UKRAINE & EU ASSOCIATION AGREEMENT - PROVISIONAL APPLICATION STARTED - NOV 1, 2014
Legal Alert - Arzinger lawfirm (a member of USUBC),
Kyiv, Ukraine, Wed, Nov 12, 2014
Distributed by U.S.-UkraineBusiness Council (USUBC),
Washington, D.C., Wednesday, November 12, 2014
Following thepolicy of providing informational support to our current and potential clients,we bring your attention to the fact that the provisional application of theAssociation Agreement between Ukraine and the EU (the "Agreement")envisaging the enactment of single titles of the Agreement before thecompletion of the ratification process by all of the EU Member States asprovided for by the Verbal Note of the General Secretariat of the Council ofthe EU No. SGS14/12029 has started on November 1, 2014.
Apart from theentry into force of the purely declarative and general rules of the Agreement,the provisional application of the Agreement means opening of a dialoguebetween Ukraine and the EU on visa facilitation and provision of mobility ofcitizens of EU Member States and Ukraine.
Furthermore,the Agreement shall touch upon important aspects of commercial activities inUkraine.
One of themost important circumstances for domestic exporters and importers is theenactment of the Agreement title relating to transport issues. In particular,based on Article 368 of the Agreement, the EU and Ukraine shall also cooperateto improve the movement of passengers and goods, increase fluidity of transportflows between Ukraine, the EU and third countries in the region, by removingadministrative, technical, cross-border and other obstacles, improvingtransport networks and upgrading the infrastructure in particular on the mainaxes connecting Ukraine and the EU Member States.
Implementationof the provisions described may lead to liberalization of customs and borderprocedures for exports and imports as well as to the development of transport infrastructurefunded by the EU. Nevertheless, specific objectives will be implemented on thebasis of the development of industry-specific Ukrainian legislation. In otherwords, Ukrainian legislators and executive agencies shall be primarilyresponsibility for implementing the mentioned provisions.
Someprovisions of the Agreement entering into force with the commencement of itsprovisional application provide for convergence of regulatory practices andstandards of Ukraine and the EU in agriculture and sea fishery. Gradualharmonization of requirements for agricultural and fishery products may allowUkrainian producers to become more competitive in the markets of Europe, or mayenable exporters that have not yet supplied their products to the EU, to enterthe European market.
Also,provisional application of the Agreement means that Ukraine is obliged toimplement a number of provisions of the EU consumer protection legislation intoits own legal system. Such provisions deal mainly with unification of rules onproduct safety, reduction of the risk of purchasing low quality products andprotection of consumers against unfair contract terms.
Anotherimportant result of the commenced application of some titles of the Agreementis the entry into force of the requirement for gradual convergence of nationaltax rules with practices and taxation rules in the EU for Ukraine. However, norevolutionary changes may be expected in this area: the Tax Code of Ukraine islargely based on the Tax Code of the EU, except, perhaps, for the value-addedtax.
It should benoted that under Article 471 of the Agreement, which will also be effectiveunder the provisional application of the Agreement, each Party undertakes toensure that natural and legal persons of the other Party have access that isfree of discrimination in relation to its own nationals to its competent courtsand administrative organs, to defend their individual rights and propertyrights.
This means thatUkrainian businesses will obtain access to the European legal remedies (if theyneed to protect their rights in the EU Member States), while businesses fromthe EU will have similar access to Ukrainian judicial and administrativebodies. This opportunity may be used, for instance, in case of unreasonablerestrictive measures applied by state regulators to exports to the EU fromUkraine or from the EU to Ukraine.
Ukraine willmonitor and control its compliance with the obligations in the above areasthrough special institutions to be established on the basis of the Agreement,in particular through the Association Council, theAssociation Committee, the Parliamentary Association Committee and itsSubcommittees, and the Civil Society Platform.
Arzinger LawOffice has established an intersectoral working group to address practicalissues regarding the impact of the Association Agreement on the clients’business processes.Our lawyersclosely monitor the implementation of the Agreement into the Ukrainianlegislation and thus developlegal tools to protect the interests of national and foreign manufacturers andsuppliers within the framework of mutual trade relations between the EU andUkraine.
Our lawyershave conducted a number of workshops dedicated to the Association Agreement andhave analyzed the latter in detail for the clients to understand its impact onprospects of doing business in particular industries. They are also authors ofpublications that clarify some aspects of the Association Agreement
We would behappy to discuss with you in further detail any issues outlined in this alertas well as to answer any questions, should the need arise.
Counsel, Headof South Ukrainian Branch