The EU has been one of the largest trade partners for so called Eastern Partnership (EaP) countries, namely Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Commodity turnover of these countries with the EU vary between 30% and 50% of total, but their access to the EU market is less preferential than for many other neighboring countries. They trade with the EU on the basis of MFN regime, and five EaP countries, with exemption of Belarus, use privileges provided by Generalized System of Preferences (GSP) or the GSP+ or autonomous trade preferences (Moldova). With the launch of EaP initiative in 2009, relations between the EU and the Eastern European countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) have received new impetus for development. The EaP offers upgrade of relations within three major dimensions, namely (a) the Association Agreement (AA), (b) Agreement on a Deep and Comprehensive Free Trade Area (DCFTA), and (c) Visa Facilitation and Readmission agreements. The AA talks have been launched with all EaP countries expect for Belarus, and four of them have been involved in the DCFTA talks. Ukraine has progressed the most, as after five years of negotiations the EU-Ukraine Association Agreement with embedded DCFTA has been initialed in 2012.The aim of this study is to assess gains and losses that could arise from the DCFTA with the EU for the EaP countries, using information about EU-Ukraine DCFTA as model case for EaP regional trade cooperation.The focus of the paper is on non-tariff (regulatory) component of the EU DCFTA and potential implications of regulatory approximation. Also, current level of harmonization of EaP countries’regulatory framework with the EU acquis in the areas related to the DCFTA is analyzed.
Authored by: Veronika Movchan, Volodymyr Shportyuk
Published in 2012
The idea of a Deep and Comprehensive Free Trade Agreement goes beyond the traditional concept of trade liberalization and, apart from the elimination of tariffs in trade of goods, it also includes the reduction/ removal of non-tariff barriers, the liberalization of the investment regime, the liberalization of trade in services, and the far-reaching harmonization/ mutual recognition of various trade and investment-related regulations and institutions. The economic literature, CGE modeling exercises and the practical experience of “deep” trade integration suggest a substantial potential for the future EU-Ukraine DCFTA in promoting trade and investments, creating additional welfare and employment, regulatory and institutional harmonization with EU’s acquis, and modernizing Ukraine’s economy. While beneficial for both sides, the potential gains (but also potential adjustment costs) are greater for Ukraine as it is the smaller partner with higher initial trade barriers. However, the DCFTA does not include an automatic guarantee of success. Very much depends on the political will and administrative capacity to implement all of its provisions in a timely and accurate manner. This is a serious challenge for Ukraine, which has a mixed record in reforming its economy and state and which is still struggling to fulfill all of its commitments undertaken during the WTO accession process.
Authored by: Marek Dabrowski and Svitlana Taran
Published in 2012
The paper examines the economic implications of Belarus' participation in the newly created EURASEC Customs Union. The results of the calculations show that after the introduction of a common external tariff (CET) the level of tariff protection in Belarus has not increased noticeably. The reduction in the volume of imports from non-CIS countries equal to USD 1.1 bn (8% of Belarusian non-CIS import in 2008) will be mainly brought about by cancellation of used cars imports from non-member countries. The analyses revealed that Belarusian budget can benefit from participation in the Customs Union (CU). The amount of possible gain will be about 28.3% of total budget revenues from customs duties and customs charges in 2008 due to the fact that approximately 40% of Russian imports may go through customs clearance in Belarus owning to less bureaucracy at the border with respect to Russia, and the revenues from customs charges, which is not planned to be distributed among member countries, will be transferred to Belarusian budget. However, it is unlikely that CU membership will increase foreign direct investment (FDI) inflow to Belarus, since in the case of South-South regional trade agreements (the type of EURASEC countries CU) FDI usually goes to the bigger country, i.e. to the bigger market. Therefore, most probably that in the regional arrangement in question Russia followed by Kazakhstan will be the main beneficiaries of foreign direct investments.
Authored by: Irina Tochitskaya
Published in 2010
This paper analyzes the costs of (partial) institutional harmonization with the EU acquis which countries of the former USSR are expected to conduct under their Partnership and Cooperation Agreements with the EU and European Neighborhood Policy Action Plans. The public sector will have to take an effort of the transposition and adaptation of EU norms, as well as ensuring that they are complied with. Yet, the major part of the adjustment costs will fall on the private sector, as enterprises will have to make substantial investments to comply with new product requirements and business practices.
In this study we used the method of extrapolation of average costs for CEE countries’ harmonization with acquis to estimate the potential harmonization costs for the neighboring countries based on internationally comparative macroeconomic indicators like sectoral and total value added. This involved estimating the EU pre-accession support for the CEE countries by main areas as a percentage of the total or sectoral value added, determining the expected degree of limited harmonization in the ENP countries and estimating “coefficients of limited harmonization”, which was subsequently used for adjustment of the estimated cost of full harmonization.
Authored by: Veliko Dmitrov
The document discusses Moldova's ongoing negotiations with the EU for a Deep and Comprehensive Free Trade Agreement (DCFTA). It provides context on the EU's Eastern Partnership initiative and explains that a DCFTA goes beyond simply reducing tariffs to integrate countries across all trade-related areas like services, intellectual property, and regulations. For Moldova, the key benefits of a DCFTA would be increased foreign investment, technological upgrading, and more competitive exports internationally. The document notes that Moldova has made significant progress in its reforms and appears to be moving faster than Ukraine in DCFTA negotiations.
The paper discusses the role of regional public goods vs. global goods in influencing postcommunist transition in Central and Eastern Europe and former USSR with special attention given to three particular factors: (i) external anchoring of national reform process; (ii) international trade arrangements and (iii) international financial stability.
Authored by: Marek Dabrowski, Artur Radziwill
Published in 2007
The paper discusses the current and potential role of the European Neighbourhood Policy (ENP) in anchoring economic reforms in the countries of the EU's Eastern Neighbourhood. It claims that it is too early to assess the success of the ENP in this sphere especially given that the actual progress of the ENP agenda has been limited. A review of the empirical evidence on external reform anchors confirms that the ENP shares some features with the EU accession process that has proven to be an effective mechanism supporting major economic, political and social changes in the countries concerned. The eventual ENP economic offer is meaningful and integration with the EU is getting stronger public support in several CIS countries and among their political elites. On the other hand several factors limit the reform anchoring potential of the ENP. This paper offers recommendations on policies that could strengthen this potential.
Authored by: Wojciech Paczynski
Published in 2009
This paper studies costs and benefits of institutional harmonisation in the context of EU relations with its neighbors. The purpose of this paper is to outline the likely forms of institutional harmonisation between the EU and its Eastern neighbors and provide an
overview of the methodologies that can be used in measuring its effects (costs and benefits). This paper serves as a background for two measurement exercises – one on benefits and another on costs – that are to be undertaken during the second stage of research.
Authored by: Veliko Dimitrov, Vladimir Dubrovskiy, Anna Kolesnichenko, Irina Orlova
Published in 2007
This document summarizes a feasibility study on establishing a Deep and Comprehensive Free Trade Area (DCFTA) between Azerbaijan and the European Union. It provides background on DCFTAs, analyzes the current trade relationship between Azerbaijan and the EU, assesses potential barriers to trade, and models the economic impacts of a DCFTA using a Computable General Equilibrium model. The study finds that a DCFTA could increase Azerbaijan's GDP and trade volumes while lowering consumer prices. However, it may also increase income inequality and poverty levels within Azerbaijan. Overall, the research suggests Azerbaijan could benefit economically from a DCFTA but would need to address regulatory alignment and socioeconomic impacts.
The idea of a Deep and Comprehensive Free Trade Agreement goes beyond the traditional concept of trade liberalization and, apart from the elimination of tariffs in trade of goods, it also includes the reduction/ removal of non-tariff barriers, the liberalization of the investment regime, the liberalization of trade in services, and the far-reaching harmonization/ mutual recognition of various trade and investment-related regulations and institutions. The economic literature, CGE modeling exercises and the practical experience of “deep” trade integration suggest a substantial potential for the future EU-Ukraine DCFTA in promoting trade and investments, creating additional welfare and employment, regulatory and institutional harmonization with EU’s acquis, and modernizing Ukraine’s economy. While beneficial for both sides, the potential gains (but also potential adjustment costs) are greater for Ukraine as it is the smaller partner with higher initial trade barriers. However, the DCFTA does not include an automatic guarantee of success. Very much depends on the political will and administrative capacity to implement all of its provisions in a timely and accurate manner. This is a serious challenge for Ukraine, which has a mixed record in reforming its economy and state and which is still struggling to fulfill all of its commitments undertaken during the WTO accession process.
Authored by: Marek Dabrowski and Svitlana Taran
Published in 2012
The paper examines the economic implications of Belarus' participation in the newly created EURASEC Customs Union. The results of the calculations show that after the introduction of a common external tariff (CET) the level of tariff protection in Belarus has not increased noticeably. The reduction in the volume of imports from non-CIS countries equal to USD 1.1 bn (8% of Belarusian non-CIS import in 2008) will be mainly brought about by cancellation of used cars imports from non-member countries. The analyses revealed that Belarusian budget can benefit from participation in the Customs Union (CU). The amount of possible gain will be about 28.3% of total budget revenues from customs duties and customs charges in 2008 due to the fact that approximately 40% of Russian imports may go through customs clearance in Belarus owning to less bureaucracy at the border with respect to Russia, and the revenues from customs charges, which is not planned to be distributed among member countries, will be transferred to Belarusian budget. However, it is unlikely that CU membership will increase foreign direct investment (FDI) inflow to Belarus, since in the case of South-South regional trade agreements (the type of EURASEC countries CU) FDI usually goes to the bigger country, i.e. to the bigger market. Therefore, most probably that in the regional arrangement in question Russia followed by Kazakhstan will be the main beneficiaries of foreign direct investments.
Authored by: Irina Tochitskaya
Published in 2010
This paper analyzes the costs of (partial) institutional harmonization with the EU acquis which countries of the former USSR are expected to conduct under their Partnership and Cooperation Agreements with the EU and European Neighborhood Policy Action Plans. The public sector will have to take an effort of the transposition and adaptation of EU norms, as well as ensuring that they are complied with. Yet, the major part of the adjustment costs will fall on the private sector, as enterprises will have to make substantial investments to comply with new product requirements and business practices.
In this study we used the method of extrapolation of average costs for CEE countries’ harmonization with acquis to estimate the potential harmonization costs for the neighboring countries based on internationally comparative macroeconomic indicators like sectoral and total value added. This involved estimating the EU pre-accession support for the CEE countries by main areas as a percentage of the total or sectoral value added, determining the expected degree of limited harmonization in the ENP countries and estimating “coefficients of limited harmonization”, which was subsequently used for adjustment of the estimated cost of full harmonization.
Authored by: Veliko Dmitrov
The document discusses Moldova's ongoing negotiations with the EU for a Deep and Comprehensive Free Trade Agreement (DCFTA). It provides context on the EU's Eastern Partnership initiative and explains that a DCFTA goes beyond simply reducing tariffs to integrate countries across all trade-related areas like services, intellectual property, and regulations. For Moldova, the key benefits of a DCFTA would be increased foreign investment, technological upgrading, and more competitive exports internationally. The document notes that Moldova has made significant progress in its reforms and appears to be moving faster than Ukraine in DCFTA negotiations.
The paper discusses the role of regional public goods vs. global goods in influencing postcommunist transition in Central and Eastern Europe and former USSR with special attention given to three particular factors: (i) external anchoring of national reform process; (ii) international trade arrangements and (iii) international financial stability.
Authored by: Marek Dabrowski, Artur Radziwill
Published in 2007
The paper discusses the current and potential role of the European Neighbourhood Policy (ENP) in anchoring economic reforms in the countries of the EU's Eastern Neighbourhood. It claims that it is too early to assess the success of the ENP in this sphere especially given that the actual progress of the ENP agenda has been limited. A review of the empirical evidence on external reform anchors confirms that the ENP shares some features with the EU accession process that has proven to be an effective mechanism supporting major economic, political and social changes in the countries concerned. The eventual ENP economic offer is meaningful and integration with the EU is getting stronger public support in several CIS countries and among their political elites. On the other hand several factors limit the reform anchoring potential of the ENP. This paper offers recommendations on policies that could strengthen this potential.
Authored by: Wojciech Paczynski
Published in 2009
This paper studies costs and benefits of institutional harmonisation in the context of EU relations with its neighbors. The purpose of this paper is to outline the likely forms of institutional harmonisation between the EU and its Eastern neighbors and provide an
overview of the methodologies that can be used in measuring its effects (costs and benefits). This paper serves as a background for two measurement exercises – one on benefits and another on costs – that are to be undertaken during the second stage of research.
Authored by: Veliko Dimitrov, Vladimir Dubrovskiy, Anna Kolesnichenko, Irina Orlova
Published in 2007
This document summarizes a feasibility study on establishing a Deep and Comprehensive Free Trade Area (DCFTA) between Azerbaijan and the European Union. It provides background on DCFTAs, analyzes the current trade relationship between Azerbaijan and the EU, assesses potential barriers to trade, and models the economic impacts of a DCFTA using a Computable General Equilibrium model. The study finds that a DCFTA could increase Azerbaijan's GDP and trade volumes while lowering consumer prices. However, it may also increase income inequality and poverty levels within Azerbaijan. Overall, the research suggests Azerbaijan could benefit economically from a DCFTA but would need to address regulatory alignment and socioeconomic impacts.
