The Ukrainian and European Domestic Advisory Groups (DAGs) under EU-Ukraine Association Agreement met on 14 November 2018 in Kiev during the Second Civil Society Forum devoted to the implementation of the provisions of Chapter 13 "Trade and Sustainable Development" of the EU-Ukraine Association Agreement (hereinafter referred to as the Association Agreement).

The participants were informed by the representatives of the government authorities of Ukraine and the European Commission on the joint statement of the EU-Ukraine Subcommittee on Trade and Sustainable Development (hereinafter referred to as the Subcommittee).

During the Forum, the discussions took place on the issues related to trade and employment, environment, sustainable forest management and other issues related to trade and sustainable development.

 The representatives of the EU civil society emphasized the role of values and principles of democracy, such as freedom of speech, the prevention and fight against corruption, access to information and justice, and the observance of high social and environmental standards in the framework of the EU trade and investment policy towards Ukraine.

 Chapter 13 "Trade and Sustainable Development" of the Association Agreement provides for the possibility of reviewing, monitoring and assessing the impact of the implementation of trade provisions on sustainable development. The EU has the practice of conducting such assessments at the stage of implementation of trade agreements. Ukraine has not yet applied such an approach, which was emphasized by the representatives of civil society.

Progress in establishing the Domestic Advisory Group

The DAG Members, in particular the representatives of the EU DAG, welcomed the creation of the Ukrainian Advisory Group.

In order to ensure the proper preparation of future civil society fora, both sides agreed to work together to develop a common framework and to have mutual consultations on improving the rules and procedures of each of the parties.

The representatives of the civil society of Ukraine noted the need to establish an effective interaction of the Ukrainian Advisory Group with the EU Advisory Group and the Subcommittee in order to enhance the cooperation with civil society organizations and monitor the implementation of the chapter on Trade and Sustainable Development.

Trade and Sustainable development

 Ukraine's trade relations with the EU should be accompanied by the implementation of the principles of sustainable development, which should be clearly enshrined in the trade policy of Ukraine.Sustainable trade requires that consumers and commodity producers are systematically informed about its foundations and tools. A unique role in this is played by common approaches to the principles and methods of assessment in order to identify environmental characteristics and overall product benefits throughout its life cycle in accordance with international standards. In Ukraine, the share of environmental goods and services makes about 1% of market share. Sustainable public procurement has been implemented, but the application of this approach at the national level requires the development of market potential, certain changes in legislation, the development of methodological recommendations, information and raising awareness of government customers and suppliers.

There, the DAG Members consider necessary to ensure the following:

• Accession of the Government of Ukraine to the negotiation process, which is currently underway within the framework of the WTO regarding the Environmental Goods Agreement;
• The implementation of Directive 24/2014 as regards the introduction of sustainability criteria as selection criteria (in technical specifications) and selection (non-price criteria);
• The inventory of the resources, especially the inventory of agricultural land and forming an actual base of investment proposals;
• Observance by the parties of Article 136, Paragraph 2, "Automobile, Rail and Inland Water Transport", of the Association Agreement with a view to the practical implementation of the liberalization of transport operations, which will allow free movement of goods and to save jobs for the automotive industry;
• The participation of the Ukrainian businesses in EU-supported projects and programs aimed at promoting sustainable trade, in particular products and services that meet international environmental and social standards;
• The implementation of educational programs on the search of partners and marketing, customs procedures, sectoral directions of technical regulation, conformity assessment (certification) of products, qualification improvement (retraining) of personnel.

Trade and labour

According to the ITUC Global Rights Index, Ukraine ranks among the countries with the most violations of trade union and worker rights. The country ratified ILO fundamental conventions, minimal wage and wage protection conventions, OSH, governance and social security norms, but the implementation in practice is far from being respected. Priority in the field of labour relations should be given to the implementation of international labour standards, EU legislation and practice on social policy, employment and labour, safety and health at work, collective bargaining, social dialogue, labour law reform to ensure the balance of interests of social partners and the protection of workers' rights in accordance with the ILO's fundamental and priority conventions (81, 122, 129, 144, 167). Ukraine also ratified European Social Charter, but out of the nine “hard core” articles of the Charter (Articles 1, 5, 6, 7, 12, 13, 16, 19 and 20), it did not ratify articles 12 (right to social security), 13 (right to social and medical assistance) and 19 (right of migrant workers and their family members to protection and assistance). Neither has it ratified the 1995 Additional Protocol on the Procedure for Collective Complaints.

