The European Union (EU) is responding to the changed political reality in Ukraine with concrete steps to strengthen the EU-Ukraine relationship. The EU supports the new leadership’s own ambitious programme of political and economic reforms with a substantive and realistic package, designed to answer Ukraine’s wish for increased integration with Europe.

On Monday 21 February the EU-Ukraine Action Plan under the European Neighbourhood Policy (ENP) was formally endorsed by the EU-Ukraine Co-operation Council, signalling a significant intensification of the EU-Ukraine relationship. On the same day and in order to further strengthen and enrich the Action Plan, the General Affairs External Relations Council (GAERC) agreed on further measures in support of Ukraine’s reform efforts. This additional offer takes up the substance of proposals made jointly by the Commissioner for External Relations and European Neigbourhood Policy, Benita Ferrero-Waldner, and High Representative for Common Foreign and Security Policy, Javier Solana. It is a powerful signal that as Ukraine makes genuine progress in carrying out internal reforms and adopting European standards, relations between the EU and Ukraine will become deeper and stronger.

EU-Ukraine Action Plan

The EU-Ukraine ENP Action Plan offers all the scope needed to allow a significant intensification of EU-Ukraine ties. It supports Ukraine’s political and economic reforms, but success will require considerable effort from both sides. The Action Plan includes elements to strengthen democracy and to help prepare Ukraine for membership of the WTO, a key condition for a possible free trade area. It also expresses the EU’s willingness to discuss visa facilitation, sets out clear steps towards deepening the dialogue on energy, transport and the environment and facilitates the opening of some Community programmes to Ukraine.

The Action Plan sets out the following priorities:

• Further strengthening the stability and effectiveness of institutions guaranteeing democracy and the rule of law.
• Ensuring the democratic conduct of presidential (2004) and parliamentary (2006) elections in Ukraine in accordance with OSCE standards.
• Ensuring respect for the freedom of the media and freedom of expression.
• Developing possibilities for enhancing EU–Ukraine consultations on crisis management.
• Enhanced co-operation in the field of disarmament and non-proliferation.
• Enhanced co-operation in our common neighbourhood and regional security, in particular working towards a viable solution to the Transnistria conflict in Moldova, including addressing border issues.
• Accession to the WTO, which is a first and crucial step towards a Free Trade Agreement with the EU.
• Intensified bilateral trading links, focused on the gradual removal of restrictions and non-tariff barriers that impede bilateral trade. As part of this the EU will support the Ukraine in implementing the necessary regulatory reform.
• Improving the investment climate, through non-discriminatory, transparent and predictable business conditions, simplified administrative procedures and by the fight against corruption.
• Tax reform, improved tax administration and sound management of public finances.
• Establishing a constructive dialogue on visa facilitation between the EU and Ukraine, with a view to preparing for future negotiations on a visa facilitation agreement, taking account of the need for progress on the ongoing negotiations for an EC-Ukraine readmission agreement.
• Gradual approximation of Ukrainian legislation, norms and standards with those of the European Union; further reinforcing administrative and judicial capacity.
• Encourage dialogue on employment issues and best endeavours, in accordance with the PCA, to ensure that treatment of migrant workers does not discriminate on grounds of nationality.
• Full implementation of the Memorandum of Understanding on the closure of the Chernobyl nuclear power plant, including completing and starting-up of the ‘K2R4’ nuclear reactors, in compliance with the internationally accepted nuclear safety standards.

Ten Points for Closer Co-operation

Additional proposals for closer co-operation were conceived following the December election, demonstrating the EU’s willingness to go substantially beyond what was originally on offer. Aimed at strengthening and enriching the Action Plan, the Council has agreed the following measures in support of a democratic and reform-oriented Ukraine:

