Deep and Comprehensive Free Trade Area: Legal Analysis Course number: EUI_S9

1. Deep and Comprehensive Free Trade Area: Legal AnalysisCourse number: EUI_S9 Lecturer:

2. Aims of the lecture • To familiarize participants with the legal aspects of DCFTA, • To allow participants to appreciate the principles governing trade in goods, • To facilitate understanding of AA rules applicable to trade in services.

3. Element 1. Free movement of GOODS Customs privileges Up to 10 years, gradually Status quo (art. 30 AА) – the minimum customs level. Possible participation in other customs unions with no collision provisions to AA/DCFTA (Art. 39 AА) Safeguard measures to protect national or public interest.

4. Regulation of international trade Tariff methods: Customs Tariff (tax on goods and other items moving across the customs border of the state); Fiscal function (introduced in order to obtain money for the state. This function applies to both import and export duties); Protectionist, when introduced to reduce or eliminate imports, thereby protecting domestic producers from foreign competition; Balanced, when introduced to prevent unwanted export of goods, domestic prices are lower than the world Non-tariff methods (economic and administrative measures aimed at limiting foreign trade, applied by the state) import subsidies - negative import tax or customs tariff, which is paid directly to the national producer of competing goods; export taxes, like import duties, may be specific and ad valorem, but their impact on foreign trade is practically the same; export subsidy - cash payments aimed at supporting national exporters and indirect discrimination of imports; import quota is a restriction on the quantity of goods imported into the country (allocation of quotas is carried out by the state with the help of import licenses, they are provided for payment or free of charge)

5. Tariffs tariffs for 94.7% of product groups were abolished industrial goods and raw materials Ukraine imposes a preferential regime for only 49.2% of goods exported from the EU special rules for the automobile sector of Ukraine (import tariffs decreased from 25% to 10%) were introduced agricultural products (Ukraine has the obligation to abolish duties by 88.5% for agricultural products) After signing of the DCFTA the EU has fully and immediately carried out tariff liberalization for most of the goods, while Ukraine will do so 3-7 years in order to create competitive conditions on the domestic market and to benefit from increased exports to the EU market.

6. Duty-free quotas The establishment of duty-free quotas for EU is provided for 36 types of goods (beef, pork, lamb meat, poultry, milk, cereals, bran, honey, sugar, starch, mushrooms, garlic, malt, grape and apple juice, butter, cigars, eggs and others) A summary list of tariff quotas is set out in the Appendix tо Annex І-А to the Association Agreement.

7. Non-tariff barriers

8. Principle of quotas Information on the current EU tariff quotas balances, administered on the basis of the "first one who came is the first one who is provided with service" principle is available on-line in the appropriate section on the official website of the European Commission. This information is updated at the end of each working day. Information on current balances of tariff quotas of Ukraine is available on the website of the State Fiscal Service of Ukraine in the section "Тariff quotas".

9. Customs privileges 1) No customs – 0% (agro products 82,2%, food 83,4%, manufactured goods94,7%): - animals, plants, fish, cheese, nuts, fruits…. 2) No customs in the frames of quotas (40 quotas, including 36 on agro products) – principle “who is the first”! Above quota – customs (limited or full) (beef meet, pork meet, lamb meet, poultry meat, milk, yoghurt, honey …) Schedule in Annex І-А AА Unilateral additional customs privileges – Regulation of European Parliament and the Council 2017/1566

10. Requirements for goods Food and feed safety Animal health Plant health Public health Marketing standards Technical requirements Ecological requirements Sanitary and fit sanitary requirements Respect for intellectual property and for geographical titles

11. Concept of “originating products”Protocol 1 AA Principle of state of origin vegetables animals goods of maritime fish production Principle of fulfillment of conditions of production • sufficiently worked or processed products (Annex ІІ to Protocol 1) • insufficientlyworked or processed products (art. 6(2) Protocol 1) • Special conditions: total value of 3rd country material does not exceed 10 % • principle of “double cumulation” EU-Ukraine • Pan-Euro-Med Convention (valid for Ukraine since 01.02.2018)

12. Documents for approval • Certificate EUR.1 Protocol 1 to AA, art. 17 Порядок заповнення та видачі митницею сертифіката з перевезення товару EUR.1 відповідно до Угоди про асоціацію між Україною та ЄС (Наказ Мінфіну №1142 від 18.11.2014 р.) • Declaration invoice • for export not exceed 6000Є • authorized exporter Protocol 1 to AA, art. 22 Про затвердження порядку надання та анулювання митницею статусу уповноваженого (схваленого) експортера (Наказ Мінфін від 07.10.2014 № 1013)

13. Element 2. Liberalization of movement of services • establishment of commercial activity (art. 87-91 AA); • cross-border supply of services (art. 92-96 AA); • temporary stay of natural persons providing services (art. 97-102 AA). Does not cover: mining, manufacturing and processing of nuclear materials; production of or trade in arms, munitions and war material; audio-visual services; national maritime cabotage and domestic and international air transport services etc. computer services (art. 108 AA) postal and courier services (art.art. 109-114 AA) electronic communication services (art.art. 115-124 AA) financial services (art.art. 125-133 AA), transport services (art.art. 134-138 AA), electronic commerce (art.art. 139-140 AA).

14. Reservations to free movement of services Annex XVI – A to Chapter 6 EU reservations on establishment Annex XVI – B to Chapter 6 List of commitments on cross-border services Annex XVI – C to Chapter 6 Reservations on contractual services suppliers and independent professionals (EU Party) Annex XVI – D to Chapter 6 Ukraine reservations to establishment Annex XVI – E to Chapter 6 Ukraine commitments on cross-border services Annex XVI – F to Chapter 6 Reservations on contractual services suppliers and independent professionals (Ukraine)

15. Element 3. Free movement of capital and current payments art.art. 144-147 AA “Movement of capital” (case ECJ Luisi and Carbone) The Parties undertake to impose no restrictions and shall allow any payments and transfers the Parties shall ensure the free movement of capital relating to direct investments Safeguard measures to limit movement of capital and current payments in exceptional circumstances

16. Things to remember • Association Agreement creates a legal framework for bilateral relations between the EU and Ukraine, • At its heart are provisions dealing with trade, • AA provides for creation of DCFTA, • Liberalisation of trade envisaged in AA goes beyond trade in goods and covers, inter alia, trade in services as well as it regulates capital movements.