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The trade part of the EU-Ukraine Association Agreement has become operational

January 5, 2016
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On 1 January 2016, the European Union (EU) and Ukraine started applying the Deep and Comprehensive Free Trade Area (DCFTA) which forms part of the Association Agreement signed in June 2014. The rest of the Association Agreement, containing political and cooperation provisions, has already been in force since November 2014. With the entry into force of the DCFTA both sides will ensure that markets for goods and services will be mutually opened on the basis of predictable and enforceable trade rules so that new opportunities will be created for the EU and Ukraine businesses, investors, consumers and citizens. By more closely aligning Ukraine’s regulations with EU legislation, the DCFTA will promote higher quality standards for products and will increase the levels of consumer and environmental protection. Economic cooperation and exchanges will also be enhanced, contributing to increased stability and prosperity for Ukraine.

“The entry into force of this trade area on 1 January 2016 creates unique opportunities for Ukraine to stabilize, diversify and develop its economy to the benefit of all its citizens. Assistance from the EU will be made available to help Ukrainian SMEs 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 over night, it will require work and investment. Gradually, the DCFTA will contribute to a prosperous Ukraine and to stronger economic integration with the EU”, – stated EU Commissioner for Trade Cecilia Malmström.

In view of the Commissioner for European Neighbourhood Policy & Enlargement Negotiations Johannes Hahn: “With the DCFTA new opportunities are opening up for Ukraine in the EU and beyond, since European standards are often international standards. 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”.

Background

EU exports to Ukraine amount to EUR 17 billion and Ukraine imports from the EU equalled EUR 14 billion (data for 2014). Main EU exports to Ukraine consist of machinery and appliances (€ 5.7bn in 2013), transport equipment (€ 2.6bn), chemicals (€ 3.7bn) and manufactured goods. Ukraine’s main exports to the EU are base metals (€ 3.5bn in 2013), vegetable products (€ 2.8bn), mineral products (€ 2.7bn), machinery and appliances (€ 1.2bn).

Independent studies suggest that the simple implementation of the AA/DCFTA would bring benefits of ca. 6% of additional Gross Domestic Product over the medium term and 12% in terms of increased welfare for Ukrainians. Much more can be expected if Ukraine genuinely implements the reforms foreseen by the Agreement, as they would improve the business climate and help to attract foreign investments and technology transfers.

Source: European Commission

Image source: Delegation of the European Union to Ukraine

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