How does Ukraine benefit from signing the association agreement with the EU? 

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2014/06/27 • Politics

What will change after signing the agreement? 

Eight benefits to Ukraine after signing the Association Agreement with the European Union:

  • corruption decrease. Changes will happen in governing state finances and planning the state budget. The functions of the Control and Revision Headquarters and Treasury Chamber will change.
  • increase in customer rights protection. European product quality control standards will be implemented. Ukrainian goods will become maximally safe.
  • export of goods to the EU. This will allow to earn at least 383 million Euro annually on export goods.
  • export of services to the EU. Ukrainians will be able to open subsidies in countries of the European Union, and Ukrainian investments in the EU will receive additional protection. However the agreement also establishes limits on service export.
  • benefits for small and medium business. It will become profitable to produce goods in Ukraine again.
  • social policy and education. An extra four days of holidays are established. It is prohibited to pay women less than men. Systems of primary medical care will be perfected. Ukrainian diplomas and qualifications for work will become valid in the EU.
  • the environment will become cleaner and safer. New standards of water and air quality are implemented. Methods of environmental control will change.
  • space, science and technology. We will work on the creation of a European navigation system, a competitor for GPS, together. The EU will use our rocket construction technologies.

Consumer rights protection

Better quality food

The changes, in particular, will regard the quality of meat and dairy products. Today 65% of Ukrainian milk does not accord with European Union standards. After signing the Association Agreement with the EU, the milk produced in Ukraine will have to accord with all demands and norms of the European Union. Besides, antibiotics and palm oil have to be removed from all produce.

90-95% of animal businesses do not accord with the demands of the European Union because of anti sanitary conditions, low quality feed and inadequate conservation of produce.

Cheaper goods

After signing the agreement with the EU, the prices on good have to go down. As such, price on hard cheeses will fall 15%, wines – 5%, Baltic fish – 15% etc.

It should not be forgotten that Ukrainians will get a much bigger selection of produce on the market thanks to the import of European goods. Meanwhile Ukrainian producers will receive the opportunity to export their produce to European countries.

More customer rights

Customers will receive many more rights, such as exchanging the purchase after the deal, monetary compensation etc.

According to experts, Ukrainian agricultural producers will be able to make at least 383 million Euro on the export of their produce. Only on poultry export alone will the producers save up to 52 million Euro without paying the customs tax with the lowest price and highest rate.

Grain sales to the EU will allow to earn up to 186 million Euro annually.

Overall 83,1% of produce will be exported to the EU from Ukraine without customs taxes. Meanwhile import taxes on European goods will be decreased gradually.

It should be added that the entire process of presenting a product or an entire industry of Ukraine at the European market will take no more than 1,5 years.

Benefits for small and medium businesses

Signing the Association Agreement with the EU encourages business to work honestly. As such, sellers will get lowered customs taxes on imported goods down to zero for five years. On their part, the customs service will be unable to change the product category to increase the customs tax payments. The procedure of passing customs control should also be simplified.

For exporters, the procedure of payment and VAT refund will be simplified.

Ukrainian producers will be able to increase their own production. In particular, safe goods will not be certified at all, and the goods that constitute a threat or are made for children, will be controlled better.

Also the number of checks and documentation for controllers will be decreased significantly after signing the association with the EU.

Environmental preservation

Ukraine will implement a contemporary system of clean air control. Businesses will be forced to set up modern filtering stations, and the land spoilt by garbage dumps will be renewed.

The businesses will be obliged to invest in modernising production within 3-5 years. This will allow to control the dispersed dust which causes lung cancer, as well as pollutants which expire quickly. The latter cause anaemia and leukaemia.

As to production, owners of the businesses will receive the right to make their own choice of method to decrease pollution.

It should be noted that overall after signing the Association Agreement with the EU Ukraine will determine the terms for modernisation itself, and the funds will be provided by the EU. The agreement also guarantees that our state will not become a dumpsite for dangerous garbage or a base for damaging production.

The advantages of the Association Agreement with the EU over the Customs Union 

We note that the customs taxes with the Customs Union countries have already been abolished. Therefore the Customs Union has nothing to offer to Ukraine except for theoretically cheaper gas.

  • sovereignty. Any customs union is a loss of sovereignty. If Ukraine should become part of the Customs Union, the customs taxes on Ukrainian goods will be determined in Moscow;
  • customs taxes. The average customs tax in Ukraine constitutes 6%, and 9% in the Customs Union. In case of joining the CU this will lead to Ukrainian goods increasing in price;
  • production cooperation. Neither the Customs Union nor the association with the EU prohibit business to cooperate with other partners;
  • export markets. Signing the association agreement will not stop trade with the Russian Federation;
  • modernisation. The Customs Union does not regulate anything except for trade. Therefore it will not encourage modernisation of Ukrainian industries. The EU, on their part, has strict standards and demands;
  • gas. There is no gas trade agreement in the Customs Union. In particular, Belarus has not gotten a discount on gas after integration into the CU;
  • trade with China. Possible integration to the CU leads to the increase and cheapening of Chinese goods, but the customs tax will increase;
  • machinations. The quick creation of the Customs Union led to machinations because of lack of thought and haste. As such, contraband in the Russian Federation is increasing.

The Association with the EU will be executed by state structures. In particular, a special body will be created, which will be responsible for the execution of the agreement. The EU Commission will also check the plans and observe their execution up to studying the bills and Cabinet of Ministers orders. Besides, the EU Commission will deem the normative act of the EU to have become part of Ukrainian legislation. The report on Ukraine’s execution of the agreement will be handed in twice per year.

A special mission will be sent to Ukraine, which will check the reports for relevance and execution of the laws. Communication will not only be conducted on government levels, but with civil organisations and businesses as well.

In sum, if the point is executed, some Ukrainian goods will be allowed to the European market.

The sooner Ukraine meets the demands, the sooner the benefits will come. 

Source: TSN

Translated by Mariya Shcherbinina

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