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Ukraine's Sectoral Integration Into the Eu

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Ukraine's Sectoral Integration Into the Eu UKRAINE’S SECTORAL INTEGRATION INTO THE EU: PRECONDITIONS, PROSPECTS, CHALLENGES The Project “Ukraine’s Sectoral Integration into the EU: Preconditions, Prospects, Challenges” was realized with the support of Konrad Adenauer Stiftung in Ukraine KYIV 2020 CONTENT UKRAINE’S SECTORAL INTEGRATION INTO THE EU: PRECONDITIONS, PROSPECTS, CHALLENGES .............................................................................................. 3 1. Integration Into the European Union: Current State, Peculiarities and Challenges ...................................... 4 1.1. European Integration Policy of the Current Government: Nature and Specifics .............................. 4 1.2. External Factors ............................................................................................................................... 8 1.3. Updating the Association Agreement and Prospects of the EU-Ukraine Relations ....................... 10 2. General Preconditions for Intensification of Sectoral Integration in the Economy ......................................15 2.1. New Priorities in EU-Ukraine Economic Cooperation in the Context of Fighting COVID-19, and Prospects of Structural Change of Economy ......................................................................... 15 2.2. Developing Mechanisms that Regulate Mutual Market Access under the Free Trade Area .......... 18 2.3. Mechanisms for Facilitating Sectoral Development and Sectoral Integration (Facilitation Institutions and Financial Instruments) ....................................................................... 22 3. Individual Areas of Sectoral Integration: Current State, Problems, Prospects ....................................... 24 3.1. EU-Ukraine Integration in the Energy Sector ................................................................................. 24 3.2. Development of Digital Economy and Its Sectors .......................................................................... 33 3.3. Eu-Ukraine Cooperation: Transport Infrastructure ......................................................................... 35 3.4. Cooperation in the Banking Sector ................................................................................................ 40 3.5. Environmental Dimenson of European Integration ......................................................................... 42 4. Conclusions and Proposals ................................................................................................................... 49 4.1. Movement Towards the EU: Specifics, Limitations, Challenges .................................................... 49 4.2. Trends and Problems in Some Spheres of European Integration .................................................. 50 4.3. Proposals and Recommendations for Certain Areas of EU-Ukraine Cooperation ......................... 51 PROGRESS TOWARDS THE EU: PROBLEMS, TASKS, PROSPECTS (Materials of Round Table by Correspondence between Government Officials and Independent Experts) ......................................................................................................................... 56 Dmytro KULEBA, Mykhailo FEDOROV, Taras KACHKA, Anatolii PETRENKO, Veronika MOVCHAN, Dmytro SHULHA, Volodymyr FESENKO, Yevhen MAHDA PATHS AND DIRECTIONS OF EUROPEAN INTEGRATION IN EXPERT ASSESSMENTS ................. 75 ARTICLES PROGRESS TOWARDS THE EU: COORDINATION, CONSISTENCY, RESULT Ivanna KLYMPUSH-TSINTSADZE ............................................................................................................ 86 IMMEDIATE ISSUES AND PROMISING AREAS IN UKRAINE’S EUROPEAN INTEGRATION Mykola KAPITONENKO ............................................................................................................................ 90 CHANGES TO THE EU-UKRAINE ASSOCIATION AGREEMENT MUST INTEGRATE UKRAINIAN BUSINESS INTERESTS AS MUCH AS POSSIBLE Olha KULYK .............................................................................................................................................. 94 PROBLEMS AND PROSPECTS IN UKRAINE'S COOPERATION WITH THE EU IN THE SECURITY SECTOR Leonid POLIAKOV ..................................................................................................................................... 