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EUROPEAN COMMISSION
MEMO
Brussels, 23 June 2014
The EU's Association Agreements with Georgia, the
Republic of Moldova and Ukraine
On 27 June 2014 the EU will sign Association Agreements with Georgia and the Republic of
Moldova and complete the signature process with Ukraine, each providing for a Deep and
Comprehensive Free Trade Area.
This is an important moment both for the EU and for the countries concerned as the
Agreements will significantly deepen political and economic ties between the signatories
with a long-term perspective of closer political association and economic integration.
1. What are the objectives and contents of the Association Agreements?
The Association Agreements aim to deepen political and economic relations between the
EU and the other signatories and to gradually integrate these countries in the EU's
Internal Market, the largest single market in the world. This entails creating a Deep and
Comprehensive Free Trade Area (DCFTA) between the EU and each of these countries.
Following the signature much work will remain to be done on domestic reforms. In this
area, the EU and each country will cooperate on: strengthening the rule of law,
advancing judicial reforms, fighting corruption, ensuring respect for fundamental rights
and freedoms and strengthening democratic institutions.
Main areas of cooperation:
Core reforms: reforms are foreseen in a number of key areas, including public
governance, justice, law enforcement, economic recovery and growth, consumer
protection and sectors such as energy, transport, environmental protection, industrial
development, social development and protection, education, youth and culture.
Values: the Agreement puts a strong emphasis on democracy and the rule of law, human
rights and fundamental freedoms, good governance, a well-functioning market economy
and sustainable development.
Trade: the Agreements will offer their signatories a framework for modernising their trade
relations and for developing their economies. Opening the markets through the
progressive removal of customs tariffs and quotas, and harmonising laws, norms and
regulations in various trade-related sectors will make this possible.
As well as contributing to stability and the promotion of democratic values in the EU's
neighbourhood, the agreements will benefit EU businesses by opening up new markets
and providing for a more secure business environment when investing in these three
countries.
MEMO/14/430
2. Signature and provisional application
The EU will sign the above three agreements on the 27 June 2014 in the margins of the
European Council meeting in Brussels. The Association Agreements with Moldova and
Georgia will be signed in their entirety, while the signing of the Ukraine Association
Agreement concerns the chapters left after the political ones were signed on 21 March.
The Agreements with all three countries foresee provisional application so that an impact
may be expected to a large extent already prior to ratification by the European Parliament
and EU member states, a process that may take some time to complete.
The Association Agreements provide for provisional application to start on the first day of
the second month after both the EU and the respective partner countries have fulfilled
required procedures on their side. Signature and the consequent implementation of the
Association Agreements will confirm and seal political association and economic integration
with the EU, but the greater the commitment and implementation of the Agreements, the
greater the opportunities they will offer. Earmarked for provisional application are
provisions regarding such important EU values as democracy, human rights and the rule of
law as well as the principles of a free market economy, sustainable development and
effective multilateralism.
For Georgia and Moldova important provisions regarding conflict prevention, crisis
management and regional stability are to be implemented. For Ukraine there is a provision
on regional application (consistent with the non-recognition policy of the illegal annexation
of Crimea) included in the Final Act to the Agreement.
Another important area where provisional application can start soon is that of economic
and sectorial cooperation. This concerns, for example, consumer protection, financial
services, civil society cooperation and the countries' participation in EU Agencies and
programmes. The Deep and Comprehensive Free Trade Area part of the Association
Agreement will be provisionally implemented, alongside the financial assistance and antifraud and control provisions.
Between the signature of the Association Agreements and the beginning of their
provisional application a considerable amount of work will need to be done to prepare the
institutional set-up. This includes the creation of the Association Council, and establishing
various committees and subcommittees and their rules of procedure. The same is true for
e.g. trade-related working groups, engagement with civil society and parliamentary
cooperation. In this way, it will be possible to formally approve the institutional set up and
the monitoring mechanisms as soon as we reach the date of provisional application.
3. Implementation and immediate benefits
The EU will work with the three partner countries' governments and businesses to bring
about reforms and upgrade goods and industries to the necessary standards. This will
benefit an extraordinarily diverse array of sectors.
Assistance ranges from the modernisation of the agricultural sector – e.g. boost rural
communities, produce higher quality products – to better regulating financial services, so
as to ensure investors' protection and safeguard of the country's financial system.
How will citizens and businesses in the partner countries and in the EU benefit from the
Association Agreements?
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Once signed and implemented, concrete benefits can flow from the Agreements. Examples
include a better protection of consumers including lower prices and better-quality
products; more business opportunities for small and medium enterprises through a wider
opening of markets and, as a result, more jobs and less emigration; better access to
improved health services; more efficient use of energy and the development of renewable
energy sources; a better functioning judiciary sector, a strengthened rule of law and
increased transparency.
Businesses in the three countries whose goods and practices meet EU standards will be
able to trade freely in any EU country without tariffs or restrictions. Likewise, EU goods
and services exporters, and EU investors will be able to operate freely on partner
country markets and sell more readily and cheaply to businesses and citizens in Georgia,
Moldova and Ukraine.
How will economies benefit from the Association Agreements?
