Trade and business without borders
EU & Eastern Neighbours
TRADE PRESS PACK
Trade and business without borders
EU & Eastern Neighbours
T R A D E P R E S S PAC K
June 2014
Association with EU leads to privileged trade relations
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Deep and Comprehensive trade with Georgia, Moldova and Ukraine
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Eastern Partnership fosters business without borders
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Vibrant small business key to trade and investment
PHOTO GALLERIES VIDEOS Setting the facts straight - Myths about the EU-Georgia Association Agreement video SUCCESS STORIES
Setting the facts straight - Myths about the EU-Moldova Association Agreement video Fighting poverty: The EU in action - trade video
This publication exists only in electronic format. It has been prepared by the European Neighbourhood Info Centre, a project funded by the EU. It does not represent the official view of the EC or the EU Institutions. The EC accepts no responsibility or liability whatsoever with regard to its content.
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EIB: Who benefits? video The EIB invests in mobility video
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Association with EU leads to privileged trade relations In today’s challenging economic environment, boosting trade, improving business climate and attracting more investments are the most effective ways to bolster economic growth and create jobs. This vision underlies the EU’s policies towards its Eastern neighbours, both in bilateral relations and in the multilateral framework of the Eastern Partnership. Progressive trade liberalisation is the corner stone of the new Association Agreements (AAs) between the EU and its partner countries, which include provisions establishing DCFTAs. These agreements go beyond any existing ones the EU has ever offered to third countries because they offer not only improved trade and investment opportunities, but deep reforms and EU assistance for those reforms, aiming to contribute to economic recovery and growth and to better integration of the Eastern Partner’s economies with the world markets.
T R A D E P R E S S PAC K What is a DCFTA? A Deep and Comprehensive Free Trade Agreement (DCFTA) is more than an ordinary free trade agreement (FTA), which involves the scrapping of customs tariffs and quota restrictions on trade. The ‘deep and comprehensive’ part of the DCFTA sees the addition of many more obligations by both parties for the opening up of service sectors, the removal of technical barriers to trade, and convergence of regulatory regimes for internal markets (such as for financial markets, transport, the environment, etc.). The partner state commits itself to introduce into its domestic laws convergence on EU regulations and standards. In many cases, the EU standards are much the same as international standards, so the agreement of the DCFTA with the EU also opens up the economy of the partner state globally. .
“It is no surprise that independent studies indicate that a DCFTA could lead to a doubling of exports from Eastern Partnership countries to the European Union from the current figure of approximately €35 billion to over €70 billion.”
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EU28 trade with Eastern Partners in figures (2002-2012) The share of the Eastern Partnership countries in the EU28’s total external trade has grown significantly over ten years, despite a strong decline in 2009, with Ukraine accounting for half of Eastern Partnership trade with the EU. Among the Eastern Partnership countries, Ukraine (€11.2 billion euro or 58% of total exports) was the leading destination for EU28 exports in the first half of 2013, followed by Belarus (€4.1 billion or 21%). The leading source of EU28 imports from the Eastern Partners was also Ukraine (€7.1 billion or 44% of total imports), followed by Azerbaijan (€6.3 billion or 39%). Eurostat Press release
Štefan Füle, European Commissioner for Enlargement and European Neighbourhood Policy
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Deep and Comprehensive trade with Georgia, Moldova and Ukraine
T R A D E P R E S S PAC K
Georgia and Moldova were the first among Eastern Partners to initial the AA/DCFTAs, on 29 November 2013, during the Eastern Partnership summit in Vilnius. With Ukraine, the EU concluded the negotiations for a DCFTA in December 2011, but on the eve of the EaP Vilnius summit in November 2013 Ukraine suspended the preparations for signing. The ensuing mass protests across the country brought about the fall of the government and a U-turn in Kyiv’s position over association with the EU. As a result, the provisional government signed the political part of AA at the EU-Ukraine summit on 21 March 2014. The newly elected president reiterated Ukraine’s commitment to European integration, and the signature of the EU-Ukraine DCFTA is now due to take place on 27 June.
Armenia has concluded negotiations of the AA/DCFTA but given its decision to join the customs union of Russia, Belarus and Kazakhstan, the steps required for the agreement to become effective have been suspended.
