The presentation reviews several key DCFTA provisions and their implementation from the point of view what other countries could learn from this experience. Veronika Movchan is a Ukraine expert, an academic director and Head of the Center for Economic Studies at IER in Kiev. Her main research interests are for example trade policy and regional integration.

1. The DCFTA provisions and their
implementation:
Some observations
Veronika Movchan
Institute for Economic Research and Policy Consulting
for Bertelsmann Stiftung Berlin
Kyiv, 2018

2. 2
 Deep and Comprehensive Free Trade Areas (DCFTAs) with Georgia,
Moldova and Ukraine are among the most comprehensive FTAs
concluded by the EU
 The DCFTAs envisage:
▫ Zero import duties for majority of products, elimination of export
duties and quantitative restrictions, abolishment of export subsidies
▫ Harmonization of product safety regulation both for food and
industrial products aimed to mutual recognition agreement
▫ Enhanced protection of intellectual property rights
▫ Mutual access to public procurement
▫ Liberalization of trade in services
 Key task of this presentation is to review several key DCFTA provisions
and their implementation from the point of view what other countries
could learn from this experience
Introduction

3. 3
Provisional application Fully in force
Georgia September 2014 – June 2016 Since July 2016
Moldova June 2014 – June 2016 Since July 2016
Ukraine* January 2016 – August 2017 Since September 2017
The launch of the DCFTA
Note: * In April 2014 – December 2015, EU applied Autonomous Trade Measures (ATMs)
replicating the first year of the DCFTA regarding the EU market access
Observation 1: The implementation of the DCFTA can start through the
mechanism of provisional application before the ratification procedures are
completed by all EU member states

4. 4
Schedule of import duties liberalization:
example of Ukraine
Change in duties Access to the EU market Access to Ukraine market
Immediately to
zero
95% of industrial TL
82% of agricultural TL
50% of industrial TL
40% of agricultural TL
Zero after
transition period
5% of industrial TL
(transition: up to 7 years)
1% of agricultural TL
(transition: up to 7 years)
50% of industrial TL
(transition: up to 10 years)
50% of agricultural TL
(transition: up to 7 years)
Partial
liberalization
17% of agricultural TL 10% of agricultural TL
Observation 2: The DCFTA can be asymmetric foreseeing faster opening of
the EU market
Observation 3: The DCFTA does not automatically imply duty-free trade
for all products; the protection of sensitive products is possible but
requires reciprocity
Note: TL – tariff line

5. 5
Instruments of partial liberalization
 Reduced by still non-zero final duties
Applied by Ukraine on selected agriculture and food products including dairy
products, eggs, selected food products (10% of agriculture TL). The level of reduction
from the baseline level is 20-60%, transition period – up to 10 years
 Tariff rate quotas (TRQs)
Intensively used by the EU and to a smaller degree – by its DCFTA partners. In case of
Ukraine’s DCFTA, the EU protects animal origin products, grains, some food products.
Ukraine protects meat and sugar, less than 1% of agriculture TL. Moldova applies
TRQs on meat and processed meat products, sugar. Georgia does not apply TRQs
 Entry price regulation
For selected vegetables, fruits and juices, the EU abolished ad valorem part of its
import duty, but preserved specific duty establishing an entry price for the access to
the EU market. The instrument is used for exports of all three DCFTAs partners.
Observation 4: There are several instruments of partial liberalization applied
within the DCFTAs, but the TRQ is the most widespread

6. 6
Ukraine’s TRQs usage
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Corn, corn meal and pellets
Natural honey
Grape and apple juice
Poultry and semi-finished…
Processed tomatoes
Cereals
Sugar
Soft wheat, wheat flour and…
Butter and dairy spreads
Wheat , barley meal and…
Exports to EU (tons)/ TRQ (tons)2017 2014
• Actual volume of UA exports noticeably exceeds TRQ volume for 90% of fully
used TRQs thus EU duties outside TRQs are not prohibitive
• But TRQ volume has appeared much lower than the country export capacity
despite it was set after consultations with business
Observation 5: Negotiations about TRQs should rely on future potential
volume of domestic production to maximize the DCFTA impact

7. 7
 Georgia and Moldova DCFTAs contain a “anti-circumvention mechanism” to
ensure that tariff liberalization does not stimulate fraud re-exports
 The mechanism:
▫ Is applied to selected agriculture and food products
▫ Sets “trigger levels” of export volumes to the EU, after which the mechanism
could be launched
▫ Requires exporter to justify higher export volumes if 80% of the trigger level is
reached
▫ Allows uninterrupted exports if the justification is satisfactory
▫ Allows a 6-month suspension of duty-free regime for the concerned product if
exporter could not provide a proper justification
 Moldova exports products subject to anti-circumvention mechanism above
‘trigger levels’ suggesting successful implementation of the mechanism
Observation 6: The anti-circumvention mechanism allows successfully reducing
the risk of fraud re-exports and thus can help to contain possible concerns and
stimulate more liberal agreement
Anti-circumvention mechanism

