Aid for Trade Needs Assessment Ukraine: Trade and Human Development Igor Burakovsky, Institute for Economic Research and Policy Consulting (Ukraine) 14 June, 2011 United Nations Development Programme

Main Findings 1.International trade plays an important role in Ukraine’s. Ukraine’s economic growth has been predominantly determined by external factors 2.Rather liberal trade regime established: low import tariffs, free trade areas with key trade partners (FTA with EU is currently negotiated). Obstacles to trade are mostly of domestic nature. 3.Trade policy agenda: addressing more complicated tasks of internal reforms and reduction of non-tariff barriers

Main Obstacles to Trade (1) Customs: fiscal bias, corruption, burdensome procedures, inconsistent legislation – in-depth reform is necessary; Transport and logistics services – poor quality for high prices: railway sector - obsolete rolling stock, inefficient state management; road sector – large number of small companies (less than 10 trucks), 2000 class IV and class V trucks (out of 22000), acute shortage of investments; acute shortage of modern warehouse capacities, etc.

Main Obstacles to Trade (2) Technical regulation: new laws (on standardization, on confirmation of conformity, on accreditation of conformity assessment bodies, etc.) are in place but legislative inconsistencies remains; implementation of technical regulations is rather low; system of supervision over product safety (market surveillance) has yet to be established; long list of products subject to compulsory certification; low speed of revising standards in force (cancellation of outdated ones and harmonization of the rest with international and European standards, etc); proper institutional and technical capacities are to be developed.

Main Obstacles to Trade: view of entrepreneurs List of problems is rather impressive: paying customs fees; confirming origin of goods; confirming customs value; confirming registration of goods/contracts; licensing; obtaining permits, etc. Problem No. 1 Importers: logistics problems and customs clearance, corruption Exporters: VAT refund and regulatory measures (veterinary, sanitary and phytosanitary control), corruption

Main Recommendations (1) Ukraine’s trade policy goal: to ensure efficient involvement in international trade system and to use efficiently opportunities offered by free movement of resources in the globalization era. New quality of trade policy making: trade policy as consistent proactive process; trade policy as structured process (situation analysis, formulation of strategy and necessary policy tools, practical implementation, monitoring and evaluation);

Main Recommendations (2) What to do is clear. But priorities are to be identified: Ensuring a stable macroeconomic environment; Favorable environment for business; Developing and upgrading human capital and physical infrastructure for business; Improving the operation of market institutions; Increasing the private sector ability to make competitiveness goods and services. Observance of relevant standards and requirements – strategic tool to strengthen positions in traditional markets and to access a new one;

Main Recommendations (3) Strengthening competition policy; Developing education and science; Addressing trade related issues of the labour market and environmental protection; Using information and communication technologies in both business and public administration; Participating in regional economic cooperation; Assessing the impact of globalization on internal socioeconomic processes;

Thank you! Contact information: Institute for Economic Research and Policy Consulting 8/5-А Reytarska str., Kyiv 01034, Ukraine Phone Fax