A complete implementation of the rights and freedoms of employers’ organizations and trade unions in Ukraine should take into account tendencies of the development of the Ukrainian society such as decentralization, increased role of civil society organizations and the European integration.

Reforming Ukraine's labour legislation should take place with the broad involvement of social partners. When adopting the draft of the new Labour Code of Ukraine, it is important to make it impossible to reduce the rights of trade unions. The proposed draft of the code will limit the rights of the workers and the protection of wage and will decrease social protection of citizens in general.

In this regards, the DAG Members:

• support the expansion of the capacities of all interested organizations, in particular CSOs, to broaden their participation in the social dialogue at the sectoral and national levels, gradually bringing the national model of social dialogue closer to the best European practices; call for public debates and trade union consultations when adopting laws and regulations which may violate workers' and union right;
• underline that the current minimal wage is 4173 GVN (131 EUR) a month. The State Budget of Ukraine for 2019 set the subsistence level at almost half of its actual size calculated by the Ministry of Social Policy. Consequently, all other indicators calculated on the basis of the subsistence level turn out to be below their proper values[1]
• point out that Ukraine has the lowest wage and salary income in Europe. In November 2018, the average wage in the country amounted to UAH 9 161 (EUR 288). Average monthly wages of women in the third quarter of 2018 dropped to 76.1% of men’s wages. Public sector workers form the core group of the working poor. This applies mainly to health and social workers whose wages as of November 2018 amounted to just 65% of the national average wage.
• emphasise that Ukraine remains one of the poorest countries in the world in terms of standards of living. According to the United Nations Development Programme (UNDP), over 60% of Ukraine's population lives below the poverty line. Ukraine came 84^th in the 2016 Human Development Index ranking list compared to 55^th place in 2015.
• explain that low wages in the formal economy are also linked to informality – with many workers receiving top-ups from employers in cash above the minimum wage level, while other workers seeking to complement low wages received in the formal economy with informal activities elsewhere. These practices have negative implications both for public finances and the adequacy of social protection benefits for many workers later on in life.
• Are concerned by the wage arrears and non-compliance in paying minimum wages. Wage arrears continue to grow in Ukraine, exceeding UAH 2.8 billion (EUR 89 million) as of December 1, 2018. 113,600 workers of economically active enterprises do not get their wages on time; they are owed UAH 1.6 billion (EUR 51 million).
• point out that following the increase of the minimum wage in December 2016, the government passed a law in the Parliament which prohibits reference to it in wage setting collective agreements, de facto demanding revision of all the collective agreements. This law is a clear violation of the collective bargaining
• concerning labour inspection, they welcome ratification of ILO conventions 81 (Labour inspection in industry and trade) and 129 (Labour inspection in agriculture) but stress out that the inspections are limited by the provisions of the Law of Ukraine on the main principles of state supervision in the area of economic activities[2].
• Point out that over 400 OSH-related laws and regulations and 5000 national standards were repealed in 2015-2018 which led to a greater number of occupational diseases and massive violations of workers’ rights in the area of OHS.
• warn that the General Collective Agreement does not include neither provisions for social partners' involvement in the development of macroeconomic policy, labour market policy, nor measures to prevent further impoverishment of the working population, actions to support youth employment and reduce irregular employment. Furthermore, the work of the National Tripartite Social and Economic Committee is not regular and its decisions are of consultative nature.
• are concerned about an excessively complex mechanism of exercising the right to strike including a number of restrictions, which makes it hard for workers to use it.

Trade, Environment and Climate

Ukraine should accelerate the process of approximation of its environment and climate-related legislation in accordance with the schedule established by the Association Agreement and pay special attention to those areas where progress has not yet been made, in particular industrial pollution, air protection, and nature protection.

In this regards, the DAG Members

• welcome the introduction of such instruments as strategic environmental assessment and environmental impact assessment, and emphasize the need to complete the reform of the government environmental supervision and environmental monitoring system.

• deem extremely important that the Subcommittee identifies climate change as one of the most important in the context of trade and sustainable development.
• DAG Members note that the absence of carbon pricing in Ukraine makes it impossible to accelerate the development of the low carbon market and attract additional investments into this sector.
• express their concern about the following:
• Ineffective use of soils and forest resources, which leads to a disturbance of the ecosystem balance and exacerbates the effects of climate change, which is transboundary, and even global in nature;
• The disorderly use of pesticides and other chemicals in agricultural land, which leads to a significant increase in the threat to the life and health of people and animals, environmental degradation and contamination of surface and groundwater on a large scale.

Animal Welfare, Phytosanitary and Sanitary standards in Ukraine

Regulatory Alignment

As per Article 290 § 2 of Chapter 13 of the EU-Ukraine Deep and Comprehensive Free Trade Area on trade and sustainable development, Ukraine shall approximate its laws, regulations and administrative practice to the EU acquis. This is key to adopting legislation that takes into account and respects economic, social and environmental best interests (Art. 289 § 2).

Approximation to the EU acquis not only translates into more exports for goods and services from Ukraine and the participation in European and global value chains, but also into the development of goods and services in the country, through increase of EU foreign direct investment, that are more innovative, greener and incorporate social standards. The EU DAG welcomes the reforms introduced by Ukraine over the past years and calls on the acceleration of these efforts. The EU DAG also recognises that there are a number of instruments developed by the EU that are available to Ukraine, such as the €50 mln support for the Energy Efficiency Fund.

The EU-Ukraine DCFTA includes in its TSD chapter an article calling for trade to favour sustainable development (article 293). These provisions underline that trade “should promote sustainable development in all its dimensions” and that “the Parties shall strive to facilitate trade in products that contribute to sustainable development.” Animal welfare is connected both directly and indirectly to sustainable development.  According to article 404 of the EU-Ukraine DCFTA, animal welfare is explicitly recognized as being a feature of sustainable agriculture. It also promotes modern agriculture and implementation of best practices, however, no effort has been made to reform Ukraine’s phytosanitary and veterinary controls in order to bring them closer to EU standards.

It is therefore important for Ukraine to progress towards aligning its animal welfare standards with the EU’s from a sustainable development perspective. The preferences that were granted notably to poultry meat, dairies, eggs and egg products, even if in the form of tariff-rate quotas, were made unconditionally and have led to a huge increase of Ukrainian imports of these products into the EU[3]. The increase in imports, notably of eggs and egg products, reflect progress on sanitary conditions. However, Ukrainian animal welfare legislation is still very weak. This is even more an issue as poultry meat and egg productions are most often intensive factory farms where animals are denied the most basic welfare conditions. Intensive farming practices also have negative impact on the environment and their daily use of antibiotics fuels the development of antimicrobial resistance which is considered a great threat to both human and animal health. The DCFTA has thus so far stimulated a trade in very unsustainable products and both parties should work to correct that trend.

• DAG members call on Ukraine to shorten the currently foreseen transition period before approximating EU animal welfare regulations from 2026 to maximum 2023.

Furthermore in Article 404 of EU-Ukraine DCFTA, the focus is also to promote modern agriculture and implementation of best practices; however, no effort has been made to reform Ukraine’s phytosanitary and veterinary controls in order to bring them closer to EU standards.  In practice, the majority of the technical and certification requirements were deemed unnecessary by operators who comply with EU standards, but there are no effective SPS controls at the fields. The exit points (e.g sea ports and grain silos) remain the only place of control. 

At this stage, it has become urgent for Ukraine to carry out a reform of phytosanitary and veterinary control bodies, create a new nationwide system of plant health control and monitoring, and adopt new national quality standards for grains and oilseeds in compliance with international standards.

Trade and Sustainable forest management

There are no market-based instruments for achieving sustainable forest management that are important in the context of the Association Agreement, in particular voluntary forest certification. The development of such certification allows to take into account the interests of civil society institutions and local communities, respect the ILO norms, preserve biodiversity, ensure non-exhaustive use of forest resources and confirm the fulfilment of these and other requirements by a third independent party.

• The DAG Members point out a lack of an independent multilateral and united discussion platform on sustainable forestry and the formation of a national forest policy and development strategy and call for requirements for the legality and constancy of timber origin in line with the Timber Regulation.

While implementing its demands, the importers are faced with a lack of information on the legality of the origin of wood and numerous misunderstandings due to lack of awareness of the content of the regulation, low responsibility to partners throughout the supply chain, lack of explanatory work and communication on these issues, and lack of coordination on the part of government authorities.

Trade and Renewable Energy

• The DAG Members note the significant impact of the energy sector on sustainable economic growth in terms of environment, climate and safety, and emphasize the need to continue the programs for the development of alternative energy sources and support energy efficiency projects, resource conservation and the introduction of cleaner production technologies.

Cooperation on the Black Sea Fisheries Resources Management

• The DAG Members support the EU recommendation on compliance with Ukraine's international obligations and consideration of opportunities to become a full member of the General Fisheries Commission for the Mediterranean, thereby strengthening its position in the organization.