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Actual challenges of the Association Agreement implementation: how should Ukraine respond?

 

To answer these questions of the implementation of the Association Agreement in the light of the BREXIT and navigate through challenges, the EU funded Project “Support for the implementation of the EU-Ukraine Association Agreement - Association4U” co-organized the International Workshop “Challenges before and after the ratification of the EU-Ukraine Association Agreement: Impact of the Dutch Referendum, the BREXIT and future elections in the EU Member States” together with Jean Monnet Centre of Excellence (based at the National University of “Kyiv-Mohyla Academy” (NaUKMA).

The implementation of Association Agreement (AA) is a live, ongoing process, which is highly dependent on external context. Every challenge that affects EU member states influence greatly the shape, context, interpretation and the progress of policies. Recently two major events have occurred, which influenced the already developed AA implementation agenda – BREXIT referendum and Dutch Referendum on the ratification by the Netherlands of the EU-Ukraine Association Agreement. Moreover, the situation in Eastern Ukraine illuminated some questions on how the AA, including Deep and Comprehensive Free Trade Agreement (DCFTA) should be implemented.

Considering the importance of issues, experts from Association4U Project and NaUKMA decided to undertake an innovative approach – to gather recognized experts from Belgium, United Kingdom, Germany and government officials, legal and sectoral policy experts, academics and students in one place through live video sessions.

As stated by prof. Roman Petrov: “engagement different, but interconnected audiences are very important to raise new generation of public servants and experts”. Meanwhile, according to Cezar Herma, Key Expert - Legal Approximation and Translation of the Association4U Project, the goal of the workshop was to create an environment for “practitioners and scholars not just to discuss important issues, but also to work jointly on dealing with challenges”.

Encouraged by the unusual format of the event, around 50 participants gathered on 30 January 2017 not only to listen about peculiarities of the internal policy of the Netherlands and the United Kingdom, but to discuss legal and economic aspects of the AA’s future.

Overviewing the recent situation prof. Petrov noted, that despite many talks about the Association Agreement only a few people know about its substance due to the fact it is not a static document, but a living organism.

 

The first part was opened by prof. Peter Van Elsuwege (Ghent University, Belgium) who described the context of the Dutch Referendum and its reflection.

Speaking about Dutch Referendum he pointed that after the BREXIT the Netherlands, actually “prepared to compromise to save the Association Agreement”. Nevertheless, that introduced solution, – decision of the heads of the EU member states, which doesn’t bind EU institutions and Ukraine, – wasn’t built on the EU law instruments. According to all experts this kind of political deals are part of the EU practice and were already used before (e.g. after the negative results of referendum in Ireland on the Treaty of Nice, clarification on the rights and obligations of the UK initiated by D.Cameron before the BREXIT referendum).

According to prof. Peter Van Elsuwege “this deal doesn’t change AA itself, the text of AA remains as it is”.

The deal is merely a product of “legal creativity of the EU member states, it is an intentional document, which bounds the EU member states to certain interpretations of the AA, but doesn't change the text. It is clearing some points, which were not clear in the beginning of the signature of the AA. Even if the deal is accepted, it does not change the AA, it is an interpretation. It could be used as a source of clarification from the EU side”, - concluded prof. Peter Van Elsuwege.

 

In turn, prof. Adam Lazowski (Westminster University, UK), underlined, that “this document couldn’t influence the possible direct effect on the AA”, which is excluded by Article 7 of the decision of the EU Council on AA signature and provisional application, but is possible according to the established jurisprudence of the EU Court of Justice.

Discussing the context of the document, it is interesting to note, that, for instance, during the referendum campaign there were some myths, which were needed to be answered in the deal, like:

- risk that Duch soldiers could be sent to the Eastern Ukraine;

- misunderstanding that there could be additional financial support to Ukraine required from the Netherlands in the framework of the Association Agreement. It is worthy to say, that this clause doesn’t restrict financial support of the EU or EU member states to Ukraine under other projects and programs.