Georgia
Trade conditions for goods and services, including the wide establishment conditions for
companies will be immediately improved for both the EU and Georgia, when the
Agreement enters into force. This will facilitate trade and investment. This is particularly
important for Georgia, which needs further foreign investment to boost its economic
growth. Georgia’s enterprises will have access to the EU market without transition
periods. But it is also true that a number of additional benefits that Georgia will take
from the Agreement do depend on the completion of reforms.
The Association Agreement with Georgia goes significantly further than classical forms of
economic integration, offering not only improved trade and investment opportunities but
also assistance in trade-related reforms with the aim to contribute to economic recovery
and growth and to better integration of the Georgian economy with the world markets.
Provided that the reforms are completed, an economic growth of 4.3% per year is
predicted (amounting to €292m in national income).
For example, Georgian agricultural products will become more attractive on the EU market
thanks to the removal of EU import duties worth €5.7m on basic agricultural products and
€0.5m on processed agricultural products. New market opportunities in the EU and higher
production standards in Georgia will spur investment, stimulate the modernisation of
agriculture and improve labour conditions.
Georgia will benefit from new trading opportunities and easier access to the EU market.
The Agreement should allow the Georgian economy to catch up with the EU in terms of
competitiveness and thereby gradually find its place in the world economy. This will open
up new opportunities not only in EU-Georgia trade, but in Georgia's trade with the rest of
the world, given the worldwide recognition of EU norms and standards. The application of
these standards will bring significantly more choice and higher quality products to
Georgian consumers and make Georgia a more attractive place for foreign investors. The
most sensitive sectors will benefit from long transitional periods to ensure the smooth
adaptation of Georgia's economy.
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Moldova
The Association Agreement with Moldova goes significantly further than classical forms of
economic integration, offering not only improved trade and investment opportunities but
also assistance in trade-related reforms with the aim to contribute to economic recovery
and growth and to better integration of the Moldovan economy with the world markets.
Independent economic research suggests that Moldova's participation in the DCFTA will
boost its exports to the EU by 16%, and imports from the EU by 8%. The DCFTA as a
whole is expected to boost GDP by 5.4% annually, if reforms are completed.
For example, Moldovan agricultural products will become more attractive on the EU
market thanks to the removal of EU import duties worth €43 million on basic agricultural
products and €3 million on processed agricultural products. New market opportunities in
the EU and higher production standards in the Republic of Moldova will spur investment,
stimulate the modernisation of agriculture and improve labour conditions.
Moldova will benefit from new trading opportunities and easier access to the EU market.
The Agreement will allow the Moldovan economy to catch up with the EU in terms of
competitiveness and thereby gradually find its place in the world economy. This will open
up new opportunities not only in EU-Moldova trade, but in Moldova's trade with the rest of
the world, given the worldwide recognition of EU norms and standards. The most sensitive
sectors will benefit from long transitional periods to ensure the smooth adaptation of
Moldova's economy.
The trade provisions will make the Moldovan market more open for imports from the EU.
This will bring more competition, which normally brings prices down for the consumers.
According to independent research, consumer prices are expected to decrease by about
1.0 and 1.3 percent over the short and long run, respectively.
Experience has already proven that Moldovan producers are able to sell more and more to
the European Union market. This will be even truer when Moldova has aligned its safety
and health standards to those of the EU to easily and effectively sell to what is the largest
single market in the world. The DCFTA will enable Moldova to go through this process in
an orderly and technically supported manner, and give Moldovan producers open access to
the EU market.
Ukraine
Through tariff liberalisation and above all regulatory approximation, Ukraine will take
advantage of new trading opportunities and easier access to the EU market. It can expect
to reap the benefits of its firm commitment to a path of institutional and economic
reforms.
Through the Agreement Ukraine will progressively remove customs tariffs and quotas,
extensively harmonise laws, norms and regulations in various trade-related sectors, and
create the conditions for aligning key sectors of the Ukrainian economy to EU standards.
The DCFTA will create opportunities for trade by lowering tariffs on imports. European
Commission estimates suggest that the implementation of the EU-Ukraine deal is expected
to boost Ukraine's income by around €1.2 bn per year.
Ukrainian exports to the EU are expected to increase by €1 bn per year. Sectors that
would benefit the most are wearing apparel and textiles, food products, vegetable oil and
non-ferrous metals. New market opportunities in the EU and higher production standards
will spur investment, stimulate the modernisation of agriculture and improve labour
conditions.
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Further information
Georgia
The EU's relations with Georgia
What does the EU-Georgia Association Agreement offer?
Myths about the EU-Georgia Association Agreement (AA) and Deep and Comprehensive
Free Trade Area (DCFTA)
European Commission's support to Georgia
Moldova
The EU's relations with Moldova
What does the EU-Moldova Association Agreement offer?
Myths about the EU-Moldova Association Agreement (AA) and Deep and Comprehensive
Free Trade Area (DCFTA)
European Commission's support to the Republic of Moldova
Ukraine
The EU's relations with Ukraine
What does the EU-Ukraine Association Agreement offer?
Frequently asked questions about Ukraine, the EU's Eastern Partnership and the EUUkraine Association Agreement
European Commission's support to Ukraine
Factsheet on EU-Ukraine relations
Texts of the Association Agreements:
Georgia
Moldova
Ukraine
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