This document provides information on intra-regional trade in Central Asia. It summarizes trade data for Kazakhstan and Kyrgyzstan with Central Asian countries and other trade partners from 1995 to 2011. For Kazakhstan, its largest trade partners outside of Central Asia are Russia, China, Italy, and the Netherlands. Trade with Central Asian countries makes up a small percentage of Kazakhstan's total trade, ranging from 0.1-1.5% from 1995 to 2011. For Kyrgyzstan, its largest trade partners outside of Central Asia are Russia, China, Switzerland, and the US. Trade with Central Asian countries also makes up a small percentage of Kyrgyzstan's total trade, ranging from 0.6-20.5%
This paper reviews the published literature on the definition and measurement of the administrative and compliance costs of taxation, with special reference to VAT (including evasion and fraud) in the European Union.
Written by Luca Barbone, Richard M. Bird, and Jaime Vasquez-Caro. Published in March, 2012.
See more on our website: http://www.case-research.eu/en/node/57573
Six Years after the 2004 enlargement: Taking Stockemtjohn
This document summarizes the political impact of the 2004 and 2007 enlargements of the European Union. It discusses decision making within EU institutions, the new member states' compliance with EU law, cooperation on common foreign and security policy, and coordination on justice and home affairs issues. Overall, the integration of the new member states has proceeded smoothly, with fears of decision making gridlock or non-compliance largely unfounded. The new members have adapted well to EU processes and norms.
This document discusses Kazakhstan's entry into the Customs Union with Belarus and Russia in 2010. It analyzes the effects of adopting a common external tariff on Kazakhstan's import structure and volumes. The empirical analysis finds that while overall imports were not significantly affected, the tariff changes likely created some trade diversion. Imports from China saw a significant negative impact, while imports from within the Customs Union saw a small but significant positive impact. However, there is little evidence of trade diversion from higher-value exporters like EU countries. The benefits to Kazakhstan from the new tariff policy alone appear to be limited based on these short-term results.
Uzbekistan and the Eurasian Economic Union EEU Integration in the Interests o...YogeshIJTSRD
Articles in the section, whether the Republic of Uzbekistan is a member of the Eurasian Economic Union or not, can be useful or harmful for our integrated economy. X. I. Muminov | I. B. Abdullayev "Uzbekistan and the Eurasian Economic Union (EEU): Integration in the Interests of the Country and the People?" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Special Issue | Innovative Development of Modern Research , April 2021, URL: https://www.ijtsrd.com/papers/ijtsrd40022.pdf Paper URL : https://www.ijtsrd.com/economics/other/40022/uzbekistan-and-the-eurasian-economic-union-eeu-integration-in-the-interests-of-the-country-and-the-people/x-i-muminov
Moldova is working to implement reforms related to document security, border control, and anti-corruption efforts in order to qualify for visa-free travel to the European Union. The document discusses Moldova's strategy of proactively implementing reforms based on the experiences of Balkan countries that have undergone a similar process. While Moldova has made progress by introducing biometric passports and border management systems, some issues around document security, border checks, and corruption remain. The key priority is for the EU to provide Moldova with a visa liberalization roadmap that clearly outlines the criteria and benchmarks needed to assess Moldova's progress towards visa-free status.
Doing business and investing in the Russian Federation, 2015PwC Russia
This guide has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this guide without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy, timeliness or completeness of the information contained in this guide, and, to the extent permitted by law, PwC, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information
contained in this guide or for any decision based on it.
Demographic change (driven by the second demographic transition) led to an uncontrolled increase in scale of various social expenditure in the OECD area, especially in continental Europe. Costs of social transfers created fiscal pressure leading to the necessity of tax increases all over Europe, including the New Member States. Employment consequences of emerging higher tax wedge has become the topic of large body of research. However, surprisingly little evidence is known on distribution of that problem across workers. Is the effect of high tax wedge equally spread or certain groups of workers suffer more than others? More specifically, are low productivity workers exposed more to the problems caused by high tax wedge?
Authored by: Marek Gora, Artur Radziwill, Agnieszka Sowa, Mateusz Walewski
Published in 2006
This paper employs a standard Tobin-Markowitz framework to analyse the determinants of capital flows into the CIS countries. Using data from 1996-2006, we find that the Russian financial crisis of 1998 has had a profound impact on capital flows into the CIS (both directly and indirectly). Firstly, it introduced a structural shift in the investors' behaviour by shifting the focus from the external factors to the internal ones, e.g. domestic interest and GDP growth rates. Secondly, it also drastically changed the impact of a number of explanatory variables on capital flows into the CIS. Political risk was found to be the second most important determinant of capital flows into the CIS. Additionally, we report some strong evidence of co-movement between portfolio flows into the CIS and CEEC, coupled with strong complementarity between global stock market activity and portfolio inflows into the CIS. Interestingly, external factors tend to be of a higher significance than internal factors for the largest members (Russia, Ukraine and Kazakhstan) of the CIS; whereas domestic variables tend to have a greater impact on the capital flows into the smaller CIS countries.
Authored by: Oleksandr Lozovyi
Published in 2007
This paper explores wage and income disparities in 14 EU member states during 1994–2001 by using the ECHP data. The results reveal that there are noticeable differences in wages across EU countries measured at both gross and net level. There is no evidence for wage convergence across countries over the period, which indicates that if convergence does exists, the process is rather slow. There are remarkable differences in the income levels across 14 EU member states. Within countries, however, income disparities seem to have declined in most cases. By using household-level data it is also possible to estimate a Gini coefficient at the level of the European Union. This enables us to compare income disparities between the United States and the EU. Based on the results, income disparities across households in the European Union are substantially smaller than those in the US.
The study analyzed 378 IT companies in Dnipro and the region, finding that most are small-to-medium sized service providers, with key industries including e-commerce, healthcare, and banking/finance. It was estimated that the IT sector contributed $630 million to the regional economy in 2018, employing over 15,000 specialists directly and creating 42,500 total jobs, with average specialist salaries of $1,650 per month. The majority of IT company sales were to markets in the US, Canada, Northern Europe, and Israel.
This document provides a literature review on analyzing gender gaps. It discusses how gender gaps can be examined across different dimensions like labor participation, economic opportunity, political empowerment, education, and health. It outlines factors that can explain gender gaps like social norms, cultural environments, and psychological differences between males and females. The document also discusses how reducing gender inequality can promote sustainable development and economic growth. Finally, it reviews several approaches used to measure gender gaps developed by organizations like the UNDP, OECD, World Bank, and World Economic Forum.
J’son & Partners Consulting provides market research and consulting services related to telecommunications, media, and IT. They have over 1000 completed projects for 300+ clients. Their areas of expertise include research on fixed voice/IP telephony, broadband, wireless, pay TV, IT, and digital content markets in Russia and CIS countries. They gather information through interviews, surveys, reports and have ongoing partnerships with major players in these industries.
Geoggraphical enclaves of Ferghana valleyBellamar Inc.
Central Asia Data Gathering and Analysis Team (CADGAT) produces reports on various topics related to Central Asia using data from multiple sources. This report analyzes tariffs and trade barriers in Central Asia. Key findings include:
1) Central Asian countries have adopted diverse economic strategies leading to different trade policies, from liberal (Kyrgyzstan) to restrictive (Uzbekistan), hindering regional cooperation.
2) Central Asian states mainly export natural resources and are dependent on these exports. In 2011, oil/gas made up 62.4% of Kazakhstan's exports and aluminum 63.4% of Tajikistan's.
3) Central Asian states have low trade complementarity as they produce and export similar items
THE UK AND SLOVAKIA WILL SUPPORT MOLDOVA IN ACHIEVING ITS EU ASPIRATIONIDIS Viitorul
The UK and Slovakia have expressed support to help Moldova achieve its goals of European integration. The UK will provide expertise in areas like finance and security to help with EU accession. Slovakia aims to increase civil society capacity and share its reform experiences. Both countries will offer diplomatic backing. However, Moldova must undertake domestic reforms and resolve its Transnistria conflict to accelerate integration. Increased civil society monitoring and confidence building in Transnistria could help address these challenges.
Institutional prospect of IDIS "Viitorul"IDIS Viitorul
The Institute for Development and Social Initiatives "Viitorul" is a Moldovan research, education, and outreach organization focused on economic analysis, governance, law, and political science. It brings together young intellectuals concerned with Moldova's transition to a free market and open society. The Institute aims to contribute to independent thinking, societal competitiveness, and good governance. It conducts research and policy analysis on modernizing public sector, strengthening the market economy, and supporting an competitive society. Current projects cover areas such as energy efficiency, economic development, and European integration.
This document summarizes a research paper on cooperation between Finland, Hungary, and Estonia based on their shared Finno-Ugric ethnic links. It discusses the foreign policy narratives of the three countries and how their shared cultural and linguistic heritage with Finno-Ugric peoples in Russia has led to some institutionalized cooperation. However, the paper finds that while there is rhetoric of cooperation, there is limited evidence of substantial cooperation in influencing the EU's policies towards Russia or in advocating for the rights of Finno-Ugric minorities in Russia. The paper aims to analyze whether shared ethnic backgrounds can facilitate foreign policy cooperation between EU member states.
The document proposes organizing a workshop to analyze and discuss the futures of Bosnia and Herzegovina and Kosovo in their paths toward European Union accession. It will bring together experts on the Balkans to examine the countries' institutional and economic challenges, including reforms needed to the political systems and economies. The goal is to better understand the issues facing these countries and the region to contribute to their integration into Europe. Students will also participate to further educate about the complexity of the subject.
The authors evaluate the effects of potential measures to liberalize trade between the EU and the CIS using a computable general equilibrium (CGE) model. They look at the CIS as an aggregate and we also present results for individual CIS countries. Their CGE model takes different underlying industry specific market structures and elasticities into account. Furthermore, the model incorporates estimated non-tariff trade barriers to trade in services. The results are compared to a baseline which incorporates recent developments in the trade policy environment, i.e. the phase out of ATC, enlargement of the EU and CIS accessions to the WTO. The analysis takes agricultural liberalization, liberalization in industrial tariffs, and liberalization in services trade as well as trade facilitation measures into account. While there is important heterogeneity in the impact of FTAs on individual countries, the results indicate that the CIS as a whole would experience a negative income effect if the FTA would be limited only to trade in goods. This implies that the CIS would most likely to benefit from an FTA with the EU if it would incorporate deeper form of integration not being limited to liberalization of tariffs in goods.
Authored by: Joseph Francois, Miriam Manchin
Published in 2009
- The six Eastern Partnership countries of Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine face a choice between integrating more closely with the EU through Association Agreements or joining the Russia-led Eurasian Economic Union. Georgia, Moldova and Ukraine chose the EU while Armenia and Belarus joined the EAEU.
- Choosing one integration path has meant weaker trade ties with the other bloc. The EU and EAEU pursue fundamentally different models of economic integration that can undermine each other. Russia has also reacted strongly politically against countries allying more closely with the EU.
- In the long run, Association Agreements with the EU are projected to boost GDP more than joining the EAEU would. However,
The document discusses the economic relations between the EU and CIS countries. It makes the following key points:
1. The EU's 2004 and 2007 enlargements increased the geopolitical and economic importance of the CIS region as many CIS countries became direct neighbors of the EU.
2. Trade between the EU and CIS countries represents a small share of both regions' total trade. However, some individual EU member states engage in more trade with the CIS than the EU average.
3. While the CIS region has limited economic potential overall, certain CIS countries like Russia are important trade partners and/or suppliers of natural resources to the EU.
This document provides information on intra-regional trade in Central Asia. It summarizes trade data for Kazakhstan and Kyrgyzstan with Central Asian countries and other trade partners from 1995 to 2011. For Kazakhstan, its largest trade partners outside of Central Asia are Russia, China, Italy, and the Netherlands. Trade with Central Asian countries makes up a small percentage of Kazakhstan's total trade, ranging from 0.1-1.5% from 1995 to 2011. For Kyrgyzstan, its largest trade partners outside of Central Asia are Russia, China, Switzerland, and the US. Trade with Central Asian countries also makes up a small percentage of Kyrgyzstan's total trade, ranging from 0.6-20.5%
This paper reviews the published literature on the definition and measurement of the administrative and compliance costs of taxation, with special reference to VAT (including evasion and fraud) in the European Union.
Written by Luca Barbone, Richard M. Bird, and Jaime Vasquez-Caro. Published in March, 2012.
See more on our website: http://www.case-research.eu/en/node/57573
Six Years after the 2004 enlargement: Taking Stockemtjohn
This document summarizes the political impact of the 2004 and 2007 enlargements of the European Union. It discusses decision making within EU institutions, the new member states' compliance with EU law, cooperation on common foreign and security policy, and coordination on justice and home affairs issues. Overall, the integration of the new member states has proceeded smoothly, with fears of decision making gridlock or non-compliance largely unfounded. The new members have adapted well to EU processes and norms.
This document discusses Kazakhstan's entry into the Customs Union with Belarus and Russia in 2010. It analyzes the effects of adopting a common external tariff on Kazakhstan's import structure and volumes. The empirical analysis finds that while overall imports were not significantly affected, the tariff changes likely created some trade diversion. Imports from China saw a significant negative impact, while imports from within the Customs Union saw a small but significant positive impact. However, there is little evidence of trade diversion from higher-value exporters like EU countries. The benefits to Kazakhstan from the new tariff policy alone appear to be limited based on these short-term results.
Uzbekistan and the Eurasian Economic Union EEU Integration in the Interests o...YogeshIJTSRD
Articles in the section, whether the Republic of Uzbekistan is a member of the Eurasian Economic Union or not, can be useful or harmful for our integrated economy. X. I. Muminov | I. B. Abdullayev "Uzbekistan and the Eurasian Economic Union (EEU): Integration in the Interests of the Country and the People?" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Special Issue | Innovative Development of Modern Research , April 2021, URL: https://www.ijtsrd.com/papers/ijtsrd40022.pdf Paper URL : https://www.ijtsrd.com/economics/other/40022/uzbekistan-and-the-eurasian-economic-union-eeu-integration-in-the-interests-of-the-country-and-the-people/x-i-muminov
Moldova is working to implement reforms related to document security, border control, and anti-corruption efforts in order to qualify for visa-free travel to the European Union. The document discusses Moldova's strategy of proactively implementing reforms based on the experiences of Balkan countries that have undergone a similar process. While Moldova has made progress by introducing biometric passports and border management systems, some issues around document security, border checks, and corruption remain. The key priority is for the EU to provide Moldova with a visa liberalization roadmap that clearly outlines the criteria and benchmarks needed to assess Moldova's progress towards visa-free status.