- nevertheless the Association Agreement is about fighting against corruption, there were arguments during the referendum that Ukraine is too corrupted state to cooperate with it. Thus, the deal underlines importance of fight against the corruption.

Discussing the impact of the BREXIT process on the Association Agreement (AA) implantation prof. Adam Lazowski stressed attention that, BREXIT will lead to withdraw also from the EU external agreements like the AA.

 

For instance, prof. Adam Lazowski figured that despite many challenges and unclear issues, “until the final withdrawal from the EU the UK is legally bound by remaining agreements. The UK seems to plan negotiating some agreements before the BREXIT although its competence to do it is questionable. The focus of the UK will be on Commonwealth states, China + former colonies and the US. So if the UK could have political agreement with the European Commission and EU partners for prenegotiating, Ukraine should encourage its British partners to start the prenegotiation process as soon as possible”.

This thesis makes sense in the context of the recent decrease of the trade between Ukraine and the UK.

Despite the status of the BREXIT is still unclear, there are some options that should be considered now:

- Ukraine should start negotiating agreements with the UK before BREXIT;

- Ukraine should be prepared that after BREXIT UK could be removed from other agreements.

 

Despite important political and trade aspects, Dr. Stefan Lorenzmeier (University of Augsburg, Germany) covered a subject of legal challenges of territorial application of the EU-Ukraine Association Agreement and protection of foreign investments on occupied territories of Ukraine.

According to Dr. Stefan Lorenzmeier, there are still “debates whether to apply principle of moving frontiers existing in the international law doctrine to the EU-Ukraine Association Agreement, because it is still unclear if this rule applies to the illegal movements of borders”. Dr. Lorenzmeier rejects this possibility as legitimizing acts that are illegal under international law.

As far as Association Agreement doesn’t regulate this situation, it should be interpreted in terms of the international public law.

There are several fundamental points regarding application of the Association Agreement:

- AA is clearly applying to the internationally recognized territory of Ukraine;

- For those, who took Russian citizenship AA could not be applied;

- Only goods which are originated from the custom area of Ukraine could be traded under the DCFTA;

- Situation in Eastern Ukraine is more complicated because, intera alia, there are enterprises which pay taxes to Ukraine.

 

Another problem is which international legal regime is to be applied in the territory of Crimea. “There are arguments that if Ukrainian authorities do not control the situation; the moving frontier rule could be applied. Thus, according to the international investment law if Ukrainian law is not applicable, thus Russian laws should be applied to protect previous investments”, - underlined Dr. Stefan Lorenzmeier.

Meanwhile, Mr Daniel Bilak, Chief Investment Advisor to the Prime Minister of Ukraine and Director of the Ukraine Investment Promotion Office, has aptly noted, “in terms of new investment, this argument can't work because there are sanctions prohibiting international investments in Crimea. Some investors applied force-majeure investment clause to protect their investments. The problem concerns mostly investors that started their activity in Crimea before its illegal annexation by Russia. To solve the disputes companies should address to the ICC and negotiate that under international jurisdiction”.

 

Dr. Zoryana Makarukha, Head of Unit of the Government Office for European and Euro-Atlantic Integration, underlined that “Ukraine considers European Integration as a chance to change, to develop as a European country. AA is just a tool which could help us to develop our country by our own”.

For Ukraine, it is very important that despite pending ratification of the Association Agreement de-facto it is being fully applied.

According to Dr. Makarukha, “our biggest challenge is the institutional capacity of the public administration to implement the AA. However, this challenge is a part of a broader problem – public service reform. That is why we appreciate the support of the Association4U Project as a networking platform for academics (senior, junior), public servants and practitioners. Thus, it is very important for us that we know to whom to address when we experience challenges. So, we are feeling synergy which helps us to implement the Association Agreement”.

 

Nevertheless, it is still important to develop a network of experts to pursue the AA implementation and to encourage them to join civil service in a view to support public service reform.

Dr. Makarukha informed that GOEEI is currently introducing new AA implementation monitoring tool, using modern IT solutions for relevant and efficient communication among central governmental bodies.