outline Content and process Ukraine Perspective To Understand what are Ukraine s Expectations

4 The EU Neighbourhood Policy Main objective: Create an ring of stability, prosperity, democracy and security Establish an EU-ENP area of regulatory convergence : free movement of capital, goods and services; people-to-people contacts, lower production costs, less bureaucracy Gradual integration into the EU internal market (market access) Regulatory convergence towards the EU acquis (legal and institutional reforms) Business climate: investments Private sector development: SMEs

5 EU Tools to realise its ENP Objectives Progressive deepening of relations: 1. Association Agreements (AA) 2. ENP Action Plans 3. Deep and Comprehensive Free Trade Areas (DCFTA) (as part of new AAs) => Financial assistance: Support the implementation of Association Agreement; technical assistance, Twinning; Capacity building

6 Ukrainian Ambition 1. Integration with the EU 2. Adoption of European Values (growth and prosperity) What does that mean? Using EU policy as a model for economic reform (Integration into national policy reform process) Policy Results (based on clear aims and results) Transparency (certainty) Openness (only necessary regulation) Risk based controls (types of control based on risk and proportionality)

7 Outline of the AA III. Justice, Freedom and Security Including Foreign and security policy Combating terrorism Dialogue on Rule of law and human rights Protection of personal data fight against illicit drugs Equal Treatment of legal workers Gradual steps towards a visafree regime Dialogue on Money laundering IV. Trade CREATION OF THE DCFTA V. Economic Cooperation Including GMO monitoring Road transport Company law, corp. governance, accounting and auditing Energy Environment Health and safety signed on 27 June 2014 Implementation over 10 years

8 Actuality of AA instruments Dialogue and cooperation with the EU in political reform, security, foreign policy, justice and freedom; Adoption of commitments from the trade (DCFTA) components (revising tariffs, application and administration of rules of origin, administration of tariff rate quotas and other obligations); Legal harmonisation and approximation across a broad range of economic, trade and political spheres, that is adoption selected elements of the EU acquis into Ukrainian legislation and regulation; Institutional and administrative reform (including enforcement and effective redress) resulting from legal reform and adoption of commitments in both trade and economic; The benefits to be derived only come when business increases business (both international and national trade) compliance with new business rules and procedures, as well as taking advantage of the opportunities.

9 Scope and Benefit of DCFTA A look at the trade part What is a DCFTA? Understanding of the difference between FTA and DCFTA The Instruments Understanding the components and definitions Benefits of the DCFTA Why is DCFTA so important to Ukraine economic growth

10 What Makes DCFTA Different? Traditional FTAs Title IV to create a DCFTA between 2 parties over 10 years EIF 1 st Jan 2016 Market Access Alignment of business acquis, no difference Adoption of norms efficiency gains

11 Benefits of the DCFTA Potential benefits: 1. Market Access improvements = increase exports 2. EU Business regime adopted in Ukraine no difference (in regulation) selling in Ukraine or EU leads to increase exports as its easier to comply for all business (esp SMEs) 3. Imports of more competitive final and intermediate products competition increases Ukraine s competitiveness Imported products, cumulation increase export competitiveness inputs cheaper increases competitiveness and consumers get cheaper and wider range of products Better market access (> 500 million consumers) Improved the business climate Increase competitiveness cheaper safer products Increased production and sales domestically, EU and globally DCFTA Analytical Papers 11

12 Competitiveness Potential % productivity AFNOR Study of Impact of Single European Market For Ukraine: Adoption of EU standards preparation, over time Imported inputs (using tariff, RoO and cumulation) Trade facilitation Competition No compliance cost in export to EU (same rules, local CABs) 12

13 Aggregate Trade Performance 15,00 14,50 ATP/DCFTA 14,00 bn 13,50 13,00 12,50 12,00 11, Ukr. X to EU declined from 14.6 bn in 2012 to 12.8bn in 2015 Exports declined by 7.56% between 2012 and 2015 Average X between (2012-3) and (2014-5) fell by 6.87%

14 Export Diversification 2013: 10.6% of exports account for 90% Ukraine s exports to the EU 2015: 12.7% of exports account for 90% Slight diversification 62% of products (HS 2-digits) increased exports 1.6bn of losses from 3 commodities (mineral fuels, ores and iron/steel 44 of 98 products increased exports by over 1 mn