Doing business and investing in the Russian Federation, 2015PwC Russia
This guide has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this guide without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy, timeliness or completeness of the information contained in this guide, and, to the extent permitted by law, PwC, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information
contained in this guide or for any decision based on it.
Demographic change (driven by the second demographic transition) led to an uncontrolled increase in scale of various social expenditure in the OECD area, especially in continental Europe. Costs of social transfers created fiscal pressure leading to the necessity of tax increases all over Europe, including the New Member States. Employment consequences of emerging higher tax wedge has become the topic of large body of research. However, surprisingly little evidence is known on distribution of that problem across workers. Is the effect of high tax wedge equally spread or certain groups of workers suffer more than others? More specifically, are low productivity workers exposed more to the problems caused by high tax wedge?
Authored by: Marek Gora, Artur Radziwill, Agnieszka Sowa, Mateusz Walewski
Published in 2006
This paper employs a standard Tobin-Markowitz framework to analyse the determinants of capital flows into the CIS countries. Using data from 1996-2006, we find that the Russian financial crisis of 1998 has had a profound impact on capital flows into the CIS (both directly and indirectly). Firstly, it introduced a structural shift in the investors' behaviour by shifting the focus from the external factors to the internal ones, e.g. domestic interest and GDP growth rates. Secondly, it also drastically changed the impact of a number of explanatory variables on capital flows into the CIS. Political risk was found to be the second most important determinant of capital flows into the CIS. Additionally, we report some strong evidence of co-movement between portfolio flows into the CIS and CEEC, coupled with strong complementarity between global stock market activity and portfolio inflows into the CIS. Interestingly, external factors tend to be of a higher significance than internal factors for the largest members (Russia, Ukraine and Kazakhstan) of the CIS; whereas domestic variables tend to have a greater impact on the capital flows into the smaller CIS countries.
Authored by: Oleksandr Lozovyi
Published in 2007
This paper explores wage and income disparities in 14 EU member states during 1994–2001 by using the ECHP data. The results reveal that there are noticeable differences in wages across EU countries measured at both gross and net level. There is no evidence for wage convergence across countries over the period, which indicates that if convergence does exists, the process is rather slow. There are remarkable differences in the income levels across 14 EU member states. Within countries, however, income disparities seem to have declined in most cases. By using household-level data it is also possible to estimate a Gini coefficient at the level of the European Union. This enables us to compare income disparities between the United States and the EU. Based on the results, income disparities across households in the European Union are substantially smaller than those in the US.
The study analyzed 378 IT companies in Dnipro and the region, finding that most are small-to-medium sized service providers, with key industries including e-commerce, healthcare, and banking/finance. It was estimated that the IT sector contributed $630 million to the regional economy in 2018, employing over 15,000 specialists directly and creating 42,500 total jobs, with average specialist salaries of $1,650 per month. The majority of IT company sales were to markets in the US, Canada, Northern Europe, and Israel.
This document provides a literature review on analyzing gender gaps. It discusses how gender gaps can be examined across different dimensions like labor participation, economic opportunity, political empowerment, education, and health. It outlines factors that can explain gender gaps like social norms, cultural environments, and psychological differences between males and females. The document also discusses how reducing gender inequality can promote sustainable development and economic growth. Finally, it reviews several approaches used to measure gender gaps developed by organizations like the UNDP, OECD, World Bank, and World Economic Forum.
J’son & Partners Consulting provides market research and consulting services related to telecommunications, media, and IT. They have over 1000 completed projects for 300+ clients. Their areas of expertise include research on fixed voice/IP telephony, broadband, wireless, pay TV, IT, and digital content markets in Russia and CIS countries. They gather information through interviews, surveys, reports and have ongoing partnerships with major players in these industries.
Geoggraphical enclaves of Ferghana valleyBellamar Inc.
Central Asia Data Gathering and Analysis Team (CADGAT) produces reports on various topics related to Central Asia using data from multiple sources. This report analyzes tariffs and trade barriers in Central Asia. Key findings include:
1) Central Asian countries have adopted diverse economic strategies leading to different trade policies, from liberal (Kyrgyzstan) to restrictive (Uzbekistan), hindering regional cooperation.
2) Central Asian states mainly export natural resources and are dependent on these exports. In 2011, oil/gas made up 62.4% of Kazakhstan's exports and aluminum 63.4% of Tajikistan's.
3) Central Asian states have low trade complementarity as they produce and export similar items
THE UK AND SLOVAKIA WILL SUPPORT MOLDOVA IN ACHIEVING ITS EU ASPIRATIONIDIS Viitorul
The UK and Slovakia have expressed support to help Moldova achieve its goals of European integration. The UK will provide expertise in areas like finance and security to help with EU accession. Slovakia aims to increase civil society capacity and share its reform experiences. Both countries will offer diplomatic backing. However, Moldova must undertake domestic reforms and resolve its Transnistria conflict to accelerate integration. Increased civil society monitoring and confidence building in Transnistria could help address these challenges.
Institutional prospect of IDIS "Viitorul"IDIS Viitorul
The Institute for Development and Social Initiatives "Viitorul" is a Moldovan research, education, and outreach organization focused on economic analysis, governance, law, and political science. It brings together young intellectuals concerned with Moldova's transition to a free market and open society. The Institute aims to contribute to independent thinking, societal competitiveness, and good governance. It conducts research and policy analysis on modernizing public sector, strengthening the market economy, and supporting an competitive society. Current projects cover areas such as energy efficiency, economic development, and European integration.
This document summarizes a research paper on cooperation between Finland, Hungary, and Estonia based on their shared Finno-Ugric ethnic links. It discusses the foreign policy narratives of the three countries and how their shared cultural and linguistic heritage with Finno-Ugric peoples in Russia has led to some institutionalized cooperation. However, the paper finds that while there is rhetoric of cooperation, there is limited evidence of substantial cooperation in influencing the EU's policies towards Russia or in advocating for the rights of Finno-Ugric minorities in Russia. The paper aims to analyze whether shared ethnic backgrounds can facilitate foreign policy cooperation between EU member states.
The document proposes organizing a workshop to analyze and discuss the futures of Bosnia and Herzegovina and Kosovo in their paths toward European Union accession. It will bring together experts on the Balkans to examine the countries' institutional and economic challenges, including reforms needed to the political systems and economies. The goal is to better understand the issues facing these countries and the region to contribute to their integration into Europe. Students will also participate to further educate about the complexity of the subject.
The authors evaluate the effects of potential measures to liberalize trade between the EU and the CIS using a computable general equilibrium (CGE) model. They look at the CIS as an aggregate and we also present results for individual CIS countries. Their CGE model takes different underlying industry specific market structures and elasticities into account. Furthermore, the model incorporates estimated non-tariff trade barriers to trade in services. The results are compared to a baseline which incorporates recent developments in the trade policy environment, i.e. the phase out of ATC, enlargement of the EU and CIS accessions to the WTO. The analysis takes agricultural liberalization, liberalization in industrial tariffs, and liberalization in services trade as well as trade facilitation measures into account. While there is important heterogeneity in the impact of FTAs on individual countries, the results indicate that the CIS as a whole would experience a negative income effect if the FTA would be limited only to trade in goods. This implies that the CIS would most likely to benefit from an FTA with the EU if it would incorporate deeper form of integration not being limited to liberalization of tariffs in goods.
Authored by: Joseph Francois, Miriam Manchin
Published in 2009
- The six Eastern Partnership countries of Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine face a choice between integrating more closely with the EU through Association Agreements or joining the Russia-led Eurasian Economic Union. Georgia, Moldova and Ukraine chose the EU while Armenia and Belarus joined the EAEU.
- Choosing one integration path has meant weaker trade ties with the other bloc. The EU and EAEU pursue fundamentally different models of economic integration that can undermine each other. Russia has also reacted strongly politically against countries allying more closely with the EU.
- In the long run, Association Agreements with the EU are projected to boost GDP more than joining the EAEU would. However,
The document discusses the economic relations between the EU and CIS countries. It makes the following key points:
1. The EU's 2004 and 2007 enlargements increased the geopolitical and economic importance of the CIS region as many CIS countries became direct neighbors of the EU.
2. Trade between the EU and CIS countries represents a small share of both regions' total trade. However, some individual EU member states engage in more trade with the CIS than the EU average.
3. While the CIS region has limited economic potential overall, certain CIS countries like Russia are important trade partners and/or suppliers of natural resources to the EU.
This document provides an overview of Ukraine's economy and business climate, as well as its trade relations with the EU. It finds that while Ukraine has significant economic strengths in its large population, fertile farmland, and strategic location, its economy also faces weaknesses such as corruption, political instability, and an inefficient bureaucracy. The document examines Ukraine's trade with the EU and promising sectors for European investment such as agribusiness and biomass energy. It analyzes the potential for closer EU-Ukraine economic integration through a proposed Association Agreement, but also notes political risks from Ukraine's internal reforms and pressure from Russia.
The CIS region is of vital importance for the EU countries considering that both are interconnected through cooperation or membership in supranational political and economic institutions (OSCE, WTO, OECD, NATO, etc.), through transport and energy corridors, through investment, trade and migration trends.
The interests of EU member states in the region are very diverse and are sometimes pursued in contradiction to one another. The overarching interest is of an economic nature, given the large reserves of natural resources (particularly gas and oil) and due to the size of the CIS market of 277 million consumers. Security and immigration issues also rank high on the list, whereas EU countries are less concerned with democratisation trends in the CIS. Russia is the most important CIS partner for a majority of EU countries. Energy plays a disproportionally high role in EU member states (MS) - Russia relations and is also a strong determinant of the overall heterogeneity of EU MS policies towards Russia. The type of bilateral relations which the EU MS maintain with one sub-region of the CIS (particularly the EENP, but increasingly also Central Asia) also affects their relations with Russia. Cultural closeness and a common history still play a large part in the development of bilateral relations. The accession to the EU of Central and Eastern European states has altered the existing relations between them and their eastern CIS neighbours, thereby also modifying their interests in the region. Regrettably, the EU's policies towards Russia and the EENP region have not yet been able to provide a playing field able to compensate for this alteration.
Thus, the present report studies the various interests (political, security, economic, cultural) which underpin relations between the EU member states and the CIS countries and also discusses the latest developments in EU policies towards a specific CIS sub-region (Russia, the Eastern ENP and Central Asia), thereby providing a broad picture of the type of interests, how they are pursued by the EU member states and where these intersect or clash.
Authored by: George Dura
Published in 2008
Does European economic integration create more inequality between domestic regions, or is the opposite true? We show that a general answer to this question does not exist, and that the outcome depends on the liberalisation scenario. In order to examine the impact of European and international integration on the regions, the paper develops a numerical simulation model with nine countries and 90 regions. Eastward extension of European integration is beneficial for old as well as new member countries, but within countries the impact varies across regions. Reduction in distance-related trade costs is particularly good for the European peripheries. Each liberalisation scenario has a distinct impact on the spatial income distribution, and there is no general rule telling that integration causes more or less agglomeration.
Authored by Arne Melchior
Published in 2009
This paper analyses the effect of the EU enlargement process on income convergence among regions in the EU and in the Eastern neighbourhood of the EU. The data used is NUTS II regions in the EU and Oblasts' of Russia over the period 1996-2004. The estimation techniques used take into account both regional and spatial heterogeneity. The main findings are that the regional income differences are reduced within EU15. The income convergence within the EU is mainly driven by reductions in the differences across countries rather than by a reduction in regional differences within countries. When differences in initial conditions in the regions are controlled for by fixed regional effects there are strong evidences of convergence among regions in all studied country groups.
Authored by: Fredrik Wilhelmsson
Published in 2009
The aim of this study is to estimate the impact of the removal of NTBs in trade between the EU and its selected CIS partners: Russia, Ukraine, Georgia, Armenia and Azerbaijan (CIS5). The report includes a discussion of methodologies of measurement of non-tariff barriers and the impact of their removal, including a review of previous studies focusing on CEE and CIS regions. Further, we employ a computable general equilibrium model encompassing the following three pillars of trade facilitation: legislative and regulatory approximation, reform of customs rules and procedures and liberalization of the access of foreign providers of services. We conclude that a reduction of NTBs and improved access to the EU market would bring significant benefits to the CIS5 countries in terms of welfare gains, GDP growth, increases in real wages and expansion of international trade. The possible welfare implications of deep integration with the EU range from 5.8% of GDP in Ukraine to sizeable expected gains in Armenia (3.1%), Russia (2.8%), Azerbaijan (1.8%) and Georgia (1.7%).
Authored by: Maryla Maliszewska, Irina Orlova, Svitlana Taran
Published in 2009
This document summarizes a literature review on technical assistance (TA) to countries in the Commonwealth of Independent States (CIS). It finds that while TA has been widely used in the CIS since the 1990s, there is little research evaluating its effectiveness in these countries. Most studies focus on other regions or individual projects. The literature identifies common problems with TA such as lack of sustainability, weak capacity building, and failure to strengthen local institutions. Donors have made efforts to improve TA through initiatives promoting country ownership and harmonization, but challenges remain. More research is needed on TA's long-term impact and political economy in the context of the CIS.