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What does it mean for Georgia, Moldova and Ukraine? All three countries will be expected to bring their legislation closer to that of the EU in a wide number of regulatory policy areas. The phasing out of existing customs tariffs and regulatory barriers will increase the variety and quality of products and services, boosting competition and exports, improving the business climate, attracting investors while ensuring higher levels of social, environmental and consumer protection. It will provide stable and more predictable governance rules, especially for SMEs, which are more vulnerable. Better products and services will enhance the overall standard of living for consumers and citizens of Georgia, Moldova and Ukraine. An independent study predicts that the DCFTA will increase Georgia’s exports to the EU by 12% and imports by 7.5%. Georgia’s GDP could increase by 4.3% or €292 million in the long term, provided that the DCFTA is implemented and its effects sustained. EU-Georgia DCFTA - Reading Guide For Moldova, the change in national income is estimated to be around €142 million, i.e. 5.4% of the country’s GDP, while its exports to the EU and imports are expected to increase by as much as 16% and 8% respectively, driving an increase in wages and offering better prices to consumers. EU-Moldova DCFTA - Reading Guide In Ukraine, the DCFTA will boost trade opportunities by lowering tariffs on imports. Ukrainian exporters will save €487m annually due to reduced EU import duties. They will get a better access to a large and stable market. At the same time, Ukrainian companies will improve their competitive position, an independent study predicts, by getting the opportunity to import advanced capital goods at relatively lower prices. EU-Ukraine DCFTA - Reading Guide
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PHOTO GALLERIES Images from across the Neighbourhood highlighting EU cooperation projects in the field of economy. High-resolution pictures available for download.
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Eastern Partnership fosters business without borders
T R A D E P R E S S PAC K
The gradual integration of the Neighbourhood countries into the EU economy is one of the aims of the Eastern Partnership. The EU encourages partners to develop trade between themselves and with the EU countries, and implements programmes aiming at improving the business environment in the region and attracting more investments.
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Opening the second EaP Business Forum on eve of the Eastern Partnership summit in Vilnius, Enlargement and European Neighbourhood Commissioner Štefan Füle said the theme of the forum – Business without Borders – “goes straight to the core of the political association and economic integration that we have been working to achieve together” since the launch of the EaP in 2009. The EU combines its strengths and resources with those of the EIB, EBRD and other European Financial Institutions, in helping partner countries to implement Association Agreements/ DCFTAs, Füle said.
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Boosting trade and improving the business environment in the region is one of the four priorities of cooperation between EaP countries and the EU. It is addressed through one of the four Multilateral platforms, Platform 2 on Economic Integration and Convergence with EU Policies. This platform, in turn, has established 2 working panels: Panel on Trade and Trade Related Regulatory Approximation, linked to DCFTAs, established to exchange information, experiences and best practices in the development and implementation of measures to promote approximation to the EU acquis and to promote consistency of measures taken by partner countries at national, bilateral and regional level. Panel on Small and Business Enterprise (SME), to exchange information on SME policy approaches in the EU and in the Partner Countries, address a common project on enterprise policy performance, accompany the implementation of the SME Flagship Initiative and organise business-to-business contacts. DOCUMENTS
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T R A D E P R E S S PAC K SMEs benefit from EIB loans SMEs and mid-cap companies in the Eastern Partnership countries and Russia benefit from credit lines provided by the European Investment Bank (EIB). Under its current mandate for 2007-2013, the EIB provides financing of up to €3.85 billion, covering Russia, Ukraine, Moldova, Armenia, Azerbaijan, Georgia, and subject to future Council and European Parliament Agreement, Belarus. EIB activity focuses on the development of economic and social infrastructure and support for small and medium-sized enterprises (SMEs) in all sectors.In 2009, the EIB approved its first loans for SMEs via partner financing institutions in Armenia, Georgia, Moldova and Ukraine. In March 2013, it extended its first loan for SMEs in Russia, in support of the EU Russia Partnership for Modernisation. By mid-October 2013, the amount of loans for SMEs in the region had reached €1.4 billion. EIB webpage - EU Eastern Neighbours Factsheet EIB financing in the EU’s Eastern Neighbourhood
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EU Export Helpdesk – a unique service for smaller companies and market newcomers In 2004, the EU created a single point of access for online information about exporting to Europe – the Export Helpdesk. The system is built in such a way as to reflect, in real time, the conditions for exporting any type of item, from handbags and t-shirts to honey and wines. It takes into account existing standards, trade agreements, rules of origin, etc. It is not a static database but a system that allows users to make precise calculations depending on which country they come from and what exactly they want to export. To date, the EU is the only trade partner in the world to offer such a service. The helpdesk has been translated into Russian, in a clear step from the EU towards its eastern neighbours. The Export Helpdesk mainly assists smaller companies and newcomers on the market. “They’re the backbone of any economy. They’re the ones that generate real economic growth and change a country’s performance,” says Holger Standertskjold-Nordenstam, Head of the Information, Communication and Civil Society Unit at the European Commission’s Directorate General for Trade. Export Helpdesk exporthelp.europa.eu
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Vibrant small business – key to trade and investment In an effort to encourage investment in the Eastern Partnership countries, the EU has launched several cooperation projects that aim to improve the investment climate and business culture, by boosting entrepreneurial activities. Some of these actions combine the EU’s grant resources with loans from International Financial Institutions (IFIs). East Invest - support to SME sector (2010-2013).