15 Major Growth of Exports under DCFTA ( mn) Absolute Growth 44 WOOD AND WOOD ARTICLES ANIMAL OR VEGETABLE FATS AND OILS CEREALS 1, , ELECTRIC MACHINERY AND PARTS , WASTE FROM THE FOOD INDUSTRIES MEAT AND EDIBLE MEAT OFFAL FURNITURE; BEDDING, MATTRESSES SALT; STONE; PLASTERING AND CEMENT GLASS AND GLASSWARE EDIBLE FRUIT AND NUTS PLASTICS AND ARTICLES THEREOF COPPER AND ARTICLES THEREOF PREPARATIONS OF VEGETABLES, FRUIT PREPARATIONS OF CEREALS, FLOUR DAIRY PRODUCE; NATURAL HONEY CERAMIC PRODUCTS ALUMINIUM AND ARTICLES THEREOF MISCELLANEOUS MANUFACTUREs FERTILISERS WADDING, FELT AND NONWOVENS AIRCRAFT, SPACECRAFT, AND PARTS

16 Further Analysis There can only be a price/tariff impact on products that have a tariff/trq benefit over GSP under the DCFTA, so analysis should aggregate only products where a margin of preference was provided

17 Scope of Coverage 1. Customs and tariffs Progressive revision of tariff schedules and implementation of a TRQ system for selected agricultural products (Chapter 1) Phasing out of Customs duties on exports (Article 31) Dialogue on trade Agreements with other countries (Article 39) and; Administrative Cooperation and Coordination with Other Countries (Article 37) Adoption and administrative application of rules of origin Article 40 Adoption and implementation of a Mechanism for Safeguard Measures on Passenger Cars (Article 44) and; second hand clothing Reform of customs and trade facilitation of legislation and procedures to ensure effective control and support facilitation of legitimate trade (chapter 5) 2. Trade Remedies Dialogue on application of WTO compatible Anti-dumping and Countervailing Measures and trade remedies (Article 51) Establishment of dispute settlement and Mediation mechanisms (chapters 14 and 15) 17

18 Scope of Coverage (2) 3. Sanitary and Phytosanitary Measures Gradually approximate its sanitary and phytosanitary and animal welfare legislation and enforcement procedures to that of the EU (Chapter 4) 4. Technical Regulations, Standards, and Conformity Assessment, including ACAA Gradual alignment of sectoral and horizontal legislation, institutions and standards regarding Technical Regulations, Standards, and Conformity Assessment, including negotiation of an ACAA (Title IV Chapter 4) 18

19 Scope of Coverage (3) 5. Services Legal and regulatory approximation to EU acquis in the general Framework of trade in services including Temporary Presence of Natural Persons for Business Purposes, as well as specific sectors: Computer Services; Postal and Courier Services; Electronic communications; Financial Services; transport and; Electronic Commerce (chapter 6) Complete the liberalisation of transactions on the capital and financial account of balance of payments equivalent to the liberalisation in the EU Party prior to the granting of internal market treatment in the area of financial services (chapter 7) 6. Public Procurement Gradual Legislative approximation and institutional reform of key elements of the EU public procurement acquis and development of mechanisms for mutual Market access (chapter 8) 7. Geographical Indications and Intellectual Property Dialogue and cooperation in intellectual property (chapter 9) in line with WTO rules and regarding Geographical Indications, mutual recognition and enforcement of each parties Geographic Indicators, including transitional mechanism for selected sensitive protected EU titles in Ukraine s market. 19

20 Scope of Coverage (4) 8. Competition Policy Approximation and enforcement, as well as co-operation and coordination between competition authorities to further enhance effective competition law enforcement, and to fulfil the objectives of this Agreement through the promotion of competition and the curtailment of anti-competitive business conduct or anticompetitive transactions. (chapter 10) 9. Trade-Related Energy Reform of national legislation on trade-related energy (chapter 11) in areas including Domestic regulated prices; Prohibition of dual pricing; Customs duties and quantitative restrictions; Transit; Transport And; Cooperation on infrastructure 10. Transparency Establishment of Enquiries and contact points for transparency (chapter 12) 11. Trade and Sustainable Development Dialogues on trade and sustainable development (chapter 13)

21 QUESTIONS

22 Examination of Main Principles What will Change in Ukraine Implementation Process Understanding the process of change and role of government Ministry Workplans Example: MEDT Workplanning Main Elements of DCFTA More detailed explanations of market access, SPS and technical regulations

23 Max. Opportunities and Min. Costs for business Funded by DCFTA Implementation Process (Not Just Legal Approx.) EU and Ukraine Obligations (including approximation) Control measures (enforcing legislative changes) Negotiations Market Access Changes eg SPS, Tech regs, GIs eg for ACAA and Pan euro RoO eg TRQ, tariffs on both sides, public procurement 23

