With the war in Eastern Ukraine showing no signs of stopping, Ukrainian producers are facing a new economic challenge. The reduction of exports to Russia has made tapping into the EU market more crucial than ever before.
How can Ukraine better understand sophisticated EU rules? How can it take advantage of the new market prospects and trade on equal terms with EU businesses?
We talked about these issues with Joachim Lambert, an EU expert on technical legislation and standardisation, currently working on an EU project aiming at removing technical barriers to EU-Ukraine trade, and with Stefanos Ioakeimidis, the project’s team leader.
Ukrainian producers are losing the Russian market. On the other hand, the EU has unilaterally opened its market to Ukrainian producers. But many say barriers to trade still exist. What are these barriers?
I think the first barrier is that many Ukrainian manufacturers don’t know the so-called New European Approach, i.e. the approach of harmonising technical regulations in the European Union that was adopted in the mid-1980s, which makes the EU regulatory system more flexible and conducive to innovation. Many of the manufacturers are not aware of the principles of the New Approach and its different elements, such as directives with respect to essential health and safety requirements, the role of harmonised European standards, conformity assessment procedures, the meaning of the conformity declaration, and the role of so-called Notified Bodies.
Ukrainian producers expect that some authority will be checking on them, but the New Approach leaves the responsibility with the producer. Ukrainian producers often don’t know how or why to prepare a conformity declaration, when to involve an EU Notified Body, or who undertakes a conformity assessment (the assessment of whether a product complies with relevant EU technical regulations).
What is a Notified Body?
It is an institution with the capacity and facilities to test and inspect products and to investigate the design and development documents associated with the product.
How do these Notified Bodies function in the EU?
They function sector by sector. They are nominated by the EU member states, which inform (notify) the European Commission of what organisations they have deemed to fulfill all criteria required of a Notified Body for a particular sector. It is the responsibility of each manufacturer to decide which Notified Body to work with in conformity assessment procedures in cases where the product requires an assessment. A manufacturer is free to involve a Notified Body from Poland, Germany, France, or wherever. The European Commission maintains a database with a list of Notified Bodies (the NANDO database), which manufacturers can consult.
You say that Ukrainian manufacturers are often not aware of these procedures. How can they access this information?
In principle, this information is disseminated by the designated bodies in Ukraine— there are a lot of them in the major cities and they can provide information to manufacturers. There are even Notified Bodies with offices in Ukraine that can provide consultations for manufacturers and help put them in touch with Notified Bodies in the EU.
Some Ukrainian bodies already have relationships with European Notified Bodies and can help manufacturers going through conformity assessment procedures. I think this assistance is crucial, because the system is often too complex for a company, especially a small business, to navigate without help; they often don’t have the staff to delve deeply into the matter and they need guidance.
Does your project plan to give some guidelines?
Yes, we will start posting this information on our website and we will be producing brochures on how to export machinery to the EU and other publications.
If a manufacturer is producing in accordance with the existing Ukrainian standards, will he/she need to shift to adhering with the EU standards? Or, if the current Ukrainian standards conform with those of the EU, is he/she able to export products without adopting EU standards?
This is a very interesting point. The principle of the New Approach is that manufacturers are free in how they conform to the EU requirements. They must conform to the requirements of relevant technical regulations, but are free on how to comply with them.
This is a big advantage of the European system, because it promotes innovation. If a manufacturer wants to develop something completely new, he is able to do that without being hindered by regulations, but it is a challenge because he must be able to demonstrate that the product fulfills the relevant essential health and safety requirements. On the other hand, if he adopts the harmonised standards, which include all relevant essential requirements applicable to the product, he is safe. He benefits from the “assumption of conformity,” because every market surveillance body in the EU assumes that if he has applied this standard completely, his product fulfils the requirements.
There are two ways forward for manufacturers: to adopt these harmonised European standards, or to prove conformity with the standards in a different way. What method would you suggest for Ukrainian manufacturers?
The second option is more difficult, manufacturers can decide for themselves. If a manufacturer is using an existing standard that is safe, then it is obviously cheaper to continue using it; however, he must prove that the standard used conforms to the relevant requirements of the European directives applicable to that product.
How can he/she prove this?
With safety assessments accepted by the European market surveillance authorities or other Notified Bodies. In the EU, if a product fails and results in an injury or damages, it is the manufacturer who brought this product to the market who is primarily liable. In such cases, the manufacturer must prove that the product fulfills the requirements of the relevant directive and it would certainly help if this was certified by a Notified Body. A market surveillance authority might carry out the tests in their own laboratories or involve a different Notified Body to carry out specific tests.
