EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA)
On 18 February 2008, in the light of Ukraine's impending WTO accession, the then EU Commissioner for Trade Peter Mandelson and Ukrainian President Viktor Yushchenko launched negotiations on a EU-Ukraine free trade agreement (FTA). Negotiations were completed on 19 October 2011 and the final text was initialled in 2012.
On 27 June 2014, the EU-Ukraine Association Agreement was signed by European Union Heads of State and Government and Ukrainian President Petro Poroshenko in Brussels. . It is partially provisionally applied as of 1 November 2014; while Title IV of the Association Agreement (which establishes a Deep and Comprehensive Free Trade Area (DCFTA)) is provisionally applied since 1 January 2016. Meanwhile, in order to maintain its support for Ukrainian exporters, the EU had extended its autonomous trade measures (which have been into force since 23 April 2014) up to the same date.
In other words, this meant that the EU had already begun to reduce or eliminate its customs duties on goods originating in Ukraine, allowing Ukrainian exporters better access to the EU market. The reason for provisional application (rather than complete application) is that the Agreement has to be ratified by all 28 EU Member States, which may still take some time as each Member State has to comply with different internal procedures.
The DCFTA is an integral part of the wider Association Agreement between the EU and Ukraine. The DCFTA is also part of the EU's broader policy of creating a stable and prosperous European neighbourhood through closer economic ties. The DCFTA is intended to bring Ukraine closer to the EU through the opening of markets for goods and services and reducing barriers to trade, especially so-called 'behind the border' issues, such as bureaucracy and red tape. By bringing Ukrainian regulations in a wide range of economic sectors in line with the EU's, it will gradually open the EU's internal market to Ukrainian exporters.
The DCFTA with Ukraine is one of the most ambitious bilateral agreements that the EU has ever negotiated with a trading partner. If implemented, it would open up the EU and Ukrainian markets by removing and reducing tariffs and quotas, and reducing non-tariff barriers to trade. The DCFTA offers Ukraine a framework for modernisation of bilateral trade and investment relations and a model for economic development that would have direct benefits for both business and consumers in Ukraine..
- About 95% of tariff lines would be set at zero, and for the rest, tariffs would be reduced. This will be particularly important for Ukraine in the agricultural and metals sectors, where Ukraine is traditionally strong, and likely to increase its exports to the EU.
- Lower tariffs would lead to more competition, which would in turn lead to lower prices for consumers.
- In the field of services, the DCFTA would result in liberalisation and alignment of Ukrainian and EU practices. This should have a particularly positive impact in Ukraine on distribution services and the communications sector.
- Freer capital movement would boost economic growth by allowing easier access to capital and more effective use of the capital available, benefitting not only the financial sector in Ukraine but businesses too.
- One of the biggest problems that Ukrainian and European companies face today is different technical norms and standards, which make cross- border trading more difficult. Under the DCFTA Ukrainian standards for industrial and agricultural goods will be aligned with those of the EU, meaning everyone can produce and sell on the basis of the same rules.
- Alignment of rules on public procurement, competition policy, and intellectual property rights would also assist in improving the business environment in Ukraine by tackling corrupt practices, opening up new investment possibilities, and modernising the economy.
For more information, download the brochure "EU-Ukraine Deep and Comprehensive Free Trade Area - a reading guide" and Trilateral Talks on EU-Ukraine DCFTA. Distinguishing between Myths & Reality [355 KB] .Back to Trade and economic relations