Page 9 - Ukraine OUTLOOK 2024
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The Ministry of Finance is taking steps to improve customs and tax systems by bringing customs legislation into line with EU norms, ensuring simplification and standardisation of customs procedures, and introducing an electronic system for monitoring the movement of goods. New laws are also being implemented to fight money laundering and strengthen monitoring and control over financial transactions. Regarding public finance management, the Ministry of Finance is promoting the introduction of new procedures to prevent abuse and inefficient use of funds from the budget.
Negotiations on Ukraine's accession to the EU may last up to 11 years.
According to the head of the European Commission's representation in Austria, Martin Zellmayer, Ukraine can join the EU in as soon as six years. "It took six years for Austria, eleven years for Spain," he pointed out. Ukraine has already implemented 70% of the required EU legislation thanks to the Association Agreement. However, Zelmeyer stressed that a lot still needs to be done, particularly the independence of the judicial system and the efficiency of management.
Cost of Ukraine’s EU membership to Europe
As Ukraine starts its formal talks to join the EU, one of the thorniest issues that needs to be dealt with is Ukraine’s entitlements to agricultural subsidies under the Common Agricultural Policy that by itself accounts for a third of the EU’s entire budgetary spending. Talks on Ukraine’s accession are bound to go on for years, as its entry will have to be preceded with very big reforms to the EU budget.
Ukraine’s agricultural sector is huge and able to swamp the rest of Europe’s agricultural businesses due to the fertility of its chernozem (black earth) soil and the cheapness of its labour.
According to one estimate, Ukraine will be entitled to €186bn in subsidies if it becomes a member, with aid for the agricultural sector making up the lion’s share. That will drastically alter the makeup of the EU’s budget and result in countries like Poland and Hungary going from being net beneficiaries of EU spending to being net contributors. As bne IntelliNews reported, Ukraine cannot join the EU unless the CAP is reformed.
“All member states will have to pay more to and receive less from the EU budget; many member states who are currently net receivers will become net contributors,” concluded the paper by the secretariat of the EU council, as cited by the Financial Times.
The power of Ukraine’s agricultural exports has already been demonstrated after Poland and several other Central European countries banned imports of Ukrainian grain after they collapsed the local grain markets in April and rendered many Polish farms loss-making.
Poland has already proposed blocking Ukrainian agricultural exports to the EU for 20 years after Ukraine joins the EU, Poland’s Deputy Minister of Agriculture Michal Kolodziejczak said in an interview on December 17.
"Ukraine’s accession to the EU is not beneficial for Polish farmers, we must protect our interests and say that agricultural products from Ukraine should not enter Poland for, for example, 20 years after Ukraine’s accession to the EU.” A new study by the Institute of German Economics (IW) has put a lower estimate on the cost of bringing Ukraine into the CAP scheme. IW suggests that after joining the EU, Ukraine could receive agricultural subsidies ranging from €70bn
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