EU bilateral cooperation in Ukraine in the agrarian sector · The entry into force of the AA/DCFTA: a long process, far from over 3. Details of EU intervention and results to date

EU bilateral cooperation in Ukraine in the agrarian sector

Kyiv, 27 September 2018

Christian Hell – Delegation of the EU to Ukraine

1. Introduction to EU Cooperation in Ukraine, including in the agrarian sector

2. The entry into force of the AA/DCFTA: a long process, far fromover

3. Details of EU intervention and results to date.

4. What comes next ?





Introduction to EU Cooperation in Ukraine, including in the agrarian sector

• EU Programming cycle usually based on a 7-year scheme;

• Between 2014 and 2017, programming was based on Annual Special Measures;

• As of 2018, back to a normal programming cycle based on a Single Support Framework 2018 – 2020;

• Choice of sectors of intervention: it reflects the revised European Neighbourhood Partnership and the Association Agenda and are coherent with the priorities set in the "20 Deliverables for 2020", which is a European Commission/HRVP - Joint Staff Working Document of 15 December 2016;

• 4 sectors were chosen, with a certain level of flexibility and several cross-cutting and complementary issues to be addressed.

Priority Sectors of Intervention:

1. Strengthening institutions and good governance, including the rule of law and security;

• Core condition for any meaningful sectoral reform.

• It entails the public administration reform, both at central and local levels and improvement of satisfactory public services;

• Public Finance Management, to restore the link between policy objectives and public budgets and improve the control environment;

• Increased efficiency of judiciary and prosecution to restore public trust into the Government and create a positive business environment.

• Border management back in line with international best practices

• Civilian security and resilience infrastructure, including cyber security needs to be stabilised and media freedom harnessed.


2. Economic development and market opportunities, including private sector development and improvement of the business climate;

• Strengthening the economic fabric of the country in order to create an environment that is conducive to the development of micro, small and medium businesses (MSMEs).

• Reform of state-owned enterprises and of the financial sector will have a significant impact on the economy;

• Equal employment opportunities and working conditions in line with international standards and best practices

• The focus is on the main engines of economic growth, i.e. agriculture, investments, innovation, vocational training, infrastructure, etc.

• Exports are expected to be a main driver of development, building on the strong potential of specific sectors.


3. Connectivity, energy efficiency, environment and climate change;

• Energy and transport sectors need continued reform in order to ensure Ukraine's energy security and independence.

• The further development of digital infrastructure will tap on the potential of Ukraine's IT industry and promote e-commerce

• International and European Financial Institutions to implement big infrastructure projects,

• The European Commission will systematically provide technical and financial assistance at strategic and capacity building levels.


4. Mobility, people-to-people contacts and social inclusion;

• Focus on vulnerable groups like elderly persons, single-parent-households, children deprived of parental care, the rural population, Roma and LGBTI exposed to discrimination, lack of access to effective social protection, quality healthcare and education or are at significantly higher risk of poverty.

• EU interventions in the related fields of social inclusion, public health, education, culture and people-to-people contacts will address these issues;

• Promoting access to quality social protection, healthcare and education for all and fostering mobility within the country and across its borders on the basis of European values.

• Cross-cutting issues, notably environmental protection and climate change, digital agenda, gender equality and human rights will be mainstreamed in the priority sectors.

Financial overview

• From 2014 to 2017 bilateral ENI assistance has been provided in form of annual Special Measures (for around EUR 200 million / year).

• The indicative allocation for the period 2018-2020 is EUR 434 - 530 million.

Sectors Indicative

allocation

million

% of total

allocations

Sector 1: Strengthening institutions and good governance,

including the rule of law and security.

€ 108 – 159 25-30%

Sector 2: Economic development and market opportunities,

including private sector development and improvement of the

business climate.

€ 87 – 133 20-25%

Sector 3: Connectivity, energy efficiency, environment and

climate change.

€ 65 – 133 15-25%

Sector 4: Mobility, people-to-people contacts and social

inclusion.

€ 87 – 133 20-25 %

Complementary support for capacity development up to € 80 up to 15%

Complementary support in favour of civil society up to € 27 up to 5%

EU assistance portfolio in the agrarian sector:

• Over the period 2015-2018, financial resources for Agriculture were limited. To-date the total support amounts to about EUR 26.5 million, including about 60% into Sanitary and Phytosanitary (SPS) areas;

• EU support has been predominantly provided in the form of Technical Cooperation and targeted small to medium-size interventions to support key reforms.