96 © Razumkov Centre, 2020 ISBN 978-966-7272-95-1 © “Zapovit” Publishing House, 2020 2 • RAZUMKOV CENTRE • UKRAINE’S SECTORAL INTEGRATION INTO THE EU: PRECONDITIONS, PROSPECTS, CHALLENGES Sectoral integration is an extensive, multi-vector and multi-speed process aimed at, so to speak, step-by-step construction of modern Europe in Ukraine – “digital”, “energy-sector”, “infrastructural”, “industrial”, “ecological”, etc. The indicator of efficiency of government's eurointegration activity is the level of implementation of the Association Agreement (overall and by sectors), which, regrettably, due to various subjective and objective circumstances is not satisfactory at the moment. Yet, another thing is also obvious, – the Agreement, approved back in 2011, now fails to match current circumstances and the potential of EU-Ukraine relations. Thus, a comprehensive update of this document is on the agenda with the objective of Ukraine’s active entry into EU's sectoral markets, including with high value added products, and overall – for efficient progress towards the “four freedoms” in relations between Kyiv and Brussels. Thus, the Agreement update entails a new quality of cooperation in key areas of sectoral integration. Ahead of us is the signing of important agreements with the EU: on “industrial visa-free regime” (ACAA), cooperation in the digital sector, common aviation area, etc. There are also discussions on Ukraine's accession to EU Common Transit System, cooperation in the framework of European Green Deal, etc. At the same time, new challenges bring adjustments to partnership priorities. Namely, the battle against COVID-19 brings to the forefront the issue of expanding cooperation in healthcare and pharmaceuticals, introduction of new contactless technologies, streng- thening cooperation in business and employment guarantees. That said, it should be noted that on the one hand, current technical assistance and potential of financial resources do not match the scale of transformational issues that Ukraine faces in the context of sectoral integration. And on the other – the Agreement does not contain an ultimate mobilising goal, i.e. the prospect of EU membership. Overall, there are grounds to talk about progress and achievements on the path towards Europe: from active political dialogue to implementation of a range of European norms in a number of sectors. However, progress towards the EU is restricted and complicated by a range of adverse internal factors, which include corruption in Ukraine, socio-economic troubles, quality of public administration system, limitations and failures of government policy, etc. At the same time, movement towards European community is slowed down by adverse geopolitical trends, centrifugal processes within the EU, Russian hybrid aggression, global pandemic outbreak. Unfortunately, so far we have failed to effectively convert eurointegration course into socio-economic changes tangible for Ukrainian citizens. It is rather obvious that Ukraine's overall eurointegration results, as well as the process of further Agreement implementation will be defined by how efficiently it overcomes its internal problems. Section one talks about the nature and specific aspects of government's eurointegration policy, achievements and problems on the path towards the EU, outlines internal circumstances and external conditions of Ukraine's progress towards the European community. Section two looks at some new priorities in Kyiv-Brussels’ cooperation, analyses preconditions for intensification of sectoral integration in the economy, outlines ways of Ukraine's progress towards EU markets, discusses efficiency of instruments that facilitate sectoral integration. Section three studies the current state, trends and prospects of EU-Ukraine integration in a number of specific sectors. Namely, in the sectors of energy, digital market, transport, banking and ecology. Section four provides generalised conclusions and a complex of proposals for intensifying and deepening EU-Ukraine sectoral integration. “Ukraine’s Sectoral Integration into the EU: Preconditions, Prospects, Challenges” report was prepared by the team of authors: M.Pashkov (Head of Project), Co-director of Foreign Policy and International Security Programmes of the Razumkov Centre; K.Markevych, Razumkov Centre Leading Expert on Economic and Social Programmes; V.Sidenko, Razumkov Centre Scientific Consultant on Economic Issues; P.Stetsiuk, Razumkov Centre Scientific Consultant on Legal Issues. M.Honchar, President of the Centre for Global Studies “Strategy XXI”; I.Stukalenko, Manager of Energy Programmes at the Centre for Global Studies “Strategy XXI”; • RAZUMKOV CENTRE • 3 / 1. INTEGRATION INTO THE EUROPEAN UNION: CURRENT STATE, PECULIARITIES AND CHALLENGES kraine’s European integration is a multi-layered, dynamic and lasting process with a Ucomplex and sometimes dramatic evolution, which depends on many internal and external factors. Stages, specifics and chronology of the development of Brussels-Kyiv relations are outlined in the previous project of the Razumkov Centre (2020).1 The first section of the report assesses the nature and peculiarities of the current govern- ment’s European integration policy, accomplishments and problems on the way to the
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