SWOT-analysis of the harmonization of technical requirements for trade with the EU acquis from Ukrainian key stakeholders groups positions

Tetiana Zosymenko, PhD, Associate Professor of Theoretical

and Applied Economics Department

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ASSOCIATION AGREEMENTbetween the European Union and Ukraine

Deep and Comprehensive Free Trade Area (DCFTA)

Removing trade barriers, including technical regulations

Harmonization of legislation of Ukraine for technical regulation with the acquis communautaire

The Goal: to create an efficient and transparent infrastructure for technical regulation (so-called quality infrastructure) – a system of institutions and institutional structures that

cumulatively ensure the implementation of standardization, metrology and accreditation processes in the national economy

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The New Approach – the European Union directives defining “essential requirements” related to health, safety and environmental issues. Products must

meet these requirements in order to be placed on the European market.

Key

prin

cipl

es

Proportionality of risk: the level of complexity of the procedures for assessing conformity and product safety requirements during

manufacturing is proportional to the degree of risk posed by products

Public-private approach: conformity assessment and verification shall not be made entirely by the government bodies; privateorganizations are also entitled to implement such procedures

Preventing conflict of interests: standards are developed by independent competent bodies; institutions and administrative

bodies, whose combination may pose a conflict of interests, must be separated

Voluntariness: application of harmonized or other standards remains voluntary, and the manufacturer may always apply other

technical specifications to meet the requirements

Post-market control: technical regulations shall not apply to the process of designing and manufacturing of products, and sets

requirements for performance characteristics, related to safety of products

Domestic Approach

Various types of regulations spread on one product. They often are contradictory and create regulatory

burden on business

Standardization in Ukraine still has not become a voluntary procedure, which would allow to confirm the specific properties of the product, taking into account

the needs of both producers and consumers

Warranty: the government guarantees adequate technical competence of private organizations of quality Infrastructure

Current institutional subordination of ministries and agencies often leads to conflict of interests,

exacerbating the situation of enterprises, institutions and organizations.

Pre-market control prevails (in the form of state registration, examinations, certifications, conclusions,

etc.)

Unclear definition of competences of supervisory bodies leads to duplication of control objects, lack of responsibility and the inability assessing the

effectiveness of state control

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National metrology institute

National accreditation body

Definition of units(may be required in standards)

Accreditation body standards

Gov

ernm

emt i

nfra

stru

ctur

e fo

r tec

hnic

al re

gula

tion

Calibrationcertificate

required forlaboratory

accreditation

Certificationbodies

Inspectionbodies

Testinglaboratories

Calibrationlaboratories

Priv

ate

infr

astr

uctu

re

for t

echn

ical

regu

latio

n

Enterprises

Setting standards for activities of

private organizations

Certification Inspectioncertificate

Testingreport

Calibrationcertificate

National standardsbody or bodies

The institutional frame of the quality infrastructure in accordance with the principles of the New Approach

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SWOT-analysis of the harmonization of technical requirements for trade with the EU acquis from Ukrainian business sector positions

Strengths Weaknesses

- European technical assistance and financial cooperation programs;- investment projects with the EU;- presence of European business partners and established trade links with the EU.

- low conversance of domestic entrepreneurs with structural features and functioning of new qualityinfrastructure;- unstable or unsatisfactory financial and economic situation;- lack of motivation of the implementation of EU technical regulations as a result of the absence of any guarantees of Ukraine's future membership in the EU and establishing of certain preconditions for such membership

Opportunities Threats

- simplification of procedures for conformity assessment and for simple products with low risk;- reducing the number of inspections and documents for controllers;- uniform and consistent product requirements;- improving access to the EU market and markets of other countries (without additional certification);- access to participation in EU public procurement;- acceleration of procedures and reducing the cost of standardization, metrology, accreditation services as a result of competition between public and private quality infrastructure;- growth of economic efficiency (labor productivity, capital productivity, etc.);- the possibility of business development in the field of conformity assessment

- high cost of standardization, metrology, accreditation services ;- loss of markets in the Single economic space, especially of Russia Federation (blocking of Ukrainian import);- corrupt practices and ignoration of legitimate requirements at the government quality infrastructure end

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SWOT-analysis of the harmonization of technical requirements for trade with the EU acquis from Ukrainian consumers positions

Strengths Weaknesses- high level of consumers’ interest in protecting their rights, which forms an active civil position to improve the effectiveness of consumer protection as a special area of public interest;- availability of an active network of non-governmental consumer organizations;- introducing elements of consumer knowledge in the education system

- low conversance of domestic consumers with their rights and protection order in case of purchase of products with defects; - low purchasing power; - lack of government support for consumer organizations; - moratorium on inspections of business entities to reply the complainant's issues of State Inspectorate of Ukraine on protection of consumer rights

Opportunities Threats- improving the safety of goods and services;- improving public health;- reduction of injuries from defective products;- decreasing of consumer spending by reducing of unnecessary costs for business;- diversification of imported products at lower prices;- consumers empowering (replacing goods after agreement, post-agreement compensation, collective claims, claims of consumer organizations);- increasing of environmental friendliness of production and products

- higher prices of domestic products due to the inclusion of costs of standardization, metrology, accreditation to the cost of production;- disappearance from the market of cheap price segment products that do not meet the quality requirements;- increasing of cheap, low-quality products’ quotient of European origin, that have no sale in the EU, in domestic food market

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SWOT-analysis of the harmonization of technical requirements for trade with the EU acquis from Ukrainian government position

Strengths Weaknesses- lasting experience in reforming the system of technical regulation;- ongoing cooperation with the EU in building of new quality infrastructure;- adoption of the Strategy of development of technical regulations for the period until 2020- implementation of the Sector Policy Support Programme “Promoting mutual trade by removing technical barriers to trade between Ukraine and the European Union” (the European Commission programme by which financial support is provided to the Government of Ukraine for the implementation of reforms in the sphere of technical Regulation)

- lack of experience in institutional support of implementation of post-market control of quality and safety of products;- lack of effective coordination mechanism at the highest level, at least at the level of prime minister, and the related lack of political attention to important details of reforming quality infrastructure;- conservative thinking of civil servants, especially lawyers;- lack of independent personnel policy;- low motivation and flexibility of civil servants responsible for the implementation of technical regulations modeled after the EU;- unsatisfactory quality of management of the state budget, including transferred within the EU budget support programme;- the lack of an effective system of monitoring changes in EU legislation;- low level of knowledge of EU languages and low quality of professional translation of EU legislation

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SWOT-analysis of the harmonization of technical requirements for trade with the EU acquis from Ukrainian government position

Opportunities Threats

- complete membership of Ukraine in the European market surveillance system;- full recognition of Ukrainian institutions belonging to quality infrastructure;- increasing of regulatory transparency and reducing opportunities for corruption;- creation of favorable investment and regulatory climate;- general improvement of public administration;- increasing of economic and social efficiency indicators;- growing of high value added export;- enhancing innovation in the country;- acceleration of industrial production’s modernization through the use of scientific and technological achievements of European countries;- improving the competitiveness of products and the economy in whole

- rising of unemployment and reducing incomesby decreasing production of uncompetitive entities;- increasing of workforce motivation to emigrate;- negative pressure on the trade balance due to faster

growth of import; - reduction of budget revenue due to curtailment of non-

competitive domestic industries.

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Thank you for attention!