The harmonised European standards represent a common agreement on the minimum product safety requirements. If a manufacturer goes beyond this minimum with a product, it is fine. If a manufacturer continues to fail to meet these standards, this is a problem. This means that the harmonised standards, even if not applied by everyone, still play an important role setting the generally-accepted standard for technology.
Did EU countries need to adapt to the common EU standards too?
Yes, all the EU countries had to shift from their national standards to the common harmonised European ones. This was a gradual process beginning in 1985. Of course, national industries, testing laboratories, and Notified Bodies also had to adapt to the new standards.
Since these harmonised standards are constantly being revised and updated, they reflect the latest technological developments. This means that producers who apply these standards also tend to be more competitive. Products don’t just have to be safe; they also have to be able to compete. I would therefore say that it is not a disadvantage to adapt to the harmonised European standards.
It is often said that another advantage of the European standards is their global recognition. Will world markets be opened to Ukraine if it adapts to these standards?
Yes, most of the European standards are also ISO [International Standards Organization] or IEC [International Electrotechnical Commission] standards. Indeed, producers will be able to access a lot of new markets by making this change.
Regarding the policy issues: a draft law on technical regulations and conformity assessment has been brought to the Ukrainian parliament. According to the Association Agreement, Ukraine is obligated to adopt this law. Were EU experts involved in drafting this law?
Yes, our project was involved. Our legal experts actively helped the Ukrainian Ministry for Economic Development and Trade, and all the relevant EU regulations are reflected in the draft law. It includes all the relevant EU legislation, particularly the new package, which was adopted in the EU in 2008.
The Ukrainian parliament is committed to adopting this law, but it doesn’t end there. What additional steps are required?
This law includes the condition that Ukraine must to adopt sectoral technical regulations in a way compliant with the respective EU directives. Basically, the law provides a framework and sets out concrete instructions to adopt specific technical regulations. Thus, the adoption of specific sectoral legislation and relevant EU standards are the next steps.
Am I correct in saying that the end goal of this process is that Ukraine and the EU sign the ACAA (Agreement on Conformity Assessment and Acceptance of industrial products)?
I think the ACAA could even be signed while this process is ongoing. This process has been unfolding in Ukraine over several years. There are already technical regulations that are almost completely in line with the respective EU directives (for example, in the sectors of machinery, simple pressure vessels, low voltage equipment, and electromagnetic compatibility).
The ACAA means that if a producer has a conformity assessment done here in Ukraine, by a Ukrainian organisation, it will be accepted in the EU.
When do you think Ukraine will sign the ACAA?
That is a good question, but I cannot make a prediction with any kind of certainty because a lot of effort is still needed from institutions involved in the process, such as the Ukrainian accreditation authority. Steps have been made, but there is still much to do.
What concrete steps are needed before Ukraine can sign the Agreement?
Ukraine needs to establish more area-by-area mutual recognition agreements with EU accreditation institutions, so that accreditation certificates can be issued in Ukraine. Also there should be recognition of Ukrainian conformity assessment bodies as equivalent to the European notified bodies. This will give Ukrainian producers the benefit of being able to use certification and assessment services in Ukraine instead of those from EU countries, which means less expense.
The last question has to do with Russia. Some believe that if Ukraine turns to EU standards, it will lose access to Russian and Customs Union markets because they would be operating according to completely different standards. Others suggest that the technical regulations of the EU and the Customs Union are converging. What is your opinion?
It depends. There are certainly many old standards still alive in the Customs Union countries to which manufacturers producing for this market must adhere. It is also quite common in the EU that a manufacturer producing both for the European market and another market, such Russia, must produce according to both European and Russian directives and standards.
We also know that Russia has also started adapting elements of its standards because, as a member of the WTO, Russia is obliged to harmonise with international standards, most of which are compatible with those of the EU.
* Background Information
To remove technical barriers to EU-Ukraine trade, the EU launched a €45 million sector policy support programme to provide direct budget support to Ukaine and a technical assistance project, “Complementary measures to the sector policy support programme ‘Promoting mutual trade by removing technical barriers to trade between Ukraine and the European Union.’” The Ukrainian Ministry for Economic Development and Trade is implementing the programme.
A shortened version of this interview was published in Ukrainian on European Pravda website.