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Internal Market Issues and Economic and Trade-related Reforms

The assessment of Internal Market Issues, Economic and Trade-Related Reforms is based on several sources: analysis of available documents, the work of the previous phase of UEPLAC ¹ , and interviews with officials of the State Department for Legal Approximation.

Unfortunately, any evaluation still remains provisional as key pieces of information are still missing ² and the existing translations from Ukrainian into English (both written and verbal) may lead to a flawed interpretation.

Initial assessment will be followed by a series of reports prepared by the Project regarding the level of adaptation of laws regulating the internal market, economic and trade reforms. Other spheres covered by the work of UEPLAC might also be affected. Detailed recommendations will be provided during the implementation stage of the project.

At present a great number of normative acts have been adopted in all priority areas listed in Art. 51 PCA. If one considers their objective to be to conform to the acquis then this condition has been met rather successfully (including detailed provisions presented as partial harmonisation). Unfortunately, almost none of these harmonised legislative acts have been implemented sufficiently. Sometimes, old legislation is still in force (for example, in the area of occupational health and safety) or the new legal norms are inconsistent (e.g. company law and intellectual property). On occasion, implementing secondary legislation does not conform to the respective provision or simply does not exist. It seems as if the public bodies responsible for implementation and enforcement of these legal norms are sufficiently staffed but are not aware of their responsibilities.

More importantly, in focusing on secondary EU legislation, those involved in the law making process appear to have neglected the basic principles of the EU treaties, especially the principle of non-discrimination. So, while on the one hand, an attempt is made to harmonise indirect taxation legislation with that of the EU (the rate and structure), discriminatory VAT and excise duty provisions, which obviously also affect foreign trade, remain in force. In considering priorities of reform, the focus should be on all the provisions which hinder Ukraine’s accession to the WTO as such provisions are incompatible with the PCA and EU treaties.

Incorrect prioritisation may jeopardise the introduction and implementation of key principles, for example:

• the problem remains unsolved, while at the same time the focus remains on a large number of individual questions in this field
• In order to advance the transposition of some of the New Approach Directives, there are attempts to undertake an almost impossible comparison between EU standards and the mandatory technical specifications as contained in national regulations (while, the PCA dictates a switch to a European system (as set out in the Directives) without any further investigation, in other words verbatim transposition) at the same time that essential requirements are being adopted by European standardisation bodies
• The transposition of the acquis in the area of free movement of goods continues, but the provisions of Directive 98/34/EC, which lay out a procedure for information sharing in the field of technical standards and regulations (which is at the heart of the EU system, and may act as evidence of a major step towards meeting WTO requirements) has yet to be transposed
• The occupational health & safety sector lags far behind. The reason for this is the long-delayed adoption of the Labour Code. It is clear that where the decision has been made to transpose such a Directive as part of a wider legislative exercise, the deadline for transposition may not be met. In this case, the European Commission recommends that³ that Member States:

“Refrain from adding to national implementing legislation conditions or requirements that are not necessary to transpose the Directive concerned, where such conditions or requirements may hinder attainment of the objectives pursued by the Directive; Ensure, when transposition of a Directive is included in a wider legislative exercise at national level, that this does not lead to missing the deadline for transposition.”

The next assessment to be submitted will deal with the prioritisation of measures to implement in 2007 as concerns the National Programme for Approximation of Ukrainian legislation and the legislation of EU.

1) Translation by the Project support staff of the Law of Ukraine “On the State Programme on Approximation of Ukrainian Legislation to the Legislation of the European Union” of 18 March 2004 # 1629.

2) Translation by the Project of the Plan of measures to implement in 2007 National Programme for Approximation of Ukrainian legislation and the legislation of EU.

3) Verbal translation by the Project support staff of the “Position Paper” prepared by the State Department in June 2006 on “the implementation of the EU-Ukraine Action Plan”.

4) Draft report to the Government prepared by the State Department in July 2006 on “the progress achieved in implementation of the State Programme on the Approximation of Ukrainian legislation to the Legislation of the European Union”.

5) “Review on the Progress Achieved in Approximation of Ukrainian legislation to the acquis communautaire” (in Ukrainian language) - Pieces of EC legislation covered by the review have been identified by their natural number for further analysis.

6) Propositions to the work plan of UEPLAC (letter from the Minister of Justice of 21 September)

¹ The Systematic updating of what was already initiated under UEPLAC Phase III is one of the requirements of the ToR. To take stock of the materials prepared or disseminated by UEPLAC III, the UEPLAC IV Expert had to rename and sort out about 250 files coming from the website of UEPLAC III of which 189 documents were analysed.

² Replies to some questions listed on 8 September 2006 and on 11 September 2006 are still expected. Are also missing in particular, documents on WTO accession issues (Working Party Report circulated in 2005, questions and replies, Schedules of commitments, …), translation of the Introduction of the Review on the Progress Achieved in Approximation of Ukrainian legislation to the acquis communautaire” (in progress), translation of the Guidelines for the public administration “Methodological recommendations on approximation of Ukrainian legislation to the acquis communautaire” (in progress).

³ Recommendation from the Commission of 12 July 2004 on the transposition into national law of Directives affecting the internal market.

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