• Hence, a fragmented intervention in several sub-sectors, with a major focus on the Public Sector.

Implementation of the Association Agreement/DCFTA (SPS, Geographical Indications, agrarian policies);

Development of capacity and reforms of concerned institutions – MoAPF and SSUFSCP;

Support to sectoral reforms, including in fisheries, forestry, and land governance (in collaboration with the WB).

EU assistance portfolio in the agrarian sector:

• Alongside the Public Sector, the EU also supports the Private Sector, primarily focusing on medium and large farms through:

the EU4Business scheme under which support is provided to the establishment and strengthening of agricultural cooperatives (dairy, grain and meat / fattening) – and possibly access to finance through EBRD partner banks;

the EIB Agri-food Value Chain Apex loan (EUR 400 million) and Technical Assistance (EUR 5 million) Project, targeting three sectors – cereals, oilseeds and aquaculture. This contains value chain strengthening and financial support;

• But the EU also targets MSMEs and small individual farms through the EU Support Programme to the East of Ukraine under which about EUR 10-12 million is dedicated to Value Chain strengthening (incl. fruits and dairy), access to subsidised finance and VET.





The AA / DCFTA in a few dates

• 2009 – one of the first steps at the EaP summit in Prague

• In the course of 2012 – conclusion of the Agreement

• 29 November 2013, no signature at the Vilnius summit

• April 2014 – first set of "Autonomous Trade Measures" by the EU

• 27 June 2014 – signature of the Agreement, beginning of the ratification process by Member States

• 1st November 2014 – provisionnal entry into force of the "Politicalpart" of the Agreement

• 2014/2015 – "trilateral discussions" on the DCFTA between the EU, Ukraine and Russia

• 1st January 2016: provisionnal entry into force of the DCFTA

• April 2016 – Dutch referendum (compromise found in December2016)

• 1st September 2017: full entry into force of the Agreement

What happened on 1st September 2017 ?

• Not that much ! As the DCFTA was already implemented provisionally since 1st January 2016

On 1st January 2016, Ukraine started to decrease its tariffs in line with the schedules foreseen in the agreement

The timetable for implementation of the economic reforms foreseen in the DCFTA started, e.g. deadlines for Ukraine's adoption of EU norms and standards : alignment will be sector by sector after 1, 3, and 5 years

The opening of the EU market that was unilaterally implemented in March 2014 (the so-called Autonomous Trade Measures) until the end of 2015 then became permanent

• So 1st of September 2017 represents much more the beginning of a process rather than the end of one. Much effort are still needed, particularly from the Ukrainian side

Association agreement (486 articles)

• PREAMBLE

• Title I GENERAL PRINCIPLES

• Title II POLITICAL DIALOGUE AND REFORM, POLITICAL ASSOCIATION, COOPERATION IN THE FIELD OF FOREIGN AND SECURITY POLICY

• Title III JUSTICE AND FREEDOM

• Title IV TRADE AND TRADE RELATED MATTERS (art 25-336)

• Title V ECONOMIC AND SECTOR COOPERATION

• Title VI FINANCIAL COOPERATION

• Title VII INSTITUTIONNAL, GENERAL AND FINAL PROVISIONS

• …and lots of annexes, including a SPS Strategy and the list of Protected GIs !

What is the DCFTA about ?

The DCFTA is entirely part of the Association Agreement (title IV). It combines:

• a standard Free Trade Agreement (duty free trade on both sides, but phased in over 7 years, asymmetrically in favour of Ukraine);

• a "Deep and Comprehensive" part, that foresees that Ukraine will adopt most norms and standards of the EU internal market (for industrial, consumer, food and agricultural products), but also competition rules, intellectual property, public procurement, services, etc.

