The EU-Ukraine association agreement should promote economic growth in Ukraine. There are not only noticeable results in regard to export in the EU, but also challenges and risks, which are automatically involved in the agreement. Veronika Movchan is a Ukraine expert, an academic director and Head of the Center for Economic Studies at IER in Kiev. Her main research interests are for example trade policy and regional integration. Further information: Stakeholder Dialogue in Cooperation with the AHK Tunisia - Negotiating ALECA – Lessons Learned from the DCFTAs with Ukraine, Moldova and Georgia. Organizer: Bertelsmann-Stiftung in Cooperation with the AHK Tunisia Date: Wednesday, 27-28 June 2018.

1. EU-Ukraine Association Agreement:
reforms and results
Veronika Movchan
Institute for Economic Research and Policy Consulting
The presentation is based on the materials developed within 3dcftas.eu project funded by the SIDA
For the conference “The European Union and Ukraine: How to enhance the cooperation and maintain the
reform process?”
Berlin, Representation of the European Commission in Germany, 7 June 2018

2. 2
Survey of exporters and importers
Current impact of the Association
Agreement
Expected impact of the Association
Agreement
28.3
31.6
6.2
6.0
61.2
60.3
4.3
2.2
0% 20% 40% 60% 80% 100%
2016
2017
firm gained firm lost no impact hard to say
45.4
51.5
6.9
5.8
25.1
22.6
22.6
25.4
0% 20% 40% 60% 80% 100%
2016
2017
firm gained firm lost no impact hard to say
Source: Trade Facilitation Dialogue Action implemented by the IER and funded by the EU

3. 3
The Association Agreement and the economic growth
The Association Agreement creates opportunities for the stronger economic
growth of Ukraine by stimulating investments and exports. It is done by:
• Placing the rule of law among fundamental principles of the Agreement
 better protection of property rights as investments prerequisite
• Anchoring the regulatory environment in Ukraine to the EU norms and practices
 higher predictability of Ukraine’s business climate
 easier access to the markets of the third countries
• Liberalizing the market access to the EU market
 more exports opportunities

4. 4
Ukraine: some of launched reforms
Area of reforms Brief description of key undertakings
Judicial and anti-corruption New structure of judiciary system, increased independence of
judges; new anti-corruption institutions; higher transparency
Food and industrial products safety New legislation and institutions; increased recognition
State aid and competition policy New law on state aid; strengthened competition authority
Public procurements On-line transparent public procurement
Energy sector New laws on gas and energy markets; independent regulator
Customs Single window at customs
Environmental protection Law on environmental impact assessment; national emissions
reduction plans
Digital sector Laws on electronic commerce and electronic trust services
Intellectual property rights protection High Court for Intellectual Property Matters

5. 5
Ukraine’s export in goods by destination
USD bn
0
10
20
30
40
50
60
70
80
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
EU-28 Russia ROW
% of total
0%
10%
20%
30%
40%
50%
60%
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
EU-28 Russia ROW
• In 2017, Ukraine exports to the EU was USD 17.5 bn (highest since 2011) and 41% of total (absolute max since
independence)
• After steep reduction, exports to Russia stabilized at USD 4 bn and 9% of total. Still, Russia remained the largest
export destination among individual
countries

6. 6
Exports to the EU by level of processing
European Union Rest of the World
• Importance of finished products in exports to the EU increased from 32% in 2013 to 43% in 2017,
while importance of raw materials exports reduced
• Key finished products exported to the EU are sunflower oil and electric machinery
0%
10%
20%
30%
40%
50%
2013 2014 2015 2016 2017
Raw materails
Semi-processed goods
Processed goods
0%
10%
20%
30%
40%
50%
2013 2014 2015 2016 2017
Raw materails
Semi-processed goods
Processed goods

7. 7
Exports to the EU: variety
Number of products, 6-digit HS
2965
3114
2893
1738
2150
2015
2196
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
# products exported to world, exports >10K USD
# products exported to EU, exports >10K USD
% EU share of product variety exported to world
50%
55%
60%
65%
70%
75%
80%
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
# products exported to EU / # products exported to world,
exports >10K USD
• Product diversify of exports to the EU has increased noticeably since the DCFTA launch
• Compared to 2013, in 2017 Ukraine exported 181 products more, while variety of its exports to the ROW
shrunk by 173 products

8. 8
Challenges and risks
• External:
• Reduction in global prices on key commodities
• Growing protectionism of trade partners:
• EU introduced import duties on maize (maize is subject to TRQs under DCFTA)
• EU anti-dumping duty on steel products
• USA safeguard import duties on steel and aluminum
• Internal:
• Uncompleted reform agenda and slowdown of reforms
• Growing domestic protectionism and violation of commitments:
• Moratorium on wood logs exports
• “Buy Ukrainian” draft law

9. Thank you!!!
Contacts
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