The project is financed through a contribution of €7 million from the European Neighbourhood Partnership Instrument (ENPI). It aims to support the economic development of the region and contribute to the improvement of its business environment through building up networks among SME business support organisations (BSOs) in the Eastern Partnership region, and between EaP and EU SME BSOs, in a number of priority sectors (agribusiness, alternative energy, textile, tourism, transport and logistics, sustainable construction etc.). East-Invest also aims to develop trade through direct support to SMEs in their internationalisation process and by improving their knowledge of the EU acquis. Fiche www.east-invest.eu
T R A D E P R E S S PAC K The road to the European market – a story from Armenia Business environments and practices in the EU and in its neighboring countries to the east are not the same. An EU-funded project is facilitating investments and economic cooperation between the EU and the countries of the Eastern Partnership, including Armenia. The project targets business support organisations and small and medium sized enterprises. The EU Neighbourhood Info Centre sent one of its journalists to see how this support is making a difference to an IT business in Armenia. Read the full story
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Eastern Partnership SME Finance Facility (2010-2019)
With a budget of €15 million (European Commission contribution), the project attracts loans from the European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB) and KfW (Kreditanstalt für Wiederaufbau, or Reconstruction Credit Institute), to support SME lending in the EaP region. The facility aims to rebuild the confidence of financial intermediaries to extend financing to SMEs following the financial crisis, seeking to enhance their capacity to assess and monitor related risks and manage their SME financing, to strengthen and deepen SME credit markets, expand financing options available to the real economy, and promote the continued development of market-based financial institutions and contribute to institution building. It also aims to support the expansion of private and entrepreneurial initiatives, working with local and international financial intermediaries. Fiche Armenia The road to the European market
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Small business support programmes in the Eastern Partnership (2010-2014)
Funded by the EU to the tune of €10 million, the Business Advisory Services (BAS) and Enterprise Growth Programmes (EGP) provide technical assistance to help micro, small and medium-sized enterprises adapt to the demands of a liberal market economy, and develop the capacities of local SMEs and business advisory services. Implemented by the European Bank for Reconstruction and Development (EBRD), the two programmes work closely together. Fiche
Azerbaijan Wasting less to gain more Georgia How to improve your business… Moldova Moldovan honey conquering the EU market Moldova A chance of a future in your own country Moldova Cutting down on energy costs? Yes, you can Russia Adapting steel to conquer the Arctic
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Useful Links
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DG Economic and Financial Affairs - International economic issues http://ec.europa.eu/dgs/economy_finance/index_en.htm
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DG Enterprise and Industry - Small and medium-sized enterprises (SMEs) http://ec.europa.eu/enterprise/policies/sme/index_en.htm DG Trade - EU position in world trade http://ec.europa.eu/trade/policy/eu-position-in-world-trade/
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DG Trade - EU and WTO http://ec.europa.eu/trade/policy/eu-and-wto/
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EU - trade cooperation with Russia http://ec.europa.eu/trade/policy/countries-and-regions/countries/russia/ EU - trade cooperation with Armenia http://ec.europa.eu/trade/policy/countries-and-regions/countries/armenia/
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EU - trade cooperation with South Caucasus http://ec.europa.eu/trade/policy/countries-and-regions/regions/south-caucasus/ EU - trade cooperation with Belarus http://ec.europa.eu/trade/policy/countries-and-regions/countries/belarus/ EU - trade cooperation with Moldova http://ec.europa.eu/trade/policy/countries-and-regions/countries/moldova/ EU - trade cooperation with Ukraine http://ec.europa.eu/trade/policy/countries-and-regions/countries/ukraine/ EIB - EU Eastern Neighbours www.eib.org/projects/regions/eastern-neighbours/index.htm
EU Neighbourhood Library Our online database
EU Export Helpdesk www.exporthelp.europa.eu/thdapp/index.htm EU Neighbourhood Info Centre economy/trade webpage www.enpi-info.eu/themeeast.php?subject=4 features www.enpi-info.eu/list_type_east.php?&subject=4&search=1&id_type=6 photo galleries www.enpi-info.eu/list_galleries_east. php?gallerytitle=&subject=4&country=0&caption=&Submit=Submit&search=1 quotes www.enpi-info.eu/list_type_east.php?id_ type=11&newstype=0&country=0&subject=4&eupolicy=0&Submit=Submit documents www.enpi-info.eu/library/theme/economy
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Other Info Centre Press packs are available online: EAST SOUTH
