2012年-CEPS欧洲政策研究中心_The_Prospect_of_Deep_Free_Trade_between_the_European_Union_and_Ukraine_243页_917kb

Summary of the Prospect of Deep Free Trade Between the European Union and Ukraine

Core Content

This report, commissioned by the European Commission, evaluates the economic feasibility and implications of a Free Trade Agreement (FTA) between the European Union (EU) and Ukraine, following Ukraine’s accession to the World Trade Organisation (WTO). It outlines both simple and deep FTA scenarios, focusing on how trade liberalisation can impact Ukraine’s economy and its integration into the EU’s market.

Main Views and Key Findings

1. Economic Context and Reforms

• Ukraine's Recovery: Ukraine has emerged from a deep post-communist recession, achieving rapid growth in recent years, largely due to a boom in metallurgical exports and energy imports.
• Need for Openness: Ukraine must become a more open and competitive economy, especially in industrial and service sectors, and must address domestic governance and corruption.
• Fiscal Adjustments: The government needs to reform unsustainable fiscal policies from 2004 and improve the business environment to attract investment.

2. FTA Scenarios

• Simple FTA: Involves removing tariffs, liberalising services, and allowing free movement of capital. This would have limited economic impact.
• Deep FTA (FTA+): Encompasses deeper integration, including harmonisation of technical standards, full regulatory alignment with the EU, and institutional reforms. It has the potential for substantial economic benefits.

3. Economic Impacts

• Quantitative Estimates: Simple FTA would lead to minor changes in trade structure but limited income growth. Deep FTA could result in welfare gains of 4–7% based on static models, potentially doubling with dynamic effects.
• GDP Growth Potential: Institutional reforms and regulatory alignment could boost GDP by 20–30%. Opening key service sectors to foreign investment could raise annual growth by 1.5%.
• EU Impact: The EU would experience minimal macroeconomic effects, but could benefit from improved competitiveness of Ukrainian industries in global supply chains.

4. Feasibility Considerations

• Administrative Capacity: Ukraine currently lacks the administrative strength to implement and enforce reforms, which must be strengthened.
• Political Will: The political economy feasibility depends heavily on the will of Ukrainian authorities to undertake necessary reforms and align with EU standards.
• Human Capital: Ukraine has a well-educated workforce, especially in natural sciences, but needs modernisation in social sciences and management.

5. Regulatory Convergence

• Customs Procedures: Ukraine needs to eliminate corruption and introduce advanced customs procedures to integrate into the European supply chain.
• Product Standards: Harmonisation with EU standards for industrial products is crucial, with the EU proposing a plan for full alignment by 2011.
• Agricultural Standards: Significant investment is required to meet EU sanitary and phytosanitary standards for agricultural exports.
• Competition Policy: Ukraine needs to strengthen its competition policy and ensure political independence in enforcing it.
• Financial Sector: Opening the financial sector to foreign investment is important for resource allocation, but full compliance with EU norms should be gradual.
• Transport and Energy: Convergence on EU standards is necessary, especially in civil aviation and energy sectors, which are already under negotiation.
• Labour and Social Standards: Improvements in safety and liability insurance are needed, but not necessarily full alignment with EU regulations.
• Movement of Persons: Visa restrictions have been lifted for EU citizens, but asymmetry in visa facilitation is acceptable for the near future.

6. Institutional and Governance Reforms

• Corruption and Transparency: A transparent, consistent, and de-corrupted regime is essential for economic governance.
• Corporate Governance: Weak corporate governance standards in Ukraine require alignment with European and international norms.
• Environmental Standards: Compliance with EU environmental standards is costly but necessary; a step-by-step approach with EU support is recommended.
• Education and Training: Enhancing Ukraine's human capital through scholarships and education reforms is a key priority, especially in social sciences and management.

Conclusion

A deep FTA with the EU offers significant economic benefits for Ukraine, but its success hinges on institutional reforms, regulatory alignment, and a commitment to openness. While simple FTA is more feasible, it delivers limited gains. Deep FTA, though more complex, can lead to substantial long-term growth and development. The report recommends a balanced approach, taking into account the costs and benefits of each reform and the need for international cooperation and financial support.