Explanatory Memorandum to COM(2022)195 - Temporary trade liberalisation supplementing trade concessions applicable to Ukrainian products under the Association Agreement with Ukraine - Main contents
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| dossier | COM(2022)195 - Temporary trade liberalisation supplementing trade concessions applicable to Ukrainian products under the Association ... |
|---|---|
| source | COM(2022)195  |
| date | 27-04-2022 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The unprovoked and unjustified military aggression of Russia against Ukraine since 24 February 2022 has had a profound negative impact on Ukraine’s ability to trade with the rest of the world, because of the toll imposed on human lives, the need to focus on the defence of the territory, vast populations being displaced and also because of the destruction of production capacity and the unavailability of a significant share of transport means due to the closure of the access to the Black Sea. In this difficult context, Ukraine has asked the Union to facilitate as much as possible the conditions to enable the country to maintain its trade position with the rest of the world and further deepen its trade relations with the Union. Measures to this end include facilitating overland logistics and increasing the degree of market liberalisation. These measures would add flexibility and certainty for Ukrainian producers.
Therefore, the Commission is proposing a Regulation of the European Parliament and of the Council introducing trade-liberalising measures in the form of the three following measures, which should apply for a period of one year:
–Temporary suspension of all outstanding tariffs under Title IV of the Association Agreement between the EU and Ukraine (hereinafter referred to as ‘the Association Agreement’) 1 establishing a deep and comprehensive free trade area (DCFTA). This concerns three categories of products:
·industrial products subject to duty phase out by the end of 2022;
·fruits and vegetables subject to the entry-price system;
·agricultural products and processed agricultural products subject to tariff-rate quotas.
–Temporary non-collection of anti-dumping duties on imports originating in Ukraine as of the date of entry into force of this Regulation; and
–Temporary suspension of the application of the common rules for imports (safeguard) 2 with respect of imports originating in Ukraine.
These temporary and exceptional measures will contribute to supporting and fostering the existing trade flows from Ukraine to the Union. This is in line with one of the main objectives of the Association Agreement, which is to establish conditions for enhanced economic and trade relations leading towards Ukraine's gradual integration in the EU Internal Market.
The trade-liberalising measures provided for under the present proposal for a Regulation are taken in observance of the commitment in Article 2 of the Association Agreement which enshrines as an essential element of the Agreement the promotion of respect for the principles of sovereignty and territorial integrity, inviolability of borders and independence. In the same vein, the trade-liberalising measures themselves would be conditional upon respect for the same basic principles set out in Article 2, including those providing that the respect for democratic principles, human rights and fundamental freedoms and respect for the principle of the rule of law constitute essential elements of that Agreement.
Furthermore, the trade-liberalising measures contained in this proposal aim at ensuring, in accordance with Article 207(1) TFEU, that the Union’s common commercial policy is conducted in the context of the principles and objectives of the Union’s external action set out in Article 21 TEU.
Normal safeguard procedures apply.
• Consistency with existing policy provisions in the policy area
These trade-liberalising measures would be consistent with the implementation of the Association Agreement and in particular with the Title IV establishing a DCFTA, which provides that Parties shall progressively establish a free trade area over a transitional period of a maximum of 10 years starting from the entry into force of that Agreement.
In addition, Ukraine has requested in 2021 the activation of the review under Article 29 i of the Agreement with the purpose of considering accelerating and broadening the scope of the elimination of customs duties between Ukraine and the Union.
• Consistency with other Union policies
The European Union has strongly condemned the Russian aggression to Ukraine and has undertaken unprecedented steps to support the country in this exceptional context, ranging from financial assistance, including emergency macro-financial assistance, to the delivery of military equipment. The proposed Regulation would therefore comply with the Union’s obligation under Article 21(3) TEU to ensure consistency between the different areas of its external action, as well as with Article 207(1) TFEU which provides that the common commercial policy is to be conducted in the context of the principles and objectives of the Union’s external actions.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The legal basis for the proposal is Article 207(2) of the Treaty on the Functioning of the European Union.
• Subsidiarity (for non-exclusive competence)
The common commercial policy, in accordance with Article 3(1)(e) of the TFEU, is defined as an exclusive Union competence. Therefore, the subsidiarity principle does not apply.
• Proportionality
This proposal is necessary in order to implement the common commercial policy and to achieve the objective of supporting Ukraine in its current difficulties economically, also in the area of trade with the Union.
• Choice of the instrument
This proposal is in accordance with Article 207(2) TFEU, which envisages common commercial policy measures.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
Not applicable.
• Stakeholder consultations
Not applicable.
• Collection and use of expertise
Not applicable.
• Impact assessment
In view of the emergency situation in Ukraine, it is important for the Regulation to enter into force as soon as possible. Therefore, no impact assessment was carried out for the measure at hand. However, the trade and trade-related provisions of the Association Agreement have been subject to a sustainability impact assessment commissioned by DG Trade in 2007 which fed into the DCFTA negotiation process. That study confirmed that implementation of trade and trade-related provisions would have a positive economic impact for the EU as well as for Ukraine.
• Regulatory fitness and simplification
The measure does not increase the regulatory burden of companies.
• Fundamental rights
These measures would respect the same basic principles as those enshrined in the Association Agreement between the EU and Ukraine. In particular, Article 2 of the Association Agreement with Ukraine provides that the respect for democratic principles, human rights and fundamental freedoms and respect for the principle of the rule of law, constitute essential elements of that Agreement.
The trade-liberalising measures would also be in accordance with the European Charter on Fundamental Rights.
4. BUDGETARY IMPLICATIONS
Based on an estimation according to the level of imports from Ukraine in 2021, the European Union will see a loss of customs revenue corresponding to less than EUR 31 million annually. In addition, the loss of anti-dumping duties is estimated at EUR 34,6 million. This figure is very likely to be significantly lower as the level of imports from Ukraine has been affected by the conflict. Therefore, the impact on the EU’s own resources will be very limited.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
On-line reporting on the evolution of bilateral EU-Ukraine trade is available via dedicated websites of the European Commission.
• Explanatory documents (for directives)
Not applicable.
• Detailed explanation of the specific provisions of the proposal
In view of the emergency situation in Ukraine, the measure aims at increasing the trade flows concerning all imports from Ukraine by suspending all outstanding tariffs and import duties applied to Ukrainian products. The trade-liberalising measures would be granted in the form of full removal of import duties on all products.