• To initiate early consultations on an enhanced agreement between EU and Ukraine, as soon as the political priorities of the ENP Action Plan have been addressed.
• To explore possibilities for closer co-operation in the area of foreign and security policy, including European Security Defence policy, particularly with regard to Transnistria. Ukraine will also be invited, on a case-by-case basis, to align itself with EU positions on regional and international issues.
• To deepen trade and economic relations between the EU and Ukraine. The review of the existing feasibility study on establishing a Free Trade Area between Ukraine and EU will be accelerated with a view to enable an early start to negotiations once Ukraine has joined the WTO. The EU is also moving quickly on agreements that will provide access to EU markets for Ukraine’s steel and textiles exports – which between them make up 30% of Ukraine’s exports to the EU. An EU-Ukraine steel agreement is under negotiation; an EU-Ukraine textile agreement was adopted by Council this week.
• To lend further support to Ukraine’s WTO accession and to offer Ukraine continued assistance in meeting the necessary requirements. The EU was one of the first partners to conclude its bilateral protocol with Ukraine in March 2004, whereas negotiations with certain other key WTO members continue.
• To intensify ongoing contacts with Ukraine to help it resolve the outstanding issues relating to the granting of “market economy status”.
• To intensify negotiations regarding visa facilitation, taking into account security aspects, with a view to opening negotiations before the next EU-Ukraine summit in October. In this context, progress in the ongoing negotiations on an EC-Ukraine readmission agreement will remain essential.
• To enhance co-operation in key sectors, including energy, transport, the environment, as well as private sector development. Preparations will be made for a high level dialogue on energy and related issues and the environmental dialogue will be upgraded. Ukraine will be treated as a priority country in the ongoing preparations for the extension of Trans-European Networks.
• To step up support for Ukraine’s legislative approximation process, including with instruments borrowed from the Enlargement process such as TAIEX and Twinning.
• Efforts in the fields of democracy and rule of law will be an immediate imperative and further targeted assistance including support for strengthening of civil society is envisaged.
• To maximise access to funding from the European Investment Bank (EIB), making up to ?250 million of EIB lending available to Ukraine, and provide increased financial assistance to Ukraine through the relevant instruments in order to help Ukraine to pursue its reform process.

Background

EU Assistance to Ukraine

The EU is already the biggest donor in Ukraine, and has undertaken to increase its financial assistance to Ukraine significantly in the next budget period.

EC assistance to Ukraine 1998-2004 (in ?million)

	1998	1999	2000	2001	2002	2003	2004	Total
Tacis National Programme	44	46.5	48	48	47	50	70	353.5
Tacis Nuclear Safety*	7.7	8.4	5.5	32.4	23.9	27	25	129.9
Tacis Cross-border Co-operation**	10.3	5.2	1	5.5	0.5	3	3	28.5
Tacis Regional Programme**	4.8	3.7	6	9.1	10.5	6	4	44.1
Fuel gap	-	-	25	20	20			65
ECHO (humanitarian assistance)	1.6	6.3	1.3	0.9	0			10.1
Chernobyl Shelter Fund	50	40.5	-	40	20	18	22	190.5
Macro-financial assistance (loan)	-	58	-		110			168
Contribution to STCU	3	3	4.5	4	4	4	4	26.5
Total	121.4	171.6	91.3	159.9	235.9	108	128	1.016.1

* Includes both national projects and estimated share of multi-country projects

* * Estimated pro-rata share for Ukraine in regional programmes

European Neighbourhood Policy

The EU-Ukraine Action Plan is part of the EU’s European Neighbourhood Policy (ENP) through which the EU aims to create an area of stability, security and prosperity for itself and its neighbours to the East and South. It aims to create a ring of friends around the borders of the new enlarged EU and is designed to prevent the emergence of new dividing lines between the enlarged EU and its neighbours. It offers partners the chance to participate in various EU activities, through greater political, security, economic and cultural co-operation.

The ENP is distinct from the issue of potential membership. It offers a privileged relationship with neighbours, which will build on mutual commitment to common values principally within the fields of the rule of law, good governance, the respect for human rights, including minority rights, the promotion of good neighbourly relations, and the principles of market economy and sustainable development. The level of ambition of the EU’s relationships with its neighbours will take into account the extent to which these values are effectively shared.

The Action Plan agreed with the Ukraine will now provide the agenda for work within the existing Partnership and Co operation Agreement

Partnership and Co-operation Agreement

Since 1998, EU relations with Ukraine have been based on the Partnership and Co-operation Agreement (PCA) which highlights respect for shared fundamental values as an essential element of the EU-Ukraine relationship; provides a framework for political dialogue; sets the principal common objectives in terms of harmonious economic relations, sustainable development, co-operation, and support to Ukraine’s efforts towards democratic standards.

The provisions governing goods, services, labour, and capital introduce extensive, legally binding commitments with considerable implications for the domestic legislation of Ukraine. The PCA is an important instrument in bringing Ukraine into line with the legal framework of the EU’s single market and of the WTO system. The Partnership and Co-operation Agreement provides the basis for creating a Free Trade Agreement and encouraging closer regulatory convergence.

For more information:

EU-Ukraine Relationship:

http://ec.europa.eu/external_relations/ukraine/intro/index.htm

European Neighbourhood Policy:

http://ec.europa.eu/world/enp/index_en.htm

Emma Udwin 02/29 59577