This document analyzes the effects of the 2004 EU enlargement, Russia's entry into the WTO, and a potential free trade agreement between Russia and the enlarged EU using a computable general equilibrium model. It finds small positive effects on GDP and trade from EU enlargement. Russia's WTO accession on top of an enlarged EU is estimated to further increase trade somewhat. A free trade agreement between Russia and the EU could significantly boost bilateral trade flows, with overall moderate economic impacts.
The European Union is funding renovation projects in the city of Sverdlovsk in Ukraine's Luhansk region, which has one of the worst qualities of life in Ukraine. The headmaster and chief medical officer praised the EU for renovating the local school and hospital, improving conditions. Ties between the EU and Ukraine have strengthened since 2005 with cooperation on political and economic reforms, energy security, and visa liberalization. The EU is Ukraine's top trade partner and has provided over €3 billion in assistance since 1991 to support reforms.
Moldova unilaterally declares its EU membership aspirations and started the process of economic, legal and institutional approximation targeted at establishing free market economy, stable democratic institutions and sound legal system. In the paper the authors made an attempt to assess the competitive and institutional capacity of Moldova in the context of EU membership requirements. It presents Polish achievements in European integration process as a CEE successful way towards full membership. The paper is devoted to transfer know how on Polish experience in EU integration at first stages of the process, with the emphasis on assessment of fulfillment of Copenhagen criteria and the role of association stage in the integration process as a whole. Basing on Poland's example, it provides the recommendations for Moldova on possible ways of integration with the EU so that Moldovan economy and society would be able to benefit most from the process - in other words, to successfully conclude the transformation of economy and adjust law and state institutions to European standards.
The analysis does not cover the political aspects of Transdniestrian conflict as it is an important and broad issue that requires deep separate analysis. In the paper there is also no evaluation of cooperation within Stability Pact for South Eastern Europe since we consider Moldova as Eastern European country with clear geopolitical position neighboring Ukraine and Romania.
Authored by: Iurie Gotisan, Karina Kostrzewa, Eugen Osmochescu
Published in 2005
This paper provides the quantitative estimate of the potential growth bonus for CIS countries, and in particular EU's Easter Neighbours, that can be a result of deeper institutional harmonisation with the EU. Econometric investigation involving instrumental variable, simultaneous equation and dynamic panel techniques documents the strong positive link between growth performance and reforms, as well as between reforms and European integration. The paper derives the range of possible values of growth bonus from the deepened neighbourhood cooperation between 1 and 3.8 with the median at 1.8 percentage points. The least growth bonus is expected through basic liberalization reforms, while countries with a considerable institutional gap are likely to gain the most.
Authored by: Artur Radziwill, Pawel Smietanka
Published in 2009
Institutional harmonization is an important part of European integration, and its effects are more far reaching than the effects of trade liberalization. In its policy towards neighbors (the European Neighborhood Policy, ENP), the EU puts a lot of stress on the desirability of institutional harmonization, at least in certain areas. In particular, the free trade agreements that the EU envisages concluding with its Eastern neighbors will involve substantial harmonization of product standards, competition policy and a range of other policies and processes. At the very least, the harmonization will have to focus on the areas that relate to improvement of market access, i.e. removing restrictions to trade, harmonizing product standards and the systems of quality control etc. But in order to implement the new standards and rules, the EU neighbors will have to reform many related areas, so that the harmonization will encompass the whole system of economic governance. Not only will such a revamp help attaining better access to the EU markets, but also (and probably more importantly) it will stimulate modernization of the neighbors' economies and bring much needed efficiency gains.
In measurement of benefits of harmonization we refer to two methods: one based on the computable general equilibrium (CGE) modeling of welfare effects of better market access, and the other employing a growth model to estimate the wider effects of European institutions on growth. The estimation of costs of harmonization bases on extrapolation of the analogous costs in other countries, in particular CEE. These costs include expenses by a public sector on introduction of harmonization measures, as well as private sector expenses and investments related to their implementation.
Authored by: Anna Kolesnichenko
Published in 2009
The document discusses the potential benefits and challenges of a free trade agreement between Ukraine and the European Union (EU). Key points:
- Negotiations between Ukraine and the EU on an Association Agreement including a Deep and Comprehensive Free Trade Agreement (DCFTA) were completed in 2011 but the agreement has not been signed due to EU concerns about Ukraine's political freedoms.
- The DCFTA would go beyond simple trade liberalization to reduce non-tariff barriers, liberalize investment and trade in services, and harmonize regulations between Ukraine and the EU.
- Estimates suggest the DCFTA could increase Ukraine's long-term welfare by 5-10% but implementing it faces challenges in
This report provides estimates of the VAT Gap for 26 EU Member States for 2012, as well as revised estimates for the period 2009-2011. It is a follow-up to the report “Study to quantify and analyse the VAT Gap in the EU-27 Member States” , published in September 2013. This update incorporates the NACE Rev. 2 classification of economic activities into the calculation of the theoretical liability.
http://www.case-research.eu/en/node/58716
The CIS countries' EU-related interests are very heterogeneous. The countries themselves differ not only in terms of their geopolitical and geo-economic situations, and how those affect their relations with the EU, but also in their levels of ambition in relation to the Union, as well as their specific sectoral interests. Some Eastern Partners have set full EU membership as their strategic goal; others want to enjoy the benefits of the common free market, and the ambitions of others are limited to developing cooperation in selected areas. Similarly, the EU's policy towards its Eastern neighbourhood is multi-level and very diverse, considering as it must the different characters of mutual relations. The EU and most of its Eastern partners have a sufficient number of common or converging interests to expect reasonable cooperation between the two sides to develop and deepen. However, serious challenges and problems exist that may prevent this positive scenario from being realised.
Authored by: Marcin Kaczmarski, Wojciech Kononczuk, Marek Menkiszak
Published in 2008
The CIS countries' EU-related interests are very heterogeneous. The countries themselves differ not only in terms of their geopolitical and geo-economic situations, and how those affect their relations with the EU, but also in their levels of ambition in relation to the Union, as well as their specific sectoral interests. Some Eastern Partners have set full EU membership as their strategic goal; others want to enjoy the benefits of the common free market, and the ambitions of others are limited to developing cooperation in selected areas. Similarly, the EU's policy towards its Eastern neighbourhood is multi-level and very diverse, considering as it must the different characters of mutual relations. The EU and most of its Eastern partners have a sufficient number of common or converging interests to expect reasonable cooperation between the two sides to develop and deepen. However, serious challenges and problems exist that may prevent this positive scenario from being realised.
Authored by: Marcin Kaczmarski, Wojciech Kononczuk, Marek Menkiszak
Published in 2008
The 15th EU-Ukraine Summit will take place in Kiev on December 19, 2011 to discuss Ukraine's reform agenda and goals of political association and economic integration between the EU and Ukraine. Key discussion topics will include political association and respect for shared values, economic integration and governance, mobility issues, and regional/international relations. The EU and Ukraine have a long history of cooperation based on democratic principles and will work to implement agreements on trade, energy cooperation, and nuclear safety.
The document discusses the potential for Moldova and Ukraine to join the European Union either together as part of a "package approach" or separately on their own individual merits. It notes that both countries have expressed a desire to join the EU but have had ambiguous efforts in implementing necessary reforms. A package approach could encourage competition between the countries to reform but also ties their chances of joining to each other's performance. Currently Moldova and Ukraine are at similar stages in relations with the EU but differ in some respects. There are arguments for considering their cases separately rather than as a package.
European Integrative Processes of Albania and Mo.docxhumphrieskalyn
European Integrative Processes of Albania and Montenegro
FEEDBACK and things TO AMEND:
1) The Title has to be re-phrased
2) The Figure of the map is wrong
3) The English used needs to make sense
4) Some facts and statistics are wrong
5) Book to include: “The Europeanisation of the Western Balkans; a Failure of EU conditionality?” ISBN: 978-3-319-91412-1
6) Freedom House has a report on Albania and Montenegro and Check EU parliment resolutions.
7) Create your own opinion, argument and support it by facts.
ABSTRACT
This study is presenting the analysis and evaluation by the use of secondary data from the past researches. The data from the year 2013 to 2017 is utilized in this study to present discussions that are explaining the trends and narrative of the countries to join EU. The conducted study is supporting the discussion by exploring and explaining each aspect of the impact of joining of EU in Albania and Montenegro. This study is presenting the advantages that can be avail by Albania and Montenegro by availing the opportunities through the membership of NATO. The critical literature is presenting the changing trends along with the democratic rights avail by the member countries in Europe under the influence of EU regulations.
Table of Contents
ABSTRACT 2
Chapter 1: Introduction 8
1.1 Research Background 8
1.2 Problem Statement 10
1.3 Research Questions 10
1.4 Research Objectives 11
1.5 Significance of the Study 11
1.6 Project Outline 11
Chapter 2: Literature Review 13
2.1 Chapter Introduction 13
2.2 European Union, its Impacts and Process of Joining 13
2.3 Conceptual Framework 21
2.4 Research Gap 22
2.5 Chapter Summary 22
Chapter 3: Research Methodology 24
3.1 Chapter Introduction 24
3.2 Research Philosophy 24
3.3 Research Type 25
3.4 Research Design 27
3.5 Data Collection Technique 27
3.6 Sampling Technique and Sample Size 28
3.7 Data Analysis 28
3.8 Ethical Consideration 29
3.9 Chapter Summary 31
Chapter 4: Data Analysis and Discussions 32
4.1 Discussions 32
4.2 Chapter Summary 37
Chapter 5: Recommendations and Conclusion 39
5.1 Limitation of the Study 39
5.2 Future Scope 39
5.3 Recommendation 40
5.4 Conclusion 40
6.0 References 42
List of Acronyms
CSR: Corporate Social Responsibility
DPS: Democratic Party of Socialists
ECU: Eurasian Customs Union
EU: European Union
FDI: Foreign Direct Investment
IFDI: Inward Foreign Direct Investment
MNC: Multinational Corporations
NATO: North Atlantic Treaty Organization
SME: Small Medium Enterprise
WTO: World Trade Organization
List of Figures
Figure 1: Countries waiting to join EU13
Figure 2: NATO and EU Relations15
Figure 3: The Economic Impact of Brexit20
Chapter 1: Introduction1.1 Research Background
This thesis is going to prove a comparative analysis of the impact of the process of joining the European Union. As per the analysis of Featherstone and Kazamias (2014), it has been found that the European Union made a step by step improvements and changes in the relations o.
Similar to CASE Network Studies and Analyses 445 - EU-Ukraine DCFTA: the Model for Eastern Partnership Regional Trade Cooperation (20)
The report examines the social and economic drivers and impact of circular migration between Belarus and Poland, Slovakia, and the Czech Republic. The core question the authors sought to address was how managing circular migration could, in the long term, help to optimise labour resources in both the country of origin and the destination countries. In the pages that follow, the authors of the report present the current and forecasted labour market and demographic situation in their respective countries as well as the dynamics and characteristics of short-term labour migration flows between Belarus and Poland, Slovakia, and the Czech Republic, concentrating on the period since 2010. They also outline and discuss related policy responses and evaluate prospects for cooperation on circular migration.
Podręcznik został opracowany w celu przekazania trenerom i nauczycielom podstawowej wiedzy, która może być przydatna w prowadzeniu szkoleń promujących pracę rejestrowaną. Prezentuje on z jednej strony korzyści z pracy rejestrowanej, z drugiej – potencjalne koszty związane z pracą nierejestrowaną. W pierwszej kolejności informacje te przedstawiono w odniesieniu do pracowników najemnych (rozdział 2), podkreślając w sposób szczególny to, że negatywne konsekwencje pracy nierejestrowanej są ponoszone przez całe życie. Ze względu na specyficzną sytuację cudzoziemców pracujących w Polsce konsekwencje ponoszone przez tę grupę opisano oddzielnie (rozdział 3). Ponadto zaprezentowano skutki dotyczące pracodawców z szarej strefy z wyodrębnieniem tych, którzy zatrudniają cudzoziemców (rozdział 4). Uzupełnieniem przedstawionych informacji jest opis działań podejmowanych przez państwo w celu ograniczenia zjawiska pracy nierejestrowanej w Polsce (rozdział 5) oraz prowadzonych w Wielkiej Brytanii, czyli w kraju będącym liderem w walce z szarą strefą (rozdział 6).
European countries face a challenge related to the economic and social consequences of their societies’ aging. Specifically, pension systems must adjust to the coming changes, maintaining both financial stability, connected with equalizing inflows from premiums and spending on pensions, and simultaneously the sufficiency of benefits, protecting retirees against poverty and smoothing consumption over their lives, i.e. ensuring the ability to pay for consumption needs at each stage of life, regardless of income from labor.
One of the key instruments applied toward these goals is the retirement age. Formally it is a legally established boundary: once people have crossed it – on average – they significantly lose their ability to perform work (the so-called old-age risk). But since the 1970s, in many developed countries the retirement age has become an instrument of social and labor-market policy. Specifically, in the 1970s and ‘80s, an early retirement age was perceived as a solution allowing a reduction in the supply of labor, particularly among people with relatively low competencies who were approaching retirement age, which is called the lump of labor fallacy. It was often believed that people taking early retirement freed up jobs for the young. But a range of economic evidence shows that the number of jobs is not fixed, and those who retire don’t in fact free up jobs. On the contrary, because of higher spending by pension systems, labor costs rise, which limits the supply of jobs. In general, a good situation on the labor market supports employment of both the youngest and the oldest labor force participants. Additionally, a lower retirement age for women was maintained, which resulted to a high degree from cultural conditions and norms that are typical for traditional societies.
Until now, the banking sector has been one of the strong points of Poland’s economy. In contrast to banks in the U.S. and leading Western European economies, lenders in Poland came through the 2008 global financial crisis without a scratch, without needing state financial support. But in recent years the industry’s problems have been growing, creating a threat to economic growth and gains in living standards.