It aims at reducing tariff and non-tariff barriers between the EU and Ukraine, and therefore at facilitating trade and investments in both directions

"FTA part" of the DCFTA:

• Liberalizes most tariffs both ways, in line with the provision of the WTO / GATT

• With delays for many products

• In an asymmetrical manner: Ukraine has usually more time to adapt

• With (tariff rate) quotas (TRQs) for certain agricultural products

• A rather usual FTA (with the exception for the asymmetry) – whereas the "Deep and comprehensive" part is veryspecific to Ukraine

"D&C part" of the DCFTA, notablyu in Agri-business:

• Alignment of Ukrainian legislation and institutionalinfrastructure as well as system of state controls with the regulatory and administrative policies and practices of the EU;

• The cooperation aims at an improvement of Food Safety Control System in Ukraine, thereby ensuring food safety"from farm to fork";

• This is based on HACCP (Hazard Analysis and Critical Control Point) Principles. Now all food producers at each level of the Value / Supply Chains will be required to identify all potential risks associated with their production processes and facilities and take all necessary steps to minimise these risks;

• The Government, through its SSUFSCP, will ensure controls(some announced but especially unannounced) based on itsown risk analysis and monitoring and assess whether risksare appropriately taken into account by FBO.

• In the area of Sanitary and Phytosanitary, there is a list of 290 EU directives and regulations the GoUA has committed to "approximate" – this is a huge and demanding task

DraftingIntra-Service

Consultation

EU

CHECK

Inter-Service

& Public

Consultation

EU

CHECK

Cabinet of

Ministers

V. Rada

Committee

Verkhovna

RadaStatus Comments

1 MAPF Council Directive 91/496/EEC laying down the

principles governing the organisation of

veterinary checks on animals entering the

Community from third countries

1. Law on Veterinary Medicine

SSUFSCP

IFSSUONGOING

Work ongoing within WG

established by SSUFSCP; IFSSU

sections drafted

1. Law "On basic principles and requirements for the safety and

quality of food products"

IFC

VR MemberN/A N/A N/A

approved

05/2014

adopted

22.07.2014IN FORCE

No. 771/97-BP

Came in force on 20.09.2015

2. Law "On state control performed to ensure verification of

compliance with food and feed law, animal health and animal

welfare rules"

VR Member N/A N/A N/Aapproved

04/2017

adopted

18.05.2017IN FORCE

No. 2042 - except some

transitional provisions

3. Order of SSFSCP “On adoption the frequency of documentary

checks, identity checks, physical checks and laboratory tests of

consignments that are imported (sent) to the customs territory

of Ukraine”;

SSUFSCP /

IFSSUN/A N/A N/A N/A

Order will be developed and

adopted after adoption of

MAPF Order on approval the

Procedure (see No. 4 below)

4. MAPF Order "On approval of the procedure for establishment

of frequency of documentary checks, identity checks, physical

checks and laboratory tests of consignments that are imported

(sent) to the customs territory of Ukraine"

SSUFSCP STUCK

draft rejected by the SRS

5. CMU Resolution "On adoption of the list of designated border

inspection posts at the state border of Ukraine for purposes of

import (shipment) to Ukraine, export (shipment) from Ukraine

and transit movement of food products and other objects of

sanitary measures"

IFSSU 31.10.2017 N/A N/A ONGOING

08.11.2017 Draft Resolution

was sent to MAPF for approval

(by letter of SSUFSCP № 602-

1122-14/14719)

1. Law "On basic principles and requirements for the safety and

quality of food products"

IFC


approved

05/2014

adopted

22.07.2014IN FORCE

No. 771/97-BP

Came in force on 20.09.2015

2. Law "On feed safety and hygiene" MAPF WG /


approved

06/2015

adopted

21.12.2017ADOPTED

No. 2264

3. Law "On state control performed to ensure verification of

compliance with food and feed law, animal health and animal

welfare rules"

VR Member N/A N/A N/Aapproved

04/2017

adopted

18.05.2017IN FORCE

No. 2042 - except some

transitional provisions

10.07.2018

No

CHAPTER 04 - ANNEX V: Tracking Table - SPS Strategy

2016 (two years)

Status

Inst. EU Legal Act UA Equivalent

2 MAPF Council Directive 97/78/EC laying down the

principles governing the organization of

veterinary checks on products entering the

Community from third countries

3 Regulation (EC) No 178/2002 laying down the

general principles and requirements of food

law, establishing the European Food Safety

Authority and laying down procedures in

matters of food safety

MAPF

As per the AA, Cooperation in the field of agriculture and rural development shall focus on the following areas:

• Facilitating mutual understanding of agricultural and rural development policies;

• Enhancing administrative capacities at central and local levels for the planning, evaluation and implementation of policies;

• Capacity building: sharing knowledge and best practices of rural development policies and disseminating knowledge through training and information events

• Promoting a modern and sustainable agricultural production, respectful of the environment and of animal welfare, including extension of the use of organic production methods and the use of biotechnologies

• Approximation of about additional 55 EU directives and regulations, including on Geographical Indications.

