Ukraine may lose EUR 700 million due to restrictions on the supply of Ukrainian metal products as part of the introduction by the European Union of the Carbon Border Adjustment Mechanism (CBAM), according to a study by the information and analytical center GMK Center presented at a roundtable devoted to the impact of CBAM on the metallurgy of Ukraine held on April 9.
According to the press release, early March 2021, the European Parliament approved a resolution introducing the Carbon Border Adjustment Mechanism (CBAM). The European Union regards the CBAM as a special fiscal instrument that will force manufacturers of imported products to pay the same price for CO2 emissions that European producers pay. The official proposal for CBAM from the European Commission is expected to appear by the end of the second quarter of 2021. CBAM is planned to be in effect no later than 2023.
According to the study conducted by analysts of GMK Center, the negative impact on the metallurgy of Ukraine from the introduction by the European Union of the CBAM can reach EUR 700 million, or 0.5% of the gross domestic product compared to 2019.
“The metallurgical industry of Ukraine will be one of the most affected as a result of the introduction of CBAM. This will happen due to our close partnership with the EU. After all, domestic metallurgists supply 26% of marketable products to the European market, which is more than to our domestic market. Our competitors do not have such a high dependence on the EU market. The introduction of the CBAM will mean a decrease in the competitiveness of Ukrainian exports, losses for the domestic economy, a rupture of production chains between European and Ukrainian enterprises,” Director of GMK Center Stanislav Zinchenko said.
According to him, the annual export losses of Ukrainian metallurgy from the introduction of CBAM by the European Union are estimated at EUR 155-200 million per year, depending on the scenario. It will also reduce the financial results of the industry by EUR 105-200 million per year.
The CBAM covers about EUR 2.5 billion of metallurgical exports per year. The exact scale of damage to national producers depends on the form of implementation of the CBAM.
As a result of the effect of the carbon tax, one can expect a decrease in the volume of pig iron production by 500,000 tonnes (2.5% down compared to the level of 2019) and long products (including square billets) by 110,000 tonnes (1.4% down).
According to Chief Analyst at GMK Center Andriy Tarasenko, this could also lead to a decrease in the volume of capital investments in the amount of up to EUR 130 million per year (12% down compared to the level of 2019). In the long run, this will mean chronic investment lag and a competitive disadvantage.
“The CBAM should not be applied to Ukraine, since we have already taken on the goals of the European Green Deal. The exclusion of Ukraine from the CBAM, on the contrary, will be an incentive for the Ukrainian economy,” Zinchenko said.
The European Commission (EC) has approved the Council’s draft decision for the signing of the Agreement on the Common Aviation Space with Ukraine, said representative of Ukraine to the European Union, Ambassador Mykola Tochytsky.
“Long awaited good news: today EU Commission has re-approved the draft Council Decision on the signing of the Common Aviation Area Agreement. Looking forward to member-states’ support and swift conclusion of the Agreement,” the Ukrainian diplomat wrote on Twitter.
Next steps are the approvement by the Council of the EU and actual signing of the Agreement. The agreement will be signed between Ukraine, the EU and the member states.
The conclusion of the Agreement will contribute to the creation of a common aviation space between Ukraine and the EU based on common and reliable EU standards in the field of flight safety, air traffic control and consumer protection, the press service of the Mission of Ukraine to the EU reported on Facebook.
“It will also open new opportunities for our citizens and business as well as investments into Ukrainian aviation. Common Aviation Area will ensure the air operation in Ukraine in line with the EU standards on aviation safety, air traffic management and aviation consumer protection,” the Ukrainian diplomats said.
The European Union does not recognize the decree of Russian President Vladimir Putin, which prohibits foreigners from owning land in Crimea, and considers its entry into force as yet another attempt to forcibly integrate the illegally-annexed peninsula into Russia, EU Spokesperson for Foreign Affairs and Security Policy Nabila Massrali has said.
“The European Union does not recognise the illegal annexation of the Crimean peninsula by Russia, which is a clear violation of international law. Therefore, the European Union does not recognise this decree and considers its entry into force as yet another attempt to forcibly integrate the illegally-annexed peninsula into Russia. Crimea is part of Ukraine,” the spokesperson said in a statement released by the European External Action Service on Tuesday.
According to her, this decree is also a violation of international humanitarian law, as it is another step towards the imposition of Russian citizenship on the peninsula, which leads to the arbitrary deprivation of property.
“The European Union calls on Russia to stop all violations of international law on the Crimean peninsula. The European Union is unwavering in its support for Ukraine’s independence, sovereignty and territorial integrity within its internationally recognized borders, and welcomes Ukraine’s diplomatic efforts to this end,” Massrali said in the statement.
The spokesperson also said the European Union will continue to enforce its non-recognition policy of the illegal annexation of the Crimean peninsula, including through restrictive measures.