For an economy’s productivity to increase, funds can’t go to all companies evenly, and definitely shouldn’t go to those that are most lacking in funds, but to those that will use them most efficiently. This is true of total external financing, and thus funding both from the banking sector and from parabanks, the capital market and funds from public institutions. In Poland, in light of the relatively modest scale of the capital market, banks play a clearly dominant role in external financing of companies. This is why the author of this text focuses on the bank credit allocation efficiency.
The author points out that in the very near future, conditions will emerge in Poland which – as the experience of other countries shows – create a risk of reduced efficiency of credit allocation to business. Additionally, in Poland today, bank lending to companies is to a high degree being replaced by funds from state aid, which reduces the efficiency of allocation of external funds to companies (both loans and subsidies), as allocation of government subsidies is not usually based on efficiency. This decline in external financing allocation efficiency may slow, halt or even reverse the process, that has been uninterrupted for 28 years, of Poland’s convergence, i.e. the narrowing of the gap in living standards between Poland and the West.
The economic characteristics of the COVID-19 crisis differ from those of previous crises. It is a combination of demand- and supply-side constraints which led to the formation of a monetary overhang that will be unfrozen once the pandemic ends. Monetary policy must take this effect into consideration, along with other pro-inflationary factors, in the post-pandemic era. It must also think in advance about how to avoid a policy trap coming from fiscal dominance.
This paper is organized as follows: Chapter 2 deals with the economic characteristics of the COVID-19 pandemic and its impact on the effectiveness of the monetary policy response measures undertaken. In Chapter 3, we analyse the monetary policy decisions of the ECB (and other major CBs for comparison) and their effectiveness in achieving the declared policy goals in the short term. Chapter 4 is devoted to an analysis of the policy challenges which may be faced by the ECB and other major CBs once the pandemic emergency comes to its end. Chapter 5 contains a summary and the conclusions of our analysis.
Purpose: This paper tries to identify the wage gap between informal and formal workers and tests for the two-tier structure of the informal labour market in Poland.
Design/methodology/approach: I employ the propensity score matching (PSM) technique and use data from the Polish Labour Force Survey (LFS) for the period 2009–2017 to estimate the wage gap between informal and formal workers, both at the means and along the wage distribution. I use two definitions of informal employment: a) employment without a written agreement and b) employment while officially registered as unemployed at a labour office. In order to reduce the bias resulting from the non-random selection of
individuals into informal employment, I use a rich set of control variables representing several individual characteristics.
Findings: After controlling for observed heterogeneity, I find that on average informal workers earn less than formal workers, both in terms of monthly earnings and hourly wage. This result is not sensitive to the definition of informal employment used and is
stable over the analysed time period (2009–2017). However, the wage penalty to informal employment is substantially higher for individuals at the bottom of the wage distribution, which supports the hypothesis of the two-tier structure of the informal labour market in Poland.
Originality/value: The main contribution of this study is that it identifies the two-tier structure of the informal labour market in Poland: informal workers in the first quartile of the wage distribution and those above the first quartile appear to be in two partially different segments of the labour market.
This document provides a comparative analysis of the rule of law and its impact on economic development in Poland and Germany. It finds that while both countries have strong rule of law frameworks de jure, there are significant differences de facto, with Polish firms showing less trust in the state and courts compared to German firms. Empirical analysis suggests higher levels of investment and economic development in Germany can be partially attributed to firms' greater recognition of the rule of law's ability to reduce transaction costs. Erosion of the rule of law in Poland since 2015 has likely negatively impacted investment and capital accumulation compared to Germany.
The report analyzes the VAT gap in the EU-28 member states in 2018. It finds that the total VAT gap in the EU was an estimated €137 billion, representing 12.2% of the total VAT liability. This is an increase compared to 2017, when the gap was €117 billion or 11.2% of the total liability. The report examines VAT revenue, total VAT liability, and VAT gap estimates for each member state from 2014 to 2018. It also conducts econometric analysis to identify factors influencing VAT gap levels across countries.
The euro is the second most important global currency after the US dollar. However, its international role has not increased since its inception in 1999. The private sector prefers using the US dollar rather than the euro because the financial market for US dollar-denominated assets is larger and deeper; network externalities and inertia also play a role. Increasing the attractiveness of the euro outside the euro area requires, among others, a proactive role for the European Central Bank and completing the Banking Union and Capital Market Union.
Forecasting during a strong shock is burdened with exceptionally high uncertainty. This gives rise to the temptation to formulate alarmist forecasts. Experiences from earlier pandemics, particularly those from the 20th century, for which we have the most data, don’t provide a basis for this. The mildest of them weakened growth by less than 1 percentage point, and the worst, the Spanish Flu, by 6 percentage points. Still, even the Spanish Flu never caused losses on the order of 20% of GDP – not even where it turned out to be a humanitarian disaster, costing the lives of 3-5% of the population. History suggests that if pandemics lead to such deep losses at all, it’s only in particular quarters and not over a whole year, as economic activity rebounds. The strength of that rebound is largely determined by economic policy. The purpose of this work is to describe possible scenarios for a rebound in Polish economic growth after the epidemic.
A separate issue, no less important, is what world will emerge from the current crisis. In the face of the 2008 financial crisis, White House Chief of Staff Rahm Emanuel said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” Such changes can make the economy and society function better than before the crisis. Unfortunately, the opportunities created by the global financial crisis were squandered. Today’s task is more difficult; the scale of various problems has expanded even more. Without deep structural and institutional changes, the world will be facing enduring social and economic problems, accompanied by long-term stagnation.
"Many brilliant prophecies have appeared for the future of the EU and our entire planet. I believe that Europe, in its own style, will draw pragmatic conclusions from the crisis, not revolutionary ones; conclusions that will allow us to continue enjoying a Europe without borders. Brussels will demonstrate its usefulness; it will react ably and flexibly. First of all, contrary to the deceitful statements of members of the Polish government, the EU warned of the threats already in 2021. Secondly, already in mid-March EU assistance programs were ready, i.e. earlier than the PiS government’s “shield” program. The conclusion from the crisis will be a strengthening of all the preventive mechanisms that allow us to recognize threats and react in time of need. Research programs will be more strongly directed toward diagnosing and treating infectious diseases. Europe will gain greater self-sufficiency in the area of medical equipment and drugs, and the EU – greater competencies in the area of the health service, thus far entrusted to the member states. The 2021-27 budget must be reconstructed, to supplement the priority of the Green Deal with economic stimulus programs. In this way structural funds, which have the greatest multiplier effect for investment and the labor market, may return to favor. So once again: an addition, as a conclusion from the crisis, and not a reinvention of the EU," writes Dr. Janusz Lewandowski the author of the 162nd mBank-CASE seminar Proceeding.
Dla wielu rodaków europejskość Polski jest oczywista, trudno jest im nawet wyobrazić sobie, jak kształtowałyby się losy naszego kraju bez uczestnictwa w integracji europejskiej. Szczególnie młode pokolenie traktuje osiągnięty przez nas dzięki uczestnictwie w Unii ogromny postęp cywilizacyjny jako coś danego i naturalnego. Jednak świadomość tego, jaki był nasz punkt wyjścia, jaką przeszliśmy drogę i jak przyczyniły się do tego unijne działania oraz jakie wynikały z tego korzyści powinna nam stale towarzyszyć. Bez tej świadomości, starannego weryfikowania faktów i docenienia naszych osiągnięć grozi nam uleganie niesprawdzonym argumentom przeciwników integracji europejskiej i popełnienie nieodwracalnych błędów. Dla tych, którzy chcą poznać te fakty, przygotowany został raport "Nasza Europa. 15 lat Polski w Unii Europejskiej". Podjęto w nim ocenę 15 lat członkostwa Polski z perspektywy doświadczeń procesu integracji, z jego barierami i sukcesami, a także wyzwaniami przyszłości.
Raport jest wynikiem pracy zbiorowej licznych ekspertów z różnych dziedzin, od wielu lat analizujących wielowymiarowe efekty działania instytucji UE oraz współpracy z krajami członkowskimi na podstawie europejskich wartości i mechanizmów. Autorzy podsumowują korzyści członkostwa Polski w Unii Europejskiej na podstawie faktów, nie stroniąc jednakże od własnych ocen i refleksji.
This report is the result of the joint work of a number of experts from various fields who have been - for many years – analysing the multidimensional effects of EU institutions and cooperation with Member States pursuant to European values and mechanisms. The authors summarise the benefits of Poland’s membership in the EU based on facts; however, they do not hide their own views and reflections. They also demonstrate the barriers and challenges to further European integration.
This report was prepared by CASE, one of the oldest independent think tanks in Central and Eastern Europe, utilising its nearly 30 years of experience in providing objective analyses and recommendations with respect to socioeconomic topics. It is both an expression of concern about Poland’s future in the EU, as well as the authors’ contribution to the debate on further European integration.
Poland’s new Employee Capital Plans (PPK) scheme, which is mandatory for employers, started to be implemented in July 2019. The article looks at the systemic solutions applied in the programme from the perspective of the concept of the simultaneous reconstruction of the retirement pension system. The aim is to present arguments for and against the project from the point of view of various actors, and to assess the chances of success for the new system. The article offers a detailed study of legal solutions, an analysis of the literature on the subject, and reports of institutions that supervise pension funds. The results of this analysis point to the lack of cohesion between certain solutions of the 1999 pension reform and expose a lack of consistency in how the reform was carried out, which led to the eventual removal of the capital part of the pension system. The study shows that additional saving for old age is advisable in the country’s current demographic situation and necessary for both economic and social reasons. However, the systemic solutions offered by the government appear to be chiefly designated to serve short-term state interests and do not create sufficient incentives for pension plan participants to join the programme.
The document summarizes the evolution of the Belarusian public sector from a command economy to state capitalism. It discusses how the Belarusian economic model has changed over time, moving from a quasi-Soviet system based on state property and central planning, to a more flexible hybrid model where the public sector still dominates the economy. The paper analyzes the role and characteristics of the state sector in Belarus and how it has developed since independence. It considers various theoretical perspectives for understanding statist economies like Belarus, but concludes that a new multidisciplinary approach is needed to fully capture the dual nature of the Belarusian economic system.
Belarusian economy has been stagnating in 2011-2015 after 15 years of a high annual average growth rate. In 2015, after four years of stagnation, the Belarusian economy slid into a recession, its first since 1996, and experienced both cyclical and structural recessions. Since 2015, the Belarusian government and the National Bank of Belarus have been giving economic reforms a good chance thanks to gradual but consistent actions aimed at maintaining macroeconomic stability and economic liberalization. It seems that the economic authorities have sustained more transformation efforts during 2015-2018 than in the previous 24 years since 1991.
As the relative welfare level in Belarus is currently 64% compared to the Central and Eastern Europe (CEE) countries average, Belarus needs to build stronger fundaments of sustainable growth by continuing and accelerating the implementation of institutional transformation, primarily by fostering elimination of existing administrative mechanisms of inefficient resource allocation. Based on the experience of the CEE countries’ economic transformation, we highlight five lessons for the purpose of the economic reforms that Belarus still faces today: keeping macroeconomic stability, restructuring and improving the governance of state-owned enterprises, developing the financial market, increasing taxation efficiency, and deepening fiscal decentralization.
Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the reputation of central banks. Thus, central banks should not try to bring inflation back to the targeted level of 2%. Rather, they should revise the inflation target downwards and publicly explain the rationale for such a move. Risks to the independence of central banks come from their additional mandates (beyond price stability) and populist politics.
Estonia has Europe’s most transparent tax system (while Poland is second-to-last, in 35th place), and is also known for its pioneering approach to taxation of legal persons’ income. Since 2000, payers of Estonian corporate tax don’t pay tax on their profits as long as they don’t realize them. In principle, this approach should make access to capital easier, spark investment by companies and contribute to faster economic growth. Are these and other positive effects really noticeable in Estonia? Have other countries followed in this country’s footsteps? Would deferment of income tax be possible and beneficial for Poland? How would this affect revenue from tax on corporate profits? Would investors come to see Poland as a tax haven? Does the Estonian system limit tax avoidance and evasion, or actually the opposite? Is such a system fair? Are intermediate solutions possible, which would combine the strengths or limit the weaknesses of the classical and Estonian models of profit tax? These questions are discussed in the mBank-CASE seminar Proceeding no. 163, written by Dmitri Jegorov, deputy general secretary of the Estonian Finance Ministry, who directs the country’s tax and customs policy, Dr. Anna Leszczyłowska of the Poznań University of Economics and Business and Aleksander Łożykowski of the Warsaw School of Economics.
The trade war between the U.S. and China began in March 2018. The American side raised import duties on aluminum and steel from China, which were later extended to other countries, including Canada, Mexico and the EU member states. This drew a negative reaction from those countries and bilateral negotiations with the U.S. In June 2018 America, referring to Section 301 of its 1974 Trade Act, raised tariffs to 25% on 818 groups of products imported from China, arguing that the tariff increase was a response to years of theft of American intellectual property and dishonest trade practices, which has caused the U.S. trade deficit.
Will this trade war mean the collapse of the multilateral trading system and a transition to bilateral relationships? What are the possibilities for increasing tariffs in light of World Trade Organization rules? Can the conflict be resolved using the WTO dispute-resolution mechanism? What are the consequences of the trade war for American consumers and producers, and for suppliers from other countries? How high will tariffs climb as a result of a global trade war? How far can trade volumes and GDP fall if the worst-case scenario comes to pass? Professor Jan J. Michałek and Dr. Przemysław Woźniak give answers to these questions in the mBank-CASE Seminar Proceeding No. 161.
This Report has been prepared for the European Commission, DG TAXUD under contract TAXUD/2017/DE/329, “Study and Reports on the VAT Gap in the EU-28 Member States” and serves as a follow-up to the six reports published between 2013 and 2018.
