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The purpose of the research is to develop analytical materials for Ukrainian authorities and society, which can be used in the process of further reforming the domestic quality infrastructure, including the organization of state supervision and control over the safety of non-food products in accordance with the Association Agreement between the EU and Ukraine.

The necessity to continue reforming market surveillance is due to its direct impact on business development, the regulatory climate, and investment attractiveness of the country, as well as the effectiveness of consumer protection.

Author:

Leonid Vitkin, Doctor of Technical Sciences, Professor, expert on technical barriers to trade

Review:

Oleksandra Bulana, PhD, Analyst, UCEP

 

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Having become independent in 1991, Ukraine inherited an outdated Soviet system of standardization, mandatory certification, metrology, and state oversight of standards, norms, and regulations. This system did not meet the basic requirements of the WTO Agreement on Technical Barriers to Trade (TBT Agreement). After Ukraine’s accession to the WTO and the country’s determination of the course of European integration and the preparation of the Association Agreement, active cooperation with the EU began in terms of further reform of the Ukrainian system of technical regulation in accordance with European legislation and practice.

According to the arrangements enshrined in the Association Agreement with the EU (Article 56.1 – 1) and Annex III (paragraph 1), during the first year of entry into force of the Agreement Ukraine had to harmonize horizontal (framework) legislation with five acts of harmonized EU legislation, three of which are relevant to market surveillance, namely Directive 2001/95/EC on general product safety (paragraph 1.1 of Annex III), Regulation (EC) No 765/2008 on general requirements for accreditation and market surveillance relating to the marketing of products (paragraph 1.2 of Annex III) and Council Directive 85/374/EEC on liability for defective products (paragraph 1.5 of Annex III). In fulfillment of this commitment, three horizontal framework laws in the field of state market surveillance were developed on the basis of corresponding EU acts, namely the Law of Ukraine “On General Safety of Non-Food Products”; Law of Ukraine “On State Market Supervision and Control of Non-Food Products”; Law of Ukraine “On Liability for Damage Caused by Product Defects” and amendments to them in the form of the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine to Reduce Pressure on Business by Market Supervisors”. These acts are aimed at preventing the introduction of dangerous products on the market, the introduction of a system of market surveillance and control of such products, as well as the introduction of the European principle of liability of the manufacturer for damage caused by a defect in the products, put into circulation. The Cabinet of Ministers of Ukraine has adopted fifteen resolutions aimed at implementing the laws of Ukraine in the field of state market supervision. At present, market surveillance of non-food products for compliance with the requirements of technical regulations is carried out by seven bodies appointed by the Government.

In addition, another Ukraine’s commitment under the Association Agreement with the EU was to refrain from amending its horizontal and sectoral legislation listed in Annex III to the Agreement, except in order to align such legislation progressively with the corresponding EU acts and to maintain such alignment (Article 56.5 of the Association Agreement).

Based on the results of the analysis of the effectiveness of market surveillance, in 2019, the EU adopted Regulation (EU) 2019/1020 on market surveillance and compliance of products. The Regulation provides a basis for enhanced market surveillance of certain products produced in and imported into the European Union. The Regulation also addresses issues related to e-commerce and the digital environment.

The new Regulation will also strengthen customs controls to prevent the sale of dangerous products to European consumers. The Regulation authorizes the Commission to approve product-related pre-export control carried out by a third country on products immediately prior to their export into the EU. Most of the provisions of the Regulation will apply from 16 July 2021. In accordance with its commitments, Ukraine must ensure that its legislation in the field of market surveillance is brought into line with the above-mentioned Regulation.

The Association Agreement between Ukraine and the EU (Article 57) also provides for the conclusion of the Agreement on Conformity Assessment and Acceptance of Industrial Products (ACAA). The ACAA will be added as a Protocol to the Association Agreement covering one or more sectors once the relevant Ukrainian sectoral and horizontal legislation, institutions, and standards have been fully aligned with those of the EU, and following a check by the EU (Article 57.1,3), including in the field of market surveillance. The ACAA will provide that trade between Ukraine and the EU in goods in the sectors that it covers, shall take place under the same conditions as those applying within the EU (Article 57.2).

It is expected that the ACAA will ultimately cover all 27 sectors (areas) for which the Association Agreement contains vertical commitments. Once this goal has been achieved, the parties may consider extending the ACAA to other industrial sectors (Article 57.4).

At the first stage, preparation for the signing of the Agreement on Conformity Assessment and Acceptance of Industrial Products is provided for 3 priority sectors of industrial products (safety of machines, electromagnetic compatibility, low-voltage electrical equipment).

Before starting negotiations on the Agreement on Conformity Assessment and Acceptance of Industrial Products, Ukraine must ensure the adoption of the necessary legislation, its entry into force, and its actual implementation by the relevant Ukrainian authorities. The parties reaffirmed their mutual commitment to conduct and facilitate a mission to pre-assess the state of Ukraine’s quality infrastructure and adaptation of national legislation to EU standards.

In accordance with the agreement reached in November 2020 – January 2021, bilateral consultations between the parties on technical regulation and assessment of the state of compliance of the Ukrainian system with European standards were held online. European experts have promised to provide the respective report in 2021.

There are some risks to the signing of the ACAA Agreement due to the fact that the European co-operation for Accreditation (EA) has suspended the recognition of the Ukrainian accreditation system in two spheres for product certification bodies and inspection bodies from March 24, 2021. The Ukrainian side must immediately take the necessary measures to restore recognition by the EA.

If Ukraine fulfills its commitments under the Association Agreement, the following goals can be expected to be achieved:

  • compliance of framework and sectoral legislation (according to Annex III of the Association Agreement with the EU) with European legislation;
  • creation in Ukraine of modern quality infrastructure, the institutions of which will carry out activities in the field of standardization, conformity assessment, accreditation, metrology, market surveillance in accordance with established European practice;
  • elimination of duplication of conformity assessment procedures of products with the requirements of technical regulations in Ukraine and the EU, reduction of financial and time costs of business for conformity assessment procedures;
  • mutual recognition of certificates of conformity between Ukraine and the EU after the signing of the ACAA and expanding access to the EU market for Ukrainian industrial producers with a high degree of added value;
  • simplification of EU approval of the system of pre-export control of Ukrainian products.

This research will serve to prepare the Ukrainian authorities for the need to amend domestic legislation and practice in accordance with the latest changes in European legislation and the activities of European regulatory authorities in the field of market surveillance and control.

The Ukrainian authorities will have to fulfill the following key tasks:

  • fulfilling of commitments under the Association Agreement in the field of market surveillance in terms of
  • amending the legislation on market surveillance and control of non-food products;
  • enhancing the effectiveness and efficiency of Ukrainian market surveillance in accordance with European practice;
  • enhancing the level of market protection against unfair competition;
  • strengthening consumer protection;
  • preparation of Ukrainian producers and exporters to meet the requirements of updated domestic and European legislation in the field of market surveillance and control;
  • ensuring close cooperation of Ukrainian market surveillance and control authorities with European regulatory authorities;
  • enhancing the level of staff competence in the field of market surveillance and control;
  • ensuring adequate financing and modernization of the testing base for market surveillance and control;
  • digitalization of market surveillance and control processes.