2.3 Prospects for the future
The possibilities for further strengthening bilateral relations are high on the bilateral agenda in 2003, not least following the adoption on 11 March 2003 of the European Commission's Communication on Wider Europe - Neighbourhood, setting out a new framework for relations over the coming decade with Ukraine, Russia, Moldova and Belarus and the Southern Mediterranean countries who do not currently have a perspective of membership but who will soon find themselves sharing a border with the Union. The EU continues to consider full PCA implementation as a first priority. Also important is the improvement of co-operation on security threats, both in the context of terrorism and organised trans-border crime.
Further progress is expected on WTO accession negotiations, with the focus now on adaptation by Ukraine to the multilateral "rules" regime. In the energy sector, a solution to the modernisation of the nuclear reactors "K2R4" with highest safety standards should be found, and further discussion will take place on gas transit.
1. EU Enlargement: Wider Europe - a new framework for EU-Ukraine relations
1.1 EU Enlargement: good news for Ukraine
The enlargement of the Union in May 2004 with ten new members, most of them in Central Europe, will impact profoundly both on the Union itself and on the Union's relations with its neighbours and the world.
The opportunities for co-operation along the future enlarged EU borders are described in the Commission's communications of 11 March and 1 July 2003 on the Wider Europe concept and a New Neighbourhood Instrument.
The EU is of the opinion that Ukraine will greatly benefit from the enlargement of the EU. Through its geographical proximity Ukraine will have access to the World's biggest single Market of almost half a billion consumers. Therefore, Ukraine, because of its traditional trade and economic relations with many of the new member states as well its geographical position will be in a good position to take advantage of the opportunities of enlargement.
By way of example, tariffs on Ukrainian exports into the EU will go down after Enlargement from 9 percent to 4 percent on average, which in Dollar or Euro terms will mean a lot to the Ukrainian economy. And this is only one example of several benefits that will follow from Enlargement.
From earlier enlargement it is known that becoming a member of the EU will bring accelerated growth to the new Member States and thus increase import demands inter alia from Ukraine. The new Member States have already started to apply European norms step by step. This means that Ukrainian companies that have been doing business with neighbouring countries in the past years have already complied with EU regulations and will thus not experience major changes after 1 May 2004.
Very often people refer to the fact that as a result of enlargement some of the free trade agreements which Ukraine used to have with certain candidate countries e.g. the Baltics will now have to scrapped. Actually, technically, FTAs will have to be adjusted to be compatible with the EU Accession treaties signed by the Baltic States. The results of this adjustment are not known yet and therefore cannot be adequately calculated. But more importantly, this example, which is always mentioned is not representative: firstly, no one can calculate the effect of this future change, but if they were to try they should take into consideration that Ukraine's trade with the Baltics constitutes only 2 percent of all of Ukraine's total trade which is a drop in the bucket compared with the overall 5% decrease in tariffs mentioned above. Further
What is true is that EU enlargement will be the occasion to address a number of challenges and opportunities to avoid new dividing lines in Europe, for example in the area of cross border cooperation and migration issues. Between 2004 and 2006 the New Neighbourhood Programmes will start working and from 2006 on New Neighbourhoods instruments will applied. These programmes include cross border cooperation between Ukraine and Poland, Hungary, Slovakia and Romania. Between 2004 and 2006 the EU will allocate a sum of 75 million Euros for cross border cooperation programmes alone.
2. Wider Europe - Neighbourhood
The EU Commission on March 11 adopted a new framework for its relations with the EU's future neighbours including Ukraine. In a Communication called Wider Europe - Neighbourhood: A New Framework for Relations with our Eastern and Southern neighbours, the Commission made it clear that the objective of the new framework is to develop a zone of prosperity and a friendly neighbourhood, a ring of friends, with whom it can enjoy close peaceful and co-operative relations.
The overall goal of Wider Europe will be to work with partner countries to foster the political and economic reform process, promote closer economic integration and sustainable development and provide political support and assistance.
In Wider Europe Ukraine is one of the priority countries and is offered a new deal, including i.a. the prospect of closer integration into the EU's Single Market, of preferential trade relations, of further cultural cooperation and mutual understanding, integration into transport, energy and telecommunications networks and the European, Research Area.
Also the new framework provides new concrete tools for its implementation including participation in EU programmes and activities and new sources of finance, an Action Plan for Ukraine and Annual Reviews.
In this regard Wider Europe offers an ambitious and realistic framework for strengthening our strategic partnership allowing Ukraine to benefit fully from EU Enlargement. The new avenues offered for cooperation offered by Wider Europe include a perspective of future progressive integration into the EU's internal market of 450 million consumers
A new tool introduced to implement the New Framework is the Action Plan, a essentially political document to be drawn up by the Commission and EU member States and agreed in association with Ukraine, clearly setting out not only policy targets but also benchmarks by which progress can be judged over several years. These benchmarks should be developed in close cooperation with the partner countries and new benefits should be offered to reflect the progress made in political and economic reform.
The Wider Europe Communication also outlines the Neighbourhood Programmes as a new initiative to take significant steps to deal with the effects of Enlargementboost co-operation across the EU's borders with Ukraine. Under four different NNPs Ukraine will receive an additional funding of 20 million Euros.
The issue of Ukraine's membership in