This Study contains new estimates of the Value Added Tax (VAT) Gap for 2017, as well as updated estimates for 2013-2016. As a novelty in this series of reports, so called “fast VAT Gap estimates” are also presented the year immediately preceding the analysis, namely for 2018. In addition, the study reports the results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). It also scrutinises the Policy Gap in 2017 as well as the contribution that reduced rates and exemptions made to the theoretical VAT revenue losses.
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3. CASE Network Studies & Analyses No.445 – EU-Ukraine DCFTA: the Model for Eastern Partn ...
2
Contents
Abstract .......................................................................................................................... 4
1. Introduction ............................................................................................................. 5
2. Current status of economic relations between EU and EaP ............................... 6
2.1. Trade links ....................................................................................................... 6
2.2. Trade regime .................................................................................................... 8
3. EU-Ukraine DC FTA: main provisions, expected benefits and costs ............... 11
3.1. Key points of the DCFTA .............................................................................. 11
3.2. Benefits and costs of the DCFTA ................................................................. 16
3.3. Stages of enactment of the of the Agreement ............................................ 18
4. Implications for EaP: status of regulatory reforms and path ahead ................. 19
5. Conclusions .......................................................................................................... 23
4. CASE Network Studies & Analyses No.445 – EU-Ukraine DCFTA: the Model for Eastern Partn ...
Veronika Movchan: Academic Director, the Institute for Economic Research and Policy
Consulting – IER (Kyiv, Ukraine); graduated from the National University “Kyiv-Mohyla
Academy” (Ukraine). Research interests: trade policy, including WTO-related issues, regional
integration, non-tariff measures, quantification of trade policy instruments, and impact
assessment of policy changes.
Volodymyr Shportyuk: Docent, Department of Finance, Economic Faculty, National University
“Kyiv-Mohyla Academy”; graduated from the Shevchenko National State University (Ukraine);
candidate of science in mathematics and physics. Research interests: economic modeling and
impact assessment, random processes, game theory.
3
5. CASE Network Studies & Analyses No.445 – EU-Ukraine DCFTA: the Model for Eastern Partn ...
4
Abstract
The EU has been one of the largest trade partners for so called Eastern Partnership (EaP)
countries, namely Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Commodity
turnover of these countries with the EU vary between 30% and 50% of total, but their access to
the EU market is less preferential than for many other neighboring countries. They trade with the
EU on the basis of MFN regime, and five EaP countries, with exemption of Belarus, use
privileges provided by Generalized System of Preferences (GSP) or the GSP+ or autonomous
trade preferences (Moldova).
With the launch of EaP initiative in 2009, relations between the EU and the Eastern European
countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) have received new
impetus for development. The EaP offers upgrade of relations within three major dimensions,
namely (a) the Association Agreement (AA), (b) Agreement on a Deep and Comprehensive Free
Trade Area (DCFTA), and (c) Visa Facilitation and Readmission agreements.
The AA talks have been launched with all EaP countries expect for Belarus, and four of them
have been involved in the DCFTA talks. Ukraine has progressed the most, as after five years of
negotiations the EU-Ukraine Association Agreement with embedded DCFTA has been initialed
in 2012.
The aim of this study is to assess gains and losses that could arise from the DCFTA with the EU
for the EaP countries, using information about EU-Ukraine DCFTA as model case for EaP
regional trade cooperation.
The focus of the paper is on non-tariff (regulatory) component of the EU DCFTA and potential
implications of regulatory approximation. Also, current level of harmonization of EaP countries’
regulatory framework with the EU acquis in the areas related to the DCFTA is analyzed.
6. CASE Network Studies & Analyses No.445 – EU-Ukraine DCFTA: the Model for Eastern Partn ...
5
1. Introduction
Former Soviet Union (SU) countries could be tentatively grouped into four categories depending
on peculiarities of their relations with the EU. Estonia, Latvia and Lithuania form the first
category of countries that have been already integrated in the EU. The second category
comprised of six countries – Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine –
could be tentatively labeled “neighbors”. These countries, except for Belarus, have signed
Partnership and Cooperation Agreements (PCA) with the EU, and are involved in the European
Neighborhood Policy (ENP) and, recently, in the Eastern Partnership (EaP). The Russian
Federation is categorized separately as “special neighbor”. Its relation with the EU features New
Agreement talks and dialog on the Common Economic Space. Finally, Central Asian republics of
the former SU – Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, Turkmenistan – constitute the
fourth category of countries that are currently “not in focus” of the EU foreign policy in the region.
These countries have only PCA with the EU (except for Turkmenistan).
In this paper, we focus on the EaP countries. The EaP initiative1 was launched in 2009 in
Prague, creating additional opportunities for cooperation between the EU and its Eastern
neighbors. The EaP offers upgrade of relations within three major dimensions, namely:
• Association Agreement (AA),
• Agreement on a Deep and Comprehensive Free Trade Area (DCFTA), and
• Visa Facilitation and Readmission agreements.
The AA talks have been launched with all EaP countries expect for Belarus, and four of them
have been involved in the DCFTA talks. Ukraine has reached the most, as after five years of
negotiations the EU-Ukraine Association Agreement with embedded DCFTA has been initialed
in March 2012.
The aim of this study is to assess gains and losses that could arise from the DCFTA with the EU
for the EaP countries, using information about EU-Ukraine DCFTA as the model case for EaP
regional trade cooperation.
1 See details at: http://eeas.europa.eu/eastern/index_en.htm
7. CASE Network Studies & Analyses No.445 – EU-Ukraine DCFTA: the Model for Eastern Partn ...
The focus of this paper is on non-tariff (regulatory) component of the EU DCFTA and potential
implications of regulatory approximation. Also, current level of harmonization of EaP countries’
regulatory framework with the EU acquis in the areas related to the DCFTA is analyzed.
The rest of the paper is organized as follows. Section 2 reviews current status of economic
relations with the EU and the EaP countries. Section 3 provides details of the EU-Ukraine
DCFTA as well as analyses benefits and costs of the agreement. Section 4 is focused on how
other five EaP countries are prepared for regulatory approximation with the EU acquis in
spheres related to the DCFTA assuming that the same scheme is applied as in the case of
Ukraine. Section 5 concludes.
6
2. Current status of economic relations between EU and
EaP
2.1. Trade links
The EU – the largest regional market – has been important trade partner for all the EaP
countries.2 In 2010, the EU-27 was “number one” partner in both merchandize exports and
imports for four EaP countries (Armenia, Azerbaijan, Georgia and Moldova). For Belarus and
Ukraine, the EU was the second largest trade partner after the Russian Federation.
On average, merchandize trade turnover with the EU constitutes about one third of total EaP
countries’ turnover. Exact figures vary between 19% and 51% of total for merchandize exports
and between 21% and 43% of total for merchandize imports (Figure 1), with the highest EU
merchandize trade orientation observed in the case of Moldova and Azerbaijan, and the lowest
in cases of Belarus and Georgia.
2 Movchan V. “Trade in Goods, Services and FDI: Current State” // European Integration Index for Eastern Partnership
Countries. International Renaissance Foundation, May 2012. Available at: http://www.eap-index.eu/
8. CASE Network Studies & Analyses No.445 – EU-Ukraine DCFTA: the Model for Eastern Partn ...
Figure 1. Role of the EU as merchandize trade partners for the EaP countries, average for
7
2009-2011
60
50
40
30
20
10
0
%
ARMENIA AZERBAIJAN BELARUS GEORGIA MOLDOVA UKRAINE
three year average for EXPORTS' share three year average for IMPORTS' share
Source: DG Trade, http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries-and-regions/
Analysis of merchandize structure of exports to and imports from the EU shows that intra-industry
trade has quite small share of trade flows, and thus the structures of exports and
imports significantly differ. The EaP exports to the EU are dominated by primary (non-processed)
products and semi-manufactures, like energy or metals, while the EaP countries
import mostly final products from the EU.
The high share of final products in exports to the EU is observed only in Moldova (over 50%),
largely because of high share of textile and clothing in exports. For other EaP countries
respective shares vary between zero and 15%. The exports of machinery and transport
equipment to the EU occupy noticeable share only for two EaP countries, namely Ukraine and
Moldova.
On the contrary, shares of final products, especially machinery and transport equipment, in the
EaP countries’ imports from the EU vary from 40% to 70% of total. The EU plays important role
in modernization of the EaP economies, supplying capital equipment and organizational know-how
associated with them.
9. CASE Network Studies & Analyses No.445 – EU-Ukraine DCFTA: the Model for Eastern Partn ...
The highest share of primary products exports to the EU is registered for Azerbaijan (over 99%
of total exports) and Georgia due to high energy product exports.
Weight of the EU as service trade partner is less homogeneous across EaP countries. Service
trade turnover between the EU and total for four smaller EaP countries: Armenia, Azerbaijan,
Georgia and Moldova. The respective shares for two larger countries – Belarus and Ukraine –
are over 40%.
While the EU occupies leading positions in trade structures of EaP countries, these countries
play very moderate role as the EU trade partners. Altogether, six countries of the region account
for about 2% of EU merchandize trade turnover and 0.4% of EU service trade turnover.
Ukraine has been the largest trade partner for the EU among the EaP countries. It accounts
about 1.0% of EU merchandize trade turnover (2009-2011 average) and less than 0.3% of EU
service trade turnover. Armenia has the lowest weight in the EU merchandize and service trade
turnover.
Apart from trade links, the EaP countries, especially Moldova and Ukraine, heavily rely on the
EU investments. The share of the EU in total inward stock of foreign direct investments (FDI) of
the EaP countries varies between 30% and 80%.
8
2.2. Trade regime
Trade regimes between the EaP countries and the EU are determined by several categories of
normative acts, namely bilateral PCAs (for Belarus, Trade and Economic and Commercial
Cooperation Agreement), WTO rules and practices (except for Belarus and Azerbaijan), and
unilateral trade preferences provided by the EU.
In line with the PCAs provisions and WTO rules, the EU and EaP countries accord each other
the most favored treatment in merchandize trade. Furthermore, the most of the EaP countries
enjoy additional preferences in access to the EU market, being eligible either to the Generalized
System of Preferences (GSP)3 or even the GSP+.4 These preferences are non-reciprocal, and
provided by the EU to developing countries with primary aim to contribute to the reduction of
3 The GSP is an autonomous trade arrangement through which the EU provides non-reciprocal preferential access to
the EU market. The system allows exporters from developing countries to pay lower duties on some or all of what they
sell to the EU. It envisages duty-free access for non-sensitive products, and a reduction in import duties for sensitive
products. See details at http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/
4 The GSP+ constitutes additional preferences available to vulnerable Developing Countries as an incentive for them
to ratify and effectively implement a set of key international conventions. These represent widely recognized
international standards in the fields of core human rights and labor standards, sustainable development and good
governance. See details at http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/
10. CASE Network Studies & Analyses No.445 – EU-Ukraine DCFTA: the Model for Eastern Partn ...
poverty and the promotion of sustainable development and good governance in these
countries.5
Five EaP countries – Armenia, Azerbaijan, Georgia, Moldova, and Ukraine – are eligible for the
GSP. Preferences to Belarus were temporary withdrawn in December 2006 in response to a
systematic and serious violation of the core principles of the International Labor Organization.6
Armenia, Azerbaijan, and Georgia enjoy preferences provided by the GSP+, while Moldova has
been entitled to Autonomous Trade Preferences (ATPs) above the level of GSP+ starting as of
March 2008. The ATPs have provided unlimited and duty free access to the EU market for all
products originating in Moldova, except for certain agricultural products.7
9
Table 1. EU Generalized System of Preferences, 2008
ARMENIA AZERBAIJAN BELARUS GEORGIA MOLDOVA UKRAINE
Share of trade
with EU under
MFN, %
45.33 99.76 99.63 64.62 27.01 80.85
including
= 0 tariff rates 43.20 99.60 91.54 58.32 19.82 73.11
> 0 tariff rates 2.13 0.16 8.09 6.30 7.19 7.74
Share of trade
54.66 0.23 0.00 34.31 15.80 18.41
with EU eligible
for GSP/GSP+ %
including
= 0 tariff rates 53.74 0.19 0.00 34.31 15.71 9.54
> 0 tariff rates 0.92 0.04 0.00 0.00 0.09 8.87
Total share of
zero-tariff trade
96.94 99.79 91.54 92.63 89.15 82.65
Level of
preference
utilization,%
96.21 71.25 0.00 92.52 90.78 84.89
Source: Mid-term Evaluation of the EU’s Generalised System of Preferences. Available at:
http://trade.ec.europa.eu/doclib/docs/2010/may/tradoc_146195.pdf
5 Movchan V. “Trade Policy” // European Integration Index for Eastern Partnership Countries. International
Renaissance Foundation, May 2012. Available at: http://www.eap-index.eu/
6 See details at: http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/belarus/
7 See details at: http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/moldova/
11. CASE Network Studies & Analyses No.445 – EU-Ukraine DCFTA: the Model for Eastern Partn ...
All the EaP countries except Belarus features rather high level of GSP utilization (Table 1).8
However, the share of trade with the EU eligible for GSP/GSP+ varies significantly for these
countries. Georgia and Armenia enjoy the highest eligibility level, while Azerbaijan faces the
lowest share (due to its energy exports not covered by the GSP). As said above, Belarus is
temporarily withdrawn from the GSP preferences.
The actual level of tariff protection faced by the EaP countries in the EU is determined by the EU
Import Tariff Schedule, eligibility to existing EU unilateral preferential schemes, bilateral
agreements, as well as the merchandize structure of the country’s exports to the EU.
Among the EaP countries, Moldova’s exporters face the lowest level of tariff protections in the
EU thanks to the ATPs, while Belarus and Ukrainian exporters face the highest (Table 2). In
turn, the EU exporters have to deal with the highest tariffs in Belarus (reciprocity principle) and in
Azerbaijan. The lowest imports tariffs on the EU products are applied in Georgia. Both the EU
and the EaP countries tend to have higher import tariffs on agricultural products as compared to
industrial goods.
10
Table 2. Applied tariffs in trade between the EU and the EaP, 2011
ARMENIA AZERBAIJAN BELARUS GEORGIA MOLDOVA UKRAINE
Applied tariff rate on goods exported to the EU
agricultural tariff
rate
5.22 5.22 9.97 5.22 2.36 7.42
industrial tariff
rate
0.11 0.11 2.86 0.11 0.01 1.19
Applied tariff rate on goods from the EU
agricultural tariff
rate
7.15 10.92 13.57 5.57 8.87 6.12
industrial tariff
rate
2.26 6.49 7.74 0.45 1.97 2.45
Source: Market Access Map http://www.intracen.org/marketanalysis/MAcMap.aspx
Azerbaijan, Belarus and Ukraine apply export tariffs that affect also exports to the EU. The list of
products subject to export tariffs includes metals and metal scrap (Azerbaijan and Ukraine),
mineral products (Belarus and Ukraine), and selected other sensitive raw materials like oil seeds
and skins (Ukraine), wood (Belarus). The EU doesn’t apply export tariffs.
8 CARIS (2010) Mid-term Evaluation of the EU’s Generalised System of Preferences. Available here:
http://trade.ec.europa.eu/doclib/docs/2010/may/tradoc_146195.pdf
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Trade defense measures have been rarely used in trade between the EU and the EaP
countries.9 Among the EaP countries, majority of currently registered cases are between Ukraine
and the EU. These measures were adopted mostly a decade ago, that is before the EU granted
Ukraine market economy status, and Ukraine became the member of the WTO.
3. EU-Ukraine DC FTA: main provisions, expected benefits
11
and costs
3.1. Key points of the DCFTA
According to publicly available information,10 the DCFTA Section of the Association Agreement
contains 15 chapters and over 20 protocols, annexes, addendums and declarations. These
Chapters concern:
1. National treatment and access to market of goods
2. Trade defense measures
3. Technical barriers to trade
4. Sanitary and phyto-sanitary measures
5. Customs issues and trade facilitation
6. Right of establishment, services, e-commerce
7. Current payments and capital movement
8. Public procurement
9 See details at: http://ec.europa.eu/trade/tackling-unfair-trade/trade-defence/
10 The text of the DC FTA agreement is closed to public. Our analysis is relied on open sources, mainly on interviews
with representatives of negotiating teams, including the following sources:
http://delo.ua/ukraine/o-chem-dogovorilas-ukraina-s-evrosojuzom-otnositelno-zony-svobod-167053/;
http://dt.ua/POLITICS/valeriy_pyatnitskiy_duzhe_hochetsya,_schob_tsya_ugoda_vidbulasya-90518.html;
http://news.dt.ua/ECONOMICS/ukrayina_i_es_domovilisya_pro_kvoti_na_bezmitniy_eksport_agroproduktsiyi-
88464.html
Also, we use information provided in “EU-Ukraine Association Agreement: Guideline for Reforms” Edited by
O.Sushko. KAS Policy Paper No.20, Kyiv, 2012; Zarembo K. (2012) EU-Ukraine DCFTA: What do oligarchs think?
Policy Brief #1/2012. Institute of World Policy, available at: www.iwp.org.ua; Dabrowski M., Taran S. (2012) The Free
Trade Agreement between the EU and Ukraine: Conceptual Background, Economic Context and Potential Impact.
No.437/2012. CASE Network Studies & Analyses. Available at: http://www.case-research.
eu/sites/default/files/publications/CNSA_2012_437.pdf; Oxford Economics (2012) Ukraine-EU Trade
Relations (forthcoming)
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12
9. Intellectual property
10. Competition policy (anti-monopoly measures, state aid)
11. Trade relations in energy
12. Transparency
13. Trade and sustainable development
14. Dispute settlement
15. Intermediation mechanism
Below we discuss main provisions of the Agreement between Ukraine and the EU.
Liberalization of trade in goods
The DCFTA envisages major liberalization of import duties. It is expected that about 95% of tariff
lines will be set at zero in bilateral trade, while for the rest of tariff schedule duties will be
reduced or tariff quotas with zero tariffs inside introduced.
Import duties and tariff quotas: Full liberalization will be achieved in industrial goods trade.
The EU committed to apply zero duties on all industrial products imported to the EU from
Ukraine from the date when the Agreement comes into force. Ukraine will gradually reduce its
import duties on industrial products over transition periods. After expiration of transition periods
and special regime periods, that is in 15-year period from the date when the Agreement comes
into force, final import duties in Ukraine will be set at zero for all industrial products.
Special regimes are applied to imports of several industrial goods to Ukraine, namely to
passenger cars (HS 8703) and second-hand clothing. In case of passenger cars, a gradual
reduction in import duties could be temporary counterweighted by introduction of import
surcharge. In the case of second-hand clothing, special estimated customs value will be
introduced, and the value of imported second-hand clothing is to be above this estimated
customs value.
As of trade in agricultural products, trade will be significantly liberalized but some import duties
will be preserved. However, the EU agreed to provide substantial quotas on duty-free exports of
key Ukrainian agricultural products.11 In particular, the parties agreed on:
11 According to information provided by Mykola Prysyazhnyuk, Minister of Agrarian Policy and Food of Ukraine.
Available at:
http://news.dt.ua/ECONOMICS/ukrayina_i_es_domovilisya_pro_kvoti_na_bezmitniy_eksport_agroproduktsiyi-
88464.html
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- Duty-free quota for grain exports amounted to 1.6 million tons in the first year of the
Agreement implementation, with gradual increase to 2.0 million tons in the fifth year. The
composition of quota will be the following: wheat – 0.950 million tons in the first year (1.0
million tons in the fifth year), corn – 0.250 million tons in the first year (0.350 million tons
in the fifth year), barley – 0.400 million tons in the first year (0.650 million tons in the fifth
year).
- Duty-free exports for meat and meat products amounted to 20 thousand tons of frozen
fowls (not cut) and 16 thousand tons of other fowl meat products (20 thousand tons in the
fifth year), 3 thousand tons of eggs and 3 thousand tons of egg products, 12 thousand
tons of meat of bovine animals, and 40 thousand tons of swine meat.
- Duty-free exports of sugar and sugar products, including 30 thousand tons for sugar and
13
27 thousand tons for molasses and sugar syrup.
Tariff quotas with duty-free exports within quota are envisaged for a number of other agricultural
products including some dairy products, cereals, honey, selected vegetables and juices.
In turn, Ukraine will gradually liberalize import duties on agricultural products within quite long
transition periods. For majority of agricultural products, zero import tariffs are envisaged in the
end of transition.
Export duties: Elimination of export duties by Ukraine was among red tapes for the EU in the
DCFTA talks. Parties agreed that Ukraine will eliminate its export duties over the 10-year period.
At the end of transition, there would be no export duties in EU-Ukraine bilateral trade.
At the same time, the Agreement introduces temporary surcharge on several products currently
subject to export duties. These surcharges will be applied to sunflower seeds, skins and non-ferrous
metal scrap over the first 15 years of the Agreement implementation. The surcharges will
be different for each product.
Export subsidies: Currently Ukraine doesn’t apply export subsidies and – according to the
WTO commitments – will not be able to apply them in the future. To remove trade distortions,
the EU committed to remove agricultural export subsidies in the trade with Ukraine by changing
respective EU acquis.
Trade defense measures
The Agreement allows applying all standard trade defense measures like anti-dumping,
safeguard and countervailing measures in EU-Ukraine bilateral trade in line with the WTO rules
and practices. These measures will be applied in accord with the respective WTO Agreements,
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in particular Articles VI and XIX of GATT 1994, Agreement on Safeguards, Agreement on
Implementation of Article VI (antidumping), and Agreement on Subsidies and Countervailing
Measures.
In addition, Ukraine and the EU agreed to establish transparency requirements, mechanisms for
revision and consultations, as well as to apply ‘lower rate’ rules for antidumping and safeguard
duties.
Special trade defense measures could be applied to imports of passenger cars over 15-year
period from the date when the Agreement comes into force. If imports of passenger cars from
the EU surpass two specific thresholds, namely 45 thousand cars per year and 20% (later on,
25%) share of the domestic market, trade defense measures could be implemented in form of
surcharge.
14
Establishment of Businesses, Trade in Services and E-Commerce
Establishment of business, trade in services and e-commerce related issues constitute important
part of the Agreement, building upon already quite liberal service trade regimes applied both in
the EU and Ukraine.
According to available information, the DCFTA envisages mutual liberalization of business
establishment and cross-border service provision in majority of sectors, excluding mining,
manufacturing and processing of nuclear materials, manufacture and trade of weapons,
audiovisual services and various service sectors related to air transportation. Major liberalization
is expected in financial sector and communication.
Also, the DCFTA contains provisions liberalizing entry and temporary stay for certain categories
of service provides. Currently in Ukraine the forth mode of service supply has remained unbound
except for horizontal limitation that the entry and temporary stay in Ukraine of a foreign supplier
requires a permit for temporary stay or a work permit.12
Protection of intellectual property rights
In the sphere of intellectual property rights (IPR) considerable reforms are envisaged, aimed at
establishment innovation-conducive and efficient level of IPR protection. The DCFTA contains
Ukraine’s commitment to approximate its IPR protection legislation with the EU acquis.
12 Report of the Working Party on the Accession of Ukraine. Addendum. Part II - Schedule of Specific Commitments in
Services. Available at: https://www.wto.org/english/thewto_e/acc_e/a1_ukraine_e.htm
16. CASE Network Studies & Analyses No.445 – EU-Ukraine DCFTA: the Model for Eastern Partn ...
During the DCFTA talks particular public attention had been paid to geographical indications, the
special legal identity given to products that are closely linked to a particular place and tradition of
production. According to available information, Ukraine committed to abandon usage of
geographical indications that belong to the European producers. It means that Ukraine will
refrain from usage of approximately 3000 names of products including nearly 15 ones currently
used by Ukrainian producers (for example, cognac, champagne, certain brands of cheese - feta,
Roquefort, etc.). However, 10-year transition period is envisages for implementation of
commitment regarding geographical indications. Moreover, the EU will provide compensation
package to the Ukrainian producers that would suffer from these provisions of the DCFTA.
15
Reforms in TBT and SPS spheres
The DCFTA envisages considerable convergence of Ukraine’s regulatory framework in TBT and
SPS area, including approximation to EU procedures in standardization, metrology,
accreditation, and conformity assessment. Ukraine committed to implement principles and
practices embedded in a number of TBT and SPS related EU Directives.
Ukraine committed to conduct administrative and institutional reforms required for
implementation of the Agreement on Conformity Assessment and Acceptance of Industrial
Products (ACAA). The Parties agreed to include the ACAA as addendum to the DCFTA.
In TBT sphere, the country will gradually embed European standards into national standards,
eliminate national standards that contradict European standards, including intrastate standards
(GOSTs) adopted before 1992.
In SPS sphere, the DCFTA envisages an establishment of the Committee on SPS Management
for regular monitoring of approximation progress and development of recommendations. Also,
the Committee on SPS Management will officially approve an equivalence of SPS measures in
Ukraine and the EU, after this equivalence will be tested in accordance with specially designed
procedures described in the annex of the Agreement.
Ukraine will ensure participation of its public bodies in European and international organizations
dealing with standardization, metrology and conformity assessment. In particular, Ukraine will
fulfill all requirements necessary to become a full-fledge member of the European Standards
Organizations.
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16
Other Regulatory changes
Strong regulatory component is a distinguishing feature of the DCFTA. Already at the beginning
of the talks, it was stated that the deepness of the DCFTA is to be achieved by elimination of
'behind the border' obstacles to trade through processes of regulatory approximation, thus
partially opening/extending the EU internal market to Ukraine.13 Apart from TBT, SPS and IPR
spheres, major regulatory reforms are expected in Ukraine’s competition policy, state aid, public
procurement, and sustainable development covering ecological, labor and social issues.
The DCFTA doesn’t contain exact details of legal approximation, but makes references to the
respective EU Directives. The Ukrainian government is responsible for embedment of key
principles and parameters of the Directives into the national legislation and for their proper
implementation.
For Ukraine it is important that that the country will receive EU technical and financial assistance
to implement these reforms, lowering associated fiscal and administrative burden.
3.2. Benefits and costs of the DCFTA
Analysis of benefits and costs of the implementation of the DCFTA with the EU shows that the
DCFTA would bring important benefits for Ukraine including:14
Improved welfare through better access to higher variety of products, stricter safety
requirements for products on domestic market, and higher incomes in long-run thanks to
new business opportunities and more efficient domestic resource allocation;
Duty-free access to the largest world market for vast majority of Ukrainian products
creating significant business opportunities. The EU GDP measured in purchasing power
parity (PPP) reached USD 15.65 trillion in 2011, while same indicator for the custom
union between Russia, Belarus and Kazakhstan (RBK CU) was USD 2.76 trillion; the
potential economic gains from any regional integration project are positively correlated
with the size of the market with which this integration occurs;
Better access to the third-countries markets through harmonization of standards with
the EU and thus acquisition of internationally acceptable standards;
13 See at: http://ec.europa.eu/delegations/ukraine/eu_ukraine/trade_relation/free_trade_agreement/index_en.htm
14 Movchan, Giucci and Kutsenko (2010) “Trade policy in Ukraine: Strategic aspects and next steps to be taken”,
Policy Paper 02, April 2010. Available at: www.ier.com.ua; Movchan V., Guicci R. (2011) “Quantitative Assessment of
Ukraine’s Regional Integration Options: DCFTA with European Union vs. Customs Union with Russia, Belarus and
Kazakhstan” Policy Paper 05, November 2011. Available at: www.ier.com.ua
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Better domestic investment climate thanks to embedment of the EU acquis into
national legislation. These changes would result in creation of regulatory environment
familiar to foreign investors and thus more attractive for them.