24 Preferential Market Access Tariffs (simple average %) All products Agric. CH 1-24 NAMA CH22-99 Current GSP EIF >10 yrs 7,6 0,5 0,05 19,8 0,6 0,24 3,9 0,5 0,0 TRQs 1. Meat of bovine animals 2. Meat of swine 3. Meat of sheep or goats 4. Meat and edible offal, of the poultry 5. Milk and cream, yogurt 6. Milk in powder 7. Products from processed milk 8. Butter and dairy spreads 9. Products from processed butter 10. Birds' eggs and albumins 11. Honey 12. Garlic 13. Sweetcorn 14. Wheat and Cereal flours 15. Barley 16. Oats 17. Maize (corn), 18. Cereal groats, meal and pellets 19. Malt, whether or not roasted 20. Starches 21. Cane or beat sugar 22. Other sugars 23. Processed products from sugar 24. Chocolate and other food preparations containing cocoa 25. Prepared foods obtained from cereals 26. Tomatoes prepared or preserved 27. Mushrooms 28. Grape and apple juice 29. Sugar syrups (HS 2106) 30. Food preparation 31. Undenatured ethyl alcohol 32. Residues of starch manufacture and similar residues 33. Cigars and cigarettes 34. Acyclic alcohols 35. Dextrins and other modified starches 36. Finishing agents, dye carriers DCFTA Analytical Papers 24

25 Rules of Origin Origin is the "economic" nationality of goods in international trade Originating products benefiting from preferential access must either (1) be manufactured from raw materials or components which have been grown or produced in the beneficiary country; or (2) at least undergo a certain amount of working or processing in the beneficiary country Under DCFTA proof is EUR 1 certificate of origin PEM and CUMULATION

26 SPS Control in the EU Exports of products of Animal Origin Only countries that have been authorised by the EU can export products subject to SPS measures. FVO Verify compliance of EU food regulations with practices in MS Verify equivalence in Third Countries Carry out inspections of the Competent Authorities Approved Facilities DG Sante database of countries and facilities by sector Exports must have Health certificate by approved bodies Exports of products of Non-Animal Origin Selected Importers in EU Selected border posts, Advance notification Exports must have Health certificate by national bodies or testing from accredited laboratories Ukraine Adopting Acquis Approval for all over time

27 Control of Product Safety (compliance with Technical Regulations) Risk Based: Certification by EU Institutions (eg ECHA under REACH) and entry points Approval by EU notified bodies for Conformity Assessment certification (NANDO) Testing from EU accredited laboratories Self Certification Ukraine Adopting Acquis ACCA - CABS and LABS (recognised) DCFTA Analytical Papers 27

28 Geographic Indications Protected for 10 Years Protected for 7 Years Champagne Cognac Madeira Porto Jerez /Xe re s/ Sherry Calvados Grappa Anis Portugue s Armagnac Marsala Malaga Tokaj Parmigiano Reggiano Roquefort Feta Article 208 Temporary measures (3) For a transitional period of 10 years from the entry into force of this Agreement, the protection pursuant to this Agreement of the following geographical indications of the EU Party shall not preclude these geographical indications from being used in order to designate and present certain comparable products originating in Ukraine 28

29 MEDT EUI Workplan Analysis (analytical papers) on the implications for business (evidence) Consult with business on findings Use Findings as appropriate in implementation Awareness raising and understanding 1. Monitoring of bilateral trade flows between Ukraine and EU under the DCFTA 2. Ukraine-EU DCFTA contact point 3: DCFTA Hotline for Business 4. Ukraine - EU High Level Dialogue On Industrial Policy 5. Accession Of Ukraine To The Regional Convention On Pan-Euro- Mediterranean Preferential Rules Of Origin (PEM) 6: Implementation of AA Trade And Sustainable Development Chapter 7. DCFTA Opportunity Studies

30 Further Reading Reference The EU Ukraine Association Agreement Text CTA Economic & Export Analysts Ltd (2015) Encyclopaedia on Exporting to the EU under the DCFTA Institute for Economic Research and Policy Consulting (2015) Transparency system under The EU-Ukraine Association Agreement European Commission (2016) Blue Guide to New Approach Directives and Conformity Assessment European Commission (2008) User s Handbook on the Pan Euro Med Rules of Origin European Commission (2004) From farm to fork - Safe food for Europe s consumers URL EN t_id= &cat_id= %20 Transparency_politics_eng1.pdf files/resources/documents/customs/customs_duties/r ules_origin/preferential/handbook_en.pdf _2004_en.pdf

31 Analysis Tools and Databases DG Trade Export Helpdesk EU TARIC Database TAXUD Utilisation of TRQs GI Database (non-alcohol) ang=en Lang=en&Code=090009&Year=2015&Expand=false GI Database (E-bacchus for wines) GI Database (E-Spirit for spirits) New approach Standards NANDO SPS Authorised Countries and Establishments n.htm

32 QUESTIONS

33 For further information, please contact: Mark Hellyer Lead Expert on DCFTA Analytical Studies and Consultation with Business T: or E: