One of the most important topics in Ukraine today is the Deep and Comprehensive Free Trade Area with the EU and the opportunities and challenges it presents for Ukrainian producers. This issue has garnered much media attention recently, and seminars and training sessions have been devoted to ensuring Ukrainians are aware of the DCFTA’s implications.
The issue has many facets, but at its core is the need for Ukrainian producers to respect the rules of the European Union when entering into that market. Jan Tombinski, head of the EU Delegation to Ukraine, highlighted the importance of this task in an article published by Evropeiska pravda.
“There is only one way for a Ukrainian producer to enter the EU market: he or she must adhere to the requirements and principles in effect in Europe. These principles are already being violated as a result of Ukraine’s current moratorium on inspections of enterprises working in the food industry.
This moratorium is unacceptable according to European requirements as it risks allowing poor-quality products to be sold on the market and could pose a threat to consumers’ health and safety. The European market wants to be sure of the safety of Ukrainian food.
Rather than upholding standards, however, the Ukrainian government seems to simply rely on the integrity and responsibility of domestic producers. This is hardly prudent.
There are reasons for the EU’s cautious approach to trade. There have been unfortunate incidents with exported Ukrainian food products, such as salmonella in eggs exported to Israel, and antibiotics in honey sold in the Czech Republic. In some cases, there is ragweed pollen in grain products, which can be dangerous for allergy sufferers.
I acknowledge the efficient and appropriate steps Ukrainian authorities took in addressing these incidents. They conducted prompt and efficient investigations and resolved the problems. For instance, Ukraine immediately suspended exports of honey after the problems were detected without waiting for sanctions from the Czech partners.
However, the very fact that such situations occurred causes distrust and worry among European consumers of Ukrainian products.
Finally, Ukrainian consumers should also be concerned for the safety and quality of products they buy for their families and for themselves.
I have no doubts that Ukrainian manufacturers can produce safe products of very good quality. But there is always a temptation to cut corners on quality for a cheaper production process.
Unscrupulous manufacturers pose a threat both to Ukrainian and European consumers and to the future of trade between Ukraine and Europe. Ukrainians should understand that they depend on the European market. While the Russian Federation was once Ukraine’s largest trading partner, trade between the countries is now greatly reduced.
How can Europeans be sure of the safety of Ukrainian products in light of the past incidents and the moratorium on inspections of food producers? Inspections are absent at all stages and the system lacks state control. Safety and quality is dependent entirely on entrepreneurs.
The absence of state control means that the state cannot make any guarantees with regard to Ukrainian products.
Maybe the government is right in this approach and is supporting businesses. Small and Medium-sized Enterprises are operating under difficult conditions in Ukraine, with the ongoing conflict and an unstable economy. Rather than state support, they need “non-interference,” and the moratorium is an example of this.
The interests of SMEs on the one hand, contrast with the interests of Ukrainian and European consumers on the other, as well as with the prospects for opening the European market to Ukraine. Ukrainian authorities are faced with the difficult task of pleasing both sides.
The moratorium raises many legal questions. The Ministry of Justice and Ministry of Economic Development argue that the moratorium applies only to the tax office, while the state regulatory agency (which would have responsibility for conducting inspections) insists it is also covered by the moratorium.
This confusion leaves room for different interpretations of the law, creating opportunities for abuse.
Volodymyr Lapa, head of the State Service of Ukraine on Food Safety and Consumer Protection, believes that the moratorium is harmful to Ukraine’s economic interests and risks allowing poor quality products on the market. He also asserts that if a product has the potential to pose a threat to life or health, it makes sense for a regulatory body to conduct unscheduled inspections.
Giving advice is a thankless task. But given these challenges, it seems reasonable to abolish the moratorium and replace it with European standards for inspections. In this case, there would be a law prescribing a set of questions that must be answered through an inspection. Volodymyr Lapa also suggests using video recording to avoid abuse by inspectors.
Inspections would not be daunting ordeals, with many inspectors with unforeseen questions and requirements. Every entrepreneur should be able to devote a day to an ordinary inspection without fear. Entrepreneurs should not have anything to hide; they also have an interest in ensuring the quality and safety of their products.
If these rules are introduced, Ukrainian producers will be much better positioned for success on the European market. Building business relationships and trade cooperation purely on trust is unwise.
We are ready to cooperate. The EU will provide support in sanitary and phytosanitary measures for the newly-established State Service for Food Safety and Consumer Protection by the end of 2017. The EU wants not only to invest in the Ukrainian reforms, but see the positive results of these reforms”.
Background information: In 2015, trade between Ukraine and the EU totalled 28.3 billion euro: Ukrainian exports reached 13 billion, and imports from the EU reached 15.3 billion. The EU is Ukraine’s largest trading partner, accounting for 34% of its exports and 41% of imports (trade with Russia comprises 13% and 20% of Ukraine’s exports and imports, respectively). Ukraine exports mostly metals, grains, electrical machinery and equipment, ore and slag, fats and oils, wood and wood products to the EU. Establishing a bigger presence for the Ukrainian food industry in the EU market is an ambitious task and is one opportunity for Ukrainian businesses made possible by the Association Agreement.