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Documents
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Trade Statistic EaP countries with world/ EU with EaP countries Armenia http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111471.pdf Azerbaijan http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111475.pdf Belarus http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111480.pdf Georgia http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111507.pdf Moldova http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111540.pdf Russia http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111720.pdf Ukraine http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111613.pdf Eurostat Statistic - EU Trade with EaP countries http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/6-26112013-AP/EN/626112013-AP-EN.pdf DCFTA with Ukraine http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_150981.pdf Trade Sustainability Impact Assessment in support of negotiations of a DCFTA between the EU and the Republic of Armenia http://trade.ec.europa.eu/doclib/docs/2013/october/tradoc_151862.pdf
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The European Bank for reconstruction and development - strategy for Armenia www.ebrd.com/downloads/country/strategy/armenia.pdf factsheet www.ebrd.com/downloads/research/factsheets/armenia.pdf Azerbaijan www.ebrd.com/downloads/country/strategy/azerbaijan_2010.pdf factsheet www.ebrd.com/downloads/research/factsheets/azerbaijan.pdf Belarus www.ebrd.com/downloads/country/strategy/belarus.pdf factsheet: www.ebrd.com/downloads/research/factsheets/belarus.pdf Georgia www.ebrd.com/downloads/country/strategy/georgia.pdf factsheet www.ebrd.com/downloads/research/factsheets/georgia.pdf Moldova www.ebrd.com/downloads/country/strategy/moldova.pdf factsheet www.ebrd.com/downloads/research/factsheets/moldova.pdf RUSSIA www.ebrd.com/downloads/country/strategy/russia.pdf factsheet www.ebrd.com/downloads/research/factsheets/russia.pdf Ukraine www.ebrd.com/downloads/country/strategy/ukraine_country_strategy_2011_2014.pdf factsheet www.ebrd.com/downloads/research/factsheets/ukraine.pdf
Trade Sustainability Impact Assessment in support of negotiations of a DCFTA between the EU and Georgia and the Republic of Moldova http://trade.ec.europa.eu/doclib/docs/2012/november/tradoc_150105.pdf
EU Neighbourhood Handbooks From the EU Neighbourhood Info Centre website, a number of different handbooks can be downloaded, offering tips to media professionals for improved coverage of EU cooperation activities, but also providing information on how to access EU funding or to navigate through EU jargon. A wealth of knowledge at your disposal, just a click away on www.enpi-info.eu.
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Trade Sustainability Impact Assessment in support of negotiations of a DCFTA between the EU and the Republic of Moldova http://trade.ec.europa.eu/doclib/docs/2012/november/tradoc_150107.pdf EIB: Eastern Partnership Technical Assistance Trust Fund – Annual Report 2012 www.eib.org/attachments/country/eptatf_annual_report_2012_en.pdf EIB: Factsheet - EIB financing in the EU’s Eastern Neighbourhood www.eib.org/attachments/country/eib_factsheet_eastern_neighbours_en.pdf EIB: A partner for the Eastern Neighbourhood and Central Asia www.eib.org/attachments/country/enca_flyer_en.pdf SME Flagship initiative http://eeas.europa.eu/eastern/initiatives/docs/fs_sme_marinelli_en.pdf Trade relations with Eastern Partnership countries 2010: http://trade.ec.europa.eu/doclib/docs/2010/december/tradoc_147083.pdf
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T R A D E P R E S S PAC K The EU: a major donor for the Neighbourhood
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EU support to the region is mainly channeled through the European Commission’s Directorate General for Development and Cooperation – EuropeAid. http://ec.europa.eu/europeaid
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The European Neighbourhood Instrument (ENI) funding approved for the period 2014-2020 is € 15.4 billion. The ENI replaces the European Neighbourhood and Partnership Instrument (ENPI), for which the funding was € 11.2 billion for the period 2007-2013. The new instrument provides faster and more flexible funding, allowing for incentives for best performers, to 16 partner countries to the East and South of the EU’s borders.
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East: Armenia, Azerbaijan, Belarus, Georgia, Moldova, Ukraine. South: Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine, Syria*, Tunisia. * EU Cooperation with Syria is currently suspended due to the political situation
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The EU Neighbourhood Info Centre is an EU-funded Regional Communication project highlighting the partnership between the EU and Neighbouring countries. www.enpi-info.eu
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EU Neighbourhood Info Centre An ENPI project The EU Neighbourhood Info Centre is an EU-funded Regional Communication project highlighting the partnership between the EU and Neighbouring countries. This presspack has been produced by the EU Neighbourhood Info Centre.
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