Geographical Indications, at the cross road between AA and DCFTA:

• A Geographical Indication (GI) is the name of a product, which corresponds to a specific geographical location or origin.

• This basically means that the product (foodstuff, wine or spirit drink) and its origin would be protected on the domestic market, but also on the market of the European Union should its sanitary quality also meet European requirements in terms of food safety;

• Such a protection can have substantial impacts on the development of rural and mountainous areas as it can assist in: (i) structuring the supply chain around a common product reputation, (ii) increasing and stabilising prices for the product, (iii) adding value distributed throughout the supply chain (notably for smaller producers in cooperatives), BUT IT ALSO allows for the preservation of working and living practices, traditions and traditional know-how;

The European Union is a strong partner for Ukraine in this process and our support focuses on the development of GIs system in Ukraine:

• Commitments were made by the Government of Ukraine to protect 3,000 EU GIs under the AA;

• Legal framework set-up ensured and administrative capacity strengthened for the development of the Ukrainian system of registration, control and enforcement of the Geographical Indications;

• Marketing activities for rebranding, market research, promotion and consultancy activities for sensitive products are provided;

• Ukrainian products registered as GIs and available on the market;

• Rural development project planning with the aim to bringing tourism to the regions and launching marketing strategies for new markets.

European Union Gis protected under the AA:

European Union Gis protected under the AA:

Supporting Transparent Land Governance in Ukraine:

• TA to facilitate transparency of land governance through notably the establishment of mechanisms to support regular monitoring and publication of data of key parameters of land governance at rayon level;

• Provision of technical support for ensuring the completeness of Land Cadastre and Registry of Rights Systems: (i) developing procedures for field-based error correction on private land and establishment of a complete inventory of public land in select village councils/hromadas; (ii) completing digitization of privatization records; and (iii) drafting of normative acts for nation-wide application and documenting impacts thereof;

• Support of: (i) development of local land management plans and registration of administrative boundaries as well as integrating data on agricultural land use based on satellite imagery; (ii) awareness creation regarding rights and their enforcement at local level; and (iii) transparent auctioning of state land.

1. Latest trade results: some light after a dark tunnel

2. The entry into force of the DCFTA: a long process, far from over



Main achievements (2015-18) – on the legal front:

4 draft laws were finalized and adopted on the basis of EUlegislation: draft Law “On state control of the compliance with thelaw on food, feed, animal by-products, animal health and welfare”(adopted on 18.05.2017), draft Law “On feed safety and hygiene”(adopted on 21.12.2017); draft Law "On Amending the Land Codeof Ukraine and Other Acts of Legislation Dealing with Land PlotsWhose Owners Have Passed Away";

About 20 additional UA legislation, based on EU requirements(including draft Law “On information to consumers regarding foodproducts”, draft Law “On veterinary medicine” and draft laws inthe fisheries and land sectors) are under preparation foradoption in the course of 2018-19;

Approximately 50 UA sub-legal acts on fisheries, land, SoEprivatisation, animal health, animal welfare, animal by-products(ABPs) and food safety were developed in pursuance of the SPSStrategy, and are in the process of being adopted.

Main achievements (2015-18) – on the legal front:

Provision of technical assistance to the SSUFSCP in developmentof nine EU-UA veterinary certificates for milk and dairyproducts (adopted in September 2017), gelatine and collagen,poultry (breading and productive poultry, hatching eggs, day-oldchicks, SPF eggs) and poultry products (fresh meat, minced meat,mechanically separated meat, eggs, egg products), in the courseof being adopted;

• CMU Resolution No. 228 of 24 February 2016 “On adoption of

Comprehensive Strategy for the implementation of Chapter

IV (Sanitary and Phytosanitary Measures), Title IV “Trade

and Trade-related Matters” of the Association Agreement between

the European Union and the European Atomic Community and

their Member States, of the one part, and Ukraine, of the other

part”.