17
However, these benefits would come at important costs that include:
Higher domestic competition due to elimination of tariff barriers and a significant
reduction in non-tariff barriers resulting in market restructuring and reallocation of factors
of production. Although higher competition is definitely beneficial for the country in the
medium-term, short-term effects of reallocations could be painful;
Increased standard obedience costs, as the EU standards are generally more
stringent and thus compliance with them would require more efforts and expenses. It
relates both to TBT and SPS standards, as well as “social” standards like occupational
safety requirements, environmental standards, social security;
Costs associated with legal and administrative adjustments taking into account that
immediate costs could be rather high (establishment of independent regulatory bodies,
introduction of new – likely technologically more advanced – procedures, etc.);
Mitigation costs related to the DCFTA, primarily for implementation of an active labor
market policy that will be needed to mitigate effects associated with labor reallocation in
process of economic restructuring.
Summing up, the DCFTA with the EU seems to have important medium- to long-term benefits
for Ukraine, but is likely to bear short-term costs. However, some of these costs are likely to be
shared with the EU as it is ready to provide necessary technical assistance.
Economic impact of the establishment of the DCFTA between the EU and Ukraine could be
demonstrated by computable general equilibrium (CGE) modeling results.
According to IER studies,15 the EU-Ukraine FTA results in net welfare gains for Ukraine both in
case of simple FTA (mutual elimination of import tariffs) and in case of the DCFTA (mutual
elimination of import tariffs plus regulatory approximation and improvement of customs and other
procedures modeled as reduction in border dead-weight costs on trade). Specifically, in case of
15 IER (2011) Ukraine’s trade policy choice: pros and cons of different regional integration options. Analytical Report.
Available at: www.ier.kiev.ua; Movchan V., Giucci R. (2011) “Quantitative Assessment of Ukraine's Regional
Integration Options: DCFTA with European Union vs. Customs Union with Russia, Belarus and Kazakhstan”, Policy
Paper PP/05/2011, November 2011. Available at: www.ier.kiev.ua; Movchan V., Shportyuk V. (2011) “Between two
unions: optimal regional integration strategy for Ukraine” Presented at the Thirteenth Annual Conference of the
European Trade Study Group (ETSG) September 8-10, 2011, Copenhagen, Denmark
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the establishment of simple FTA with the EU the total welfare of Ukraine increase by 1.3% in the
medium run and by 4.6% in the long run ceteris paribus, while for the DCFTA welfare increase
would be 4.3% and 11.8% respectively.
These results are comparable with other studies of the impact of trade regime changes in
Ukraine. According to the CEPS,16 the simple FTA would lead to negligible welfare gains, while
for the deep FTA results in gains at 4-7%. Also, CASE researchers concluded that the positive
welfare effects are largest in the extended FTA between Ukraine and the EU. 17 They estimated
that the integration leads to 2% increase in welfare for Ukraine using static model formulation.
18
3.3. Stages of enactment of the of the Agreement
Technical completion of the EU-Ukraine DCFTA negotiations was announced in October 2011.
In December 2011, the parties made official announcement regarding the completion of
negotiations on Association Agreement in general, including its DCFTA component.
Officially, the Association Agreement was initialed in English in March 2012. However, de-facto
the process of initialization was prolonged till summer as although technical editing of the
DCFTA and economic cooperation sections of the Agreements has been continued after March.
After the text is initialed, there are several more steps needed for its enactment. First, it has to
be signed. Next, it has to be ratified. There are different procedures for ratification of the DCFTA
and economic cooperation sections of the Association Agreement and the rest of the text. The
ratification of the DCFTA and several other economy-related issued will be in the competence of
the European Parliament, while the rest of the Association Agreement will undergo process of
the ratification by the national parliaments of the EU member countries. Therefore, it is quite
likely that the DCFTA component could be enacted well before the entire Association Agreement
is ratified.
16 CEPS (2006). The Prospect of Deep Free Trade Between the European Union and Ukraine. Report prepared by
Centre for European Policy Studies (CEPS), Brussels; Institut fur Weltwirtschaft (IFW), Kiel; International Centre for
Policy Studies (ICPS), Kyiv
17 CASE (2007). Global Analysis Report for the EU-Ukraine TSIA. Ref: TRADE06/D01. Concept Global Analysis
Report prepared by ECORYS and CASE
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19
4. Implications for EaP: status of regulatory reforms and
path ahead
As discussed in Section 3, the level of applied tariff protection between the EU and the EaP
countries (except for Belarus) is quite low, and thus impact of tariff liberalization will be relatively
small on average, although definitively some industries will experience significant impact. Still, it
is expected that the most of benefits and costs associated with the DCFTA will be generated by
elimination of non-tariff barriers that is by regulatory approximation.
To understand the level of the EaP countries’ readiness for the DCFTA negotiations and
implementation, we compare the level of regulatory approximation to the EU acquis. The
analysis has been done on the basis of information collected by experts within the project
“European Integration Index for Eastern Partnership Countries” funded by the International
Renaissance Foundation and Open Society Institute.18
WTO membership
The WTO membership is the prerequisite for the DCFTA negotiations with the EaP countries.
The most of the EaP countries have already joined this international organization, including
Armenia, Georgia, Moldova and Ukraine. Azerbaijan and Belarus are negotiating accession.
Trade defence measures
Almost all of the EaP countries have been prepared for proper implementation of trade defense
measures. The members of the WTO (Armenia, Georgia, Moldova and Ukraine) have joined
respective WTO Agreements and obliged to apply the WTO rules. Also, these countries as well
as Belarus have necessary national legislation and national authority responsible for
investigation.
However, Azerbaijan doesn’t have necessary national legislation and national authority
responsible for investigation of antidumping and unfair competition practices related to foreign
trade.
Summing up, approximation of legislation in the sphere of trade defense measures should not
create major problems for all the EaP countries except for Azerbaijan.
18 See at: http://www.eap-index.eu/
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20
Protection of intellectual property rights
General framework for the trade-related protection of the intellectual property rights has been
already established in the EaP countries. All of them are the members of the WIPO and
participate in the WIPO-administered treaties. All EaP countries - WTO members are obliged to
obey TRIPS that created common minimal ground for intellectual rights protection enforcement
in the countries.
Although implementation of protection of intellectual property rights has been traditionally quite
low in the region, only Moldova has been in the list of the countries with low protection of the
intellectual property rights. Thus, the EaP countries are relatively well prepared for the
intellectual right protection talks.
But negotiations related to geographical indications could be the most sensitive for the EaP
countries as it was in Ukraine. All the EaP countries have national legislation on geographical
indications, but there are a limited number of registered geographical indications in the countries
and in the most of these countries there are conflicting EU geographical indications used by
national producers. In Ukraine, Moldova and Georgia national producers voluntary or on the
basis of international agreements have been phasing out the use of the EU GIs. There is no
process like this in other EaP countries.
Reforms in TBT and SPS spheres
Approximation of national legislation and practices in the TBT and SPS spheres is expected to
be one of the most necessary and, at the same time, the most costly for the EaP countries.
The EaP countries - WTO members signed respective WTO TBT and SPS Agreements that
created a common denominator for national regulation, although proper implementation of the
Agreements’ provisions remains a reason for concern.
In the TBT sphere, issues of approximation/harmonization of national technical regulations and
standards with international regulations and practices as well as conformity assessment
procedures and market surveillance have been on reform agenda for all the EaP countries.
According to information collected by project “European Integration Index for Eastern
Partnership Countries” funded by the International Renaissance Foundation and Open Society
Institute, a number of New Approach Directives implemented in the EaP countries is very limited.
Ukraine is the leader with 5 Directives, while in Belarus, Armenia and Azerbaijan no directives
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have been implemented so far. Three of out of six EaP countries – Belarus, Azerbaijan and
Ukraine19 - have mandatory implementation of standards.
Apart from Ukraine, no EaP countries have even started negotiations on the ACAA with the EU.
Market surveillance mechanism is non-compliant with the EU practices and rules. In all the EaP
countries, the requirements towards national market surveillance authority are non-complaint
with the EU legislation. 20 Also apart from Ukraine, the national market surveillance legislation is
incompatible with the EU aquis.
In the SPS area, situation has been even more difficult. The EU doesn’t have mutually
recognized equivalence of requirements applied to any sector or product with any the EaP
country. The EU doesn’t recognize (in the official opinions of DG SANCO or other authorities)
that national food safety authority of any the EaP country is compatible with EU requirements.
The same statement is truth for compatibility of general national food safety legislation with EU
requirements.
Very limited number of the EaP countries’ establishments has a right to export to the EU
products of animal origin. In Ukraine, 96 national establishments obtained this right, in Belarus –
66, in Moldova – 15, and in Armenia – 5. Georgian and Azeri national establishments have not
received this right.
In majority of the EaP countries, implementation of the HACCP (Hazard Analysis and Critical
Control Points) is not legally binding for national producers. Only in Ukraine, the HACCP
implication is legally binding, although de-facto its implementation is very limited. Also Armenian
fish producers are obliged to implement the HACCP.
Summing up, all the EaP countries have to implement extensive reforms to
approximate/harmonize its national legislation and practices with the EU asquis in the spheres of
TBT and SPS. However, these reforms are most crucial for getting better access to the EU
market and for gathering expected DCFTA benefits. Without these changes, benefits of the
DCFTA related to non-tariff barriers reduction would be foregone.
19 Formally, rule about obligatory application of standards is not repealed.
20 Requirements to institutions, set out in Decision No.768/2008/EC of the European Parliament and of the Council of
9 July 2008 on a common framework for the marketing of products, and repealing Council Decision 93/465/EEC (OJ L
218, 13.8.2008, p. 82–128) and Regulation (EC) No 765/2008 of the European Parliament and of the Council of 9 July
2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products and
repealing Regulation (EEC) No 339/93 (OJ L 218, 13.8.2008, p. 30–47).
21
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22
Other Regulatory changes
All the EaP countries seem to be quite highly prepared to DCFTA talks related to customs
regulation and trade facilitation issues. All six countries are members of the World Customs
Organization. Majority of countries ratified necessary international treaties and conventions
(Table 4).
Table 4. International treaties and conventions ratified by the EaP countries in the sphere
of customs regulation and trade facilitation
ARMENIA AZERBAIJAN BELARUS GEORGIA MOLDOVA UKRAINE
Framework of Standards to
Secure and Facilitate Global
Trade
Yes yes yes yes yes yes
Istanbul Convention on
temporary admission
No no yes yes yes yes
HS Convention Yes yes yes yes yes yes
UN TIR Convention Yes yes yes yes yes yes
1982 Convention on
Yes yes yes yes yes yes
harmonization of frontier
controls of goods
Revised Kyoto Convention
on the simplification and
harmonization of customs
procedures
Yes no yes no no yes
Source: database for European Integration Index for Eastern Partnership Countries. Available at:
http://www.eap-index.eu/
Three EaP countries – Ukraine, Moldova and Georgia - carry out assessments of its customs
authority according to the EC Customs Blueprints, and Armenia made official declaration to
implement these Blueprints in its national practice.
In the sphere of competition policy and state aid, the EaP countries are far less prepared.
Although all countries have established national authority responsible for protection of economic
competition in the country, in two countries – Azerbaijan and Belarus – the authority is not fully
independent.
Only in two EaP countries – Ukraine and Georgia – the national legislation on competition is
broadly compatible with EU law21, and only in Georgia national legislation on control and
prohibition of state aid is compatible with the EU acquis.22
21 Articles 101 and 102 of Treaty on functioning of the European Union
22 Article 108 of Treaty on functioning of the European Union
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Summing up, regulatory approximation of competition policy and especially state aid with the EU
laws would be required in the course of the DCFTA implementation.
23
5. Conclusions
The EU has been one of the largest trade partners for so called Eastern Partnership (EaP)
countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine). Commodity turnover of
these countries with the EU vary between 30% and 50% of total, but their access to the EU
market is less preferential than for many other neighboring countries. They trade with the EU on
the basis of MFN regime, and five EaP countries, with exemption of Belarus, use privileges
provided by Generalized System of Preferences (GSP) or the GSP+ or autonomous trade
preferences (Moldova).
With the launch of the EaP initiative in 2009, relations between the EU and these countries have
received new impetus for development. The AA talks have been launched with all EaP countries
expect for Belarus, and four of them have been involved in the DCFTA talks. Ukraine has
progressed the most, as after five years of negotiations the EU-Ukraine Association Agreement
with embedded DCFTA has been initialed in 2012.
The implementation of the DCFTA between Ukraine and the EU would bring important benefits
for Ukrainian economy including duty-free access to the largest world market for vast majority of
products creating considerable opportunities for Ukraine’s exports; improved access to markets
of the third countries through harmonization of standards with the EU and thus acquisition of
internationally acceptable standards; and better domestic investment climate as the adjustment
to the EU regulations would means changes in national legislation. Total welfare of Ukraine is
estimated to increase due to the DCFTA.
However, the DCFTA implementation will require significant costs, associated mostly with
implementation of regulatory approximation in TBT and SPS spheres, protection of intellectual
property rights, competition policy and state aid.
In other EaP countries, similarly to Ukraine, regulatory approximation is expected to bring the
most of gains in case of the DCFTA with the EU. As Ukraine, these countries have limited
approximation to the EU acquis in TBT and SPS, competition and state aid policies. These
spheres are likely to be the most sensitive in DCFTA talks and in implementation period.