Aid for Trade Needs Assessment Ukraine: Trade and Human Development Igor Burakovsky,

1. Aid for Trade Needs Assessment Ukraine: Trade and Human Development Igor Burakovsky, Institute for Economic Research and Policy Consulting (Ukraine) 14 June, 2011 United Nations Development Programme

2. Main Findings • International trade plays an important role in Ukraine’s. Ukraine’s economic growth has been predominantly determined by external factors • Rather liberal trade regime established: low import tariffs, free trade areas with key trade partners (FTA with EU is currently negotiated). Obstacles to trade are mostly of domestic nature. • Trade policy agenda: addressing more complicated tasks of internal reforms and reduction of non-tariff barriers

3. Main Obstacles to Trade (1) • Customs: • fiscal bias, corruption, burdensome procedures, inconsistent legislation – in-depth reform is necessary; • Transport and logistics services – poor quality for high prices: • railway sector - obsolete rolling stock, inefficient state management; • road sector – large number of small companies (less than 10 trucks), 2000 class IV and class V trucks (out of 22000), acute shortage of investments; • acute shortage of modern warehouse capacities, etc.

4. Main Obstacles to Trade (2) • Technical regulation: • new laws (on standardization, on confirmation of conformity, on accreditation of conformity assessment bodies, etc.) are in place but legislative inconsistencies remains; • implementation of technical regulations is rather low; • system of supervision over product safety (market surveillance) has yet to be established; • long list of products subject to compulsory certification; • low speed of revising standards in force (cancellation of outdated ones and harmonization of the rest with international and European standards, etc); • proper institutional and technical capacities are to be developed.

5. Main Obstacles to Trade: view of entrepreneurs • List of problems is rather impressive: • paying customs fees; • confirming origin of goods; • confirming customs value; • confirming registration of goods/contracts; • licensing; • obtaining permits, etc. • Problem No. 1 • Importers: logistics problems and customs clearance, corruption • Exporters: VAT refund and regulatory measures (veterinary, sanitary and phytosanitary control), corruption

6. Main Recommendations (1) • Ukraine’s trade policy goal: to ensure efficient involvement in international trade system and to use efficiently opportunities offered by free movement of resources in the globalization era. • New quality of trade policy making: • trade policy as consistent proactive process; • trade policy as structured process (situation analysis, formulation of strategy and necessary policy tools, practical implementation, monitoring and evaluation);

7. Main Recommendations (2) • What to do is clear. But priorities are to be identified: • Ensuring a stable macroeconomic environment; • Favorable environment for business; • Developing and upgrading human capital andphysical infrastructure for business; • Improving the operation of market institutions; • Increasing the private sector ability to make competitiveness goods and services. Observance of relevant standards and requirements – strategic tool to strengthen positions in traditional markets and to access a new one;

8. Main Recommendations (3) • Strengthening competition policy; • Developing education and science; • Addressing trade related issues of the labour market and environmental protection; • Using information and communication technologies in both business and public administration; • Participating in regional economic cooperation; • Assessing the impact of globalization on internal socioeconomic processes;

9. Thank you! Contact information: Institute for Economic Research and Policy Consulting www.ier.com.ua institute@ier.kiev.ua 8/5-А Reytarska str., Kyiv 01034, Ukraine Phone +38-044-278-6360 Fax +38-044-278-6336