8. 8
Food safety regulation
 Adaptation to the EU food safety requirements is the prerequisite for the
access to the EU market for agricultural and food producers
 Main challenge: exports of animal origin products
 There are two approaches:
▫ Individual (commodity or sector) access
Any third country can get access to the EU market through getting the EU approval for its
national safety control system for a specific product and then, if required, verification of
individual producers. The DCFTA envisages time-bound procedures for the recognition of
equivalence of measures thereby facilitating the process
▫ Country access
Once the SPS approximation is fully undertaken, all concerned producers will be able to
export after obtaining the certificate from their national competent authorities. The lists for
SPS approximation within the DCFTAs contain about 250 EU legal acts being both
cumbersome and costly, especially for smaller economies of Moldova and Georgia
Observation 7: The DCFTA facilitates individual access, but also aims full
approximation of SPS legislation that many experts deem too costly

9. 9
Before DCFTAs: 2013 After DCFTAs: as of May 2018
Food
(max 15 categories)
Animal by-products
(max 10 categories)
Food
(max 15 categories)
Animal by-products
(max 10 categories)
Georgia No access No access 1 category
(8 establishments)
2 category
(4 establishments)
Moldova No access 2 categories
(24 establishments)
2 categories
(2 establishments)
2 categories
(48 establishments)
Ukraine 4 category
(8 establishments)
6 categories
(86 establishments)
9 category
(66 establishments)
9 category
(280 establishments)
Individual access for animal origin products
• Producers of animal origin products can spend several years before they
get individual access to the EU market. In Ukraine, preparations have been
active since the launch of the DCFTA talks in 2008
• The DCFTA definitely stimulated the process of getting access to the EU
market both for new products and for new producers of already allowed
products
Observation 8: The DCFTA became an important stimulus for producers of
animal origin products to get individual access to the EU market

10. 10
Intellectual property rights (IPRs)
 The DCFTAs reconfirm the WTO TRIPS provisions and go beyond them in
several areas, in particular the IPRs enforcement
 Protection of geographic indications (GIs) is a key component of the IPR
chapter:
▫ Georgia/Moldova: excising agreements with the EU regarding GIs are
integrated in the DCFTA; lists of mutually protected GIs are added; GIs
subcommittee are envisaged
▫ Ukraine: list of protected EU GIs is added; no registered Ukraine's’ GIs; GIs
subcommittee are envisaged; transition periods (up to 10 years) before all EU
GIs are enforced (e.g. for Feta, Parmigiano Reggiano). The EU promised to
provide technical and financial supports for re-branding of companies needed
due to changed GIs protection
Observation 9: The DCFTA envisages higher level of IPRs protection compared
to baseline WTO TRIPS.
Observation 10: The enforcement of the selected EU GIs could be postponed.

11. 11
Public procurement
The DCFTA envisages a mutual access to public procurement markets. The EU public
procurement accounts for about 18% of GDP of the EU
EU market access tentative schedule: Georgia Moldova Ukraine
1. Supplies for central government authorities 3 years 9 months 6 months
2. Supplies for state, regional and local authorities and
bodies
5 years 3 years 3 years
3. Supplies for all contracting entities 6 years 4 years 4 years
4. Services and works contracts and concessions for all
contracting authorities
7 years 6 years 6 years
5. Services and works contracts and concessions for all
contracting entities in the utility sector
8 years 8 years 8 years
• The DCFTAs grants mutual access to public procurement markets
• The access is granted in stages after the DCFTA country complete the
legislative approximation associated with the stage and this progress is
verified and confirmed.
Observation 11: The access to the EU public procurement market envisaged
within the DFCTAs is possible after confirmed successful reforms.

12. 12
Trade in services
EU Georgia Moldova Ukraine
Reservations with regard to market access and
national treatment for cross-border supply of
services (mode 1)
up to
201
14 3 27
Reservations with regard to market access and
national treatment for establishments
up to
161
32 12 21
 The liberalization of trade in services is less extensive than trade in goods
 The legal approximation and thus potentially “internal market treatment”
at the EU market is envisaged for several sectors:
▫ Postal and courier services; Electronic communication; Financial services; and
International maritime transport.
▫ Ukraine took the definite commitment to complete the legal approximation, while
Georgia and Moldova “recognize the importance of approximation”
▫ The current progress in approximation is slow
Observation 12: Trade in service liberalization is far less extensive, with the
EU being relatively more closed than its DCFTA partners.

13. Contacts
@IER_Kyivwww.ier.com.ua
8/5-А Reytarska str., Kyiv 01030, Ukraine
tel: +38-044-278-6360
e-mail: institute@ier.kiev.ua
IER.Kyiv