Main achievements (2015-18) – on the Institutional front:

A single institution – executive agency – dealing with SPS issuesestablished, the State Service for Food Safety and ConsumerProtection (SSUFSCP) and now fully functional;

318 state inspectors, who are certified HACCP auditors havebeen further trained while more than 60 lead auditors;

Approximately 10 methodology documents, guidelines and studieshave been prepared and finalised on risk assessment andcategorisation (of establishments), risk management, and riskcommunication in the SPS / Animal health sphere were finalised,in line with EU approach – and 150 SSUFSCP specialists weretrained for their use;

Finalisation and roll-out of the Veterinary Information Systemfor planning and conduct of anti-epizootic measures, veterinaryinspection support and maintenance of registers, Nationaldatabase of laboratory analysis results, and Register of veterinarydocument;


Initiate the assessment of information and data managementsystem of the phytosanitary (plant health, plant quarantine andplant protection) department at the SSUFSCP;

The delivery, installation and testing of new laboratoryequipment at six state laboratories was finalised in April 2017while the compliance to standard ISO 17025 and capacity of 11laboratories to perform testing of residues in live animals, foodand feed were assessed;

About 200 laboratory technicians trained to use and validateanalytical methods for analysis of residues and contaminants inlive animals and other food and feed products;


A functional review of MoAPF was carried out and four newDirectorates were established to cover Strategic Planning /Budgeting, Food Safety, Agro-resources and Rural Development;

A fully functioning Reform Support Team (RST comprising 20experts financed by the EU) was established and embedded withinMAPF and primarily focused on analytical and legal work in priorityreform areas:

Land Reform,

State Owned Enterprise Privatisation,

State Financial Support,

Food Safety,

Rural Development,

Market Development, and Organic issues;

1. Latest trade results: some light after a dark tunnel

2. The entry into force of the DCFTA: a long process, far from over



A scaled-up support to the agriculture sector was considered, which could tentatively be addressing following areas:

• Support to the land reform:

• Extension of current support to increased transparency in land governance / management, including judicial support and management tools development;

• Institutional reform and capacity building of the GeoCadastre Agency;

• Land consolidation and electronic forest cadastre.

• Institutional and sectoral reforms in targeted institutions: MoAPF Institutional and Strategic Framework Development.

To support the implementation of the Agriculture and Rural Development Strategy between 2020-2025 in line with Ukraine’s commitments under the AA/DCFTA.

A scaled-up support to the agriculture sector was considered, which could tentatively be addressing following areas:

• Institutional and sectoral reforms in targeted institutions: MoAPF Institutional and Strategic Framework Development.

• Finalisation of MoAPF / SSUFSCP restructuring, institutional strengthening and capacity development of selected DGs;

• Understanding and implementation of a medium-term budget framework and consolidation of PFM reforms;

• Legal drafting as part of the EU approximation process and in support to implementation of the strategic plan 2020-2025;

• Development of State support programmes, subsidies monitoring tools focused on small and medium sized farms, and codes of good agri-environmental practices;

• Support to the reform and development of both the Forestry and Fisheries Sectors:

To create the foundations of state policy for the effective and sustainable development of forestry and fishery industry.

• Support the development and approval of state targeted programmes, the improvement of the regulatory framework and international treaty obligations;

• Changing the model of public administration / organizational management, monitoring and control approaches and separation of powers between institutions;

• Advice/training/information on sustainable forestry, inland and marine fisheries management, including community management and self-regulation approaches;

• Support forestry, fish stock and fleet inventory and harmonisation with EU fisheries data collection regulation, communication and public awareness;

• Strengthening of Agricultural Value Chains and support to Small Farm and Rural Development:

To increase agriculture competitiveness and small farms' profitability, thereby reducing rural poverty.

• Development of an integrated agricultural and rural development policy, including for young farmers and value chains development, related legislation and capacity building at central and Oblast levels and information exchange networks;

• Support the development of cooperatives and appropriate extension approaches engaging public and private sector;

• Specifically identify value chains to be strengthened through capacity building and stakeholders integrations;

• Development of agri-finance (incl. in support to the land reform), leasing and insurance packages for small/medium sized farmers and farmer groups, alongside banks / credit unions / insurance / leasing companies and supported by matching grants programmes;

THANK YOU FOR YOUR ATTENTION !

Documents

EU bilateral cooperation in Ukraine in the agrarian sector · The entry into force of the AA/DCFTA: a long process, far from over 3. Details of EU intervention and results to date