The Russian presidential decree states that most of Crimea and the city of Sevastopol were added to the list of border territories of Russia, where foreign citizens are prohibited from owning land, entered into force on March 20, 2021, a year after its adoption.
The European Union plans to present a demo version of COVID-19 vaccination passports on March 17, Deputy Health Minister Yaroslav Kucher said during a press briefing in Kyiv on Monday.
“Currently, there is no jointly worked out decision on vaccination passports in the world. The EU is only discussing a unified document and proposes to submit a demo version of the document on March 17,” he said.
The deputy minister added that after the approval of the unified document, Ukraine will be able to issue it to citizens on the basis of vaccination data, which are stored in the corresponding register of the electronic health care system.
“When the EU or other countries adopt a unified document that Ukraine will support, it will be possible to issue such a document or certificate based on the data in the electronic health care system,” he said.
Kucher also added that currently, countries that carry out vaccinations issue vaccination certificates, certificates or QR codes in paper or electronic format. For example, in Israel a certificate is issued electronically, in Poland a QR code is issued, in Denmark one can download a certificate through a special portal, Hungary offers a mobile application, and in Sweden the certificate will be issued in electronic format with its own application.
Over 14,000 Ukrainian companies annually export their products to the European Union, said Minister of Economy Ihor Petrashko.
“Over 14,000 companies annually export their products to the EU. And as of mid-January, 362 companies producing animal products have the right to export their products to the EU, which is subject to the most stringent requirements from the EU,” the press service of the ministry quoted Petrashko as saying in the release on Friday.
Reforms in technical regulation, public procurement, sanitary and phytosanitary standards, as well as improving the product safety control system, customs, intellectual property protection system will allow to remove barriers to trade and provide more free access to the EU internal market for Ukrainian companies, the minister said.
“Today we see that we are ready to go further in our European aspirations,” Petrashko added.
Ukraine and the European Union have agreed on further economic integration and regulatory convergence in a number of areas.
A joint statement by the leaders of Ukraine and the EU, adopted at the end of the summit in Brussels, says.
“We looked forward to further enhancing economic integration and regulatory approximation within the framework of the Association Agreement in the following fields: on digital, we took note of the on-site assessment of the implementation of Ukraine’s commitments in the AA/DCFTA. We also discussed the EU’s engagement in further supporting Ukraine and its institutions in approximation with and gradual implementation of the EU Digital Single Market acquis and institutional capacities, to fully benefit from the Association Agreement. We agreed to prepare by the end of 2020 a joint working plan for co-operation between EU and Ukraine on electronic trust services with a view to a possible agreement which must be based on approximation to the EU legislation and standards,” the statement reads.
The leaders welcomed progress on the update of the Annexes on telecommunication, environment, climate and financial cooperation of the Association Agreement. “Welcoming Ukraine’s ambition to approximate its policies and legislation with the European Green Deal, we stressed the importance of progress in Ukraine’s commitments in the areas of climate change, environment, marine ecosystem, education, energy, transport and agriculture, building on existing established sectoral dialogues, and agreed on a focused dialogue on the necessary steps in these areas,” the statements says.
In addition, they acknowledged the importance of fully complying with DCFTA commitments, notably in the areas of intellectual property rights, public procurement, trade defence, and sanitary and phytosanitary standards with a view to building an open and predictable business and investment climate in Ukraine. “We agreed to further discuss and review the ways to improve DCFTA implementation in order to further develop and facilitate bilateral trade,” the leaders said.
They also welcomed the launch of the pre-assessment on Ukraine’s preparedness on an Agreement on Conformity Assessment and Acceptance of Industrial Products.
The EU also welcomed Ukraine’s willingness to associate to the incoming EU’s Research and Innovation Framework Programme Horizon Europe and EU4Health Programme, which will be a significant enabler for green and digital post-COVID recovery.
“We recalled the importance and reaffirmed our commitment to concluding the Common Aviation Area Agreement at the earliest possible date,” the statement notes.
What is more, the EU reaffirmed Ukraine’s role as a strategic transit country for gas and welcomed the agreement on gas transit to the EU after 2019. “We underlined the importance of pursuing the modernization of the Ukrainian national gas transmission system and further cooperation on strengthening European energy security. We stressed the importance of Ukraine’s cooperation with the EU, with a view to its integration with the EU energy market based on effective implementation of the updated Annex XXVII of the Association Agreement as well as coordination of further steps for the integration of gas and electricity markets,” it says.
The parties also agreed to improve connectivity between Ukraine, the EU and other countries of the Eastern Partnership with a view to facilitating trade, further developing safe and sustainable transport links and supporting people-to-people contacts.
“We welcomed the participation of Ukraine in EU programmes and underlined the importance of Erasmus+ for education, training, youth and sport and Creative Europe for culture. We looked forward to intensifying the relevant cooperation in the framework of current and future programmes,” the leaders said.
