ATTACHMENT_J.5_-_BACKGROUND_INFORMATION_FOR_OFFERORS.pdf

Competitive Economy Program (CEP)

SOL-121-17-000007

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ATTACHMENT J.5 – BACKGROUND INFORMATION FOR OFFERORS

PART 1:

Acronyms and Abbreviations

ADS Automated Directives System ARDS Agriculture and Rural Development Support Program CDCS Country Development and Cooperation Strategy CLP Competition Law and Policy for Ukraine CLPU II Commercial Law Project for Ukraine DCFTA EU/Ukraine Deep and Comprehensive Free Trade Area DO Development Objective EG Economic Growth EU European Union GDA Global Development Alliance GDP Gross Domestic Product GOU Government of Ukraine GUC Grant under Contract ICT Information and Communications Technology IDP Internally Displaced Person IFC International Finance Corporation IMF International Monetary Fund IR Intermediate Result LEV Leadership in Economic Governance LGBT Lesbian, Gay, Bisexual and Transgender M&E Monitoring and Evaluation MEDT Ministry of Economic Development and Trade MOF Ministry of Finance SME Small- and Medium-sized Enterprise NGO Non-Governmental Organization PWD People with Disabilities SFS State Fiscal Service SIDA Swedish International Development Agency SPS Sanitary and Phyto-Sanitary SURE Supporting Urgent Reforms to Better Ukraine’s Business Environment SURE EU Support to Ukraine to Re-launch the Economy program TA Technical Assistance TFA Trade Facilitation Agreement (WTO) USAID United States Agency for International Development USG United States Government UTPP Ukraine Trade Policy Program WB World Bank WTO World Trade Organization

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PART 2:

CDCS Results Framework for DO2

DO 2: Broad-based, resilient economic development as a means to sustain

Ukrainian democracy

IR 2.1 Increased investment availability to the emerging middle class

IR 2.1.1 More transparent legal & regulatory framework

IR 2.1.2 Financial sector more diversified

IR 2.1.3 Improved MSME access to agricultural finance

IR 2.2 Strengthened private sector capacity

IR 2.2.1 Business community more effectively advocates for reform

IR 2.2.2 Improved business support services for SMEs

IR 2.3 Local government more efficient and accountable

IR 2.3.1 Local government more financially independent

IR 2.3.2 Local govenrment resources managed in an effective, transparent & accountable manner

IR 2.3.3 Municipal services improved

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PART 3:

Illustrative ways TAC activities could help support the Eastern Ukraine

• Municipal competitiveness survey and index:

o Substitute Kramatorsk and Severodonetsk for Donetsk and Lugansk in the cities surveyed and provide them extra help to undertake follow up reforms o Add Mariupol to the survey and give it extra support for follow up reforms

• Emerging industries:

o Give preference to a proposed emerging industry if it would also have a particular impact in the East o Once industries are selected, give extra consideration to proposals for sub-grants if they would also particularly benefit the East

• Export promotion:

o Deliver export-readiness training targeted to firms in the East o Provide modest extra support from the marketing expense budget for participation by firms from the East in trade fairs, B2B, etc.

• WTO participation:

o Conduct WTO awareness seminars especially for firms and officials from the East

• Trade facilitation:

o Give extra consideration to sub-grant proposals from trade-related business associations in the East that wish to increase membership, expand services to members, or increase capacity to interact with government on trade facilitation issues o Give extra consideration to sub-grant proposals from firms from the East that propose pioneering investments to improve trade facilitation e.g., multi-modal transfer facilities

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PART 4:

Component Background Information

Component 1: A better business-enabling environment (C.4.a.)

Background: A better business climate is important to give start-ups and SMEs the opportunity to develop. But Ukraine is still a difficult place for them to do business.

Government leaders are well aware that administrative and regulatory barriers constrain the economy. They regularly put deregulation and fighting corruption at the top of policy action lists and have taken meaningful steps to address them. The GOU has also taken steps to make business-related information accessible to the public through the internet and make its own transactions more transparent.

The GOU receives both pressure and support from international organizations and donors for improving the business climate. The IMF’s Extended Fund Facility and the World Bank’s Financial Sector Development Policy Loan make especially important contributions. USAID is helping to address business enabling environment constraints through support for local think tanks and NGOs that are directly involved in the policy debate on business enabling environment issues. The LEV alliance identifies reforms to improve the business environment for SMEs, supports the debate with analysis, and strengthens the ability of the SME community to advocate for SME- and investor-friendly change. The Commercial Law Project helps develop legislation that is SME-friendly, reflects market principles and helps to open economic opportunities to all. USAID is also supporting the expansion of the Pro Zorro e-procurement system across the government and, through the U.S. Department of Justice and Federal Trade Commission, is assisting the Anti-Monopoly Committee of Ukraine to promote competition and prosecute anti-competitive behavior in the economy.

Despite this support, there is a long way to go to establish a business climate in Ukraine that truly supports the development of new firms and SMEs. Frequent changes in personnel at the national level have disrupted the continuity of leadership for reform initiatives. The Rada represents multiple interests including groups threatened by reforms. It can delay, distort, and prevent reform initiatives. A weak and sometimes hostile bureaucracy can impede the implementation of reforms and may erect new barriers to business as old barriers are taken down. The challenge is compounded by weak institutions for business advocacy by smaller enterprises which are often excluded from policy discussions and have little ability to effect policy change. TAC is intended to support business advocacy informed by economic and legal analyses which is a missing element in building a better business enabling environment.

The potential for initiating improvements to the business-enabling environment at the local level has yet to be tapped. Ukraine’s municipal governments are responsive to citizen needs and compete with each other aggressively to promote business and investment, especially that which will create jobs. Municipal governments have demonstrated pragmatism and creativity in addressing economic problems. While most laws and regulations that determine the quality of the business climate originate at the national level, there is significant discretion in how they are implemented

Attachment J.5 – Page 5 of 15 locally which gives municipalities the opportunity to improve the business climate on their own. USAID will seek, instead, to develop information, incentives and a political dynamic at the local level to accelerate reforms from the bottom up.

Component 2: Support for emerging industries (C.4.b.)

Background: In addition to impeding the development of individual firms, the difficult enabling environment for business in Ukraine has discouraged development of the new industries that need to emerge to replace declining industries or industries that will decline as CIS markets dry up and Ukrainian companies face stiffer competition.

Business climate reforms, privatization, and the elimination of subsidies to SOEs will eventually create more space for new industries to grow. Development of Ukraine’s financial sector will eventually make the funds available to finance them. But neither will happen quickly enough to address Ukraine’s current economic crisis or meet post-Maidan expectations. Moreover, although the progressive reduction of trade barriers between Ukraine and the EU under the DCFTA makes the large European market potentially accessible to Ukrainian producers in emerging industries, few Ukrainian businesses or entrepreneurs are accustomed to producing to the EU’s quality and delivery standards. They will need help.

Component 3: An export promotion capability (C.4.c.)

Background: There are a few nascent institutional resources in Ukraine to help businesses develop the capacity to produce to export standards and enter new markets.

An Export Council meets periodically but has neither budget nor dedicated staff and does not provide services to businesses. A draft Export Strategy was recently prepared for the Ministry of Economic Development and Trade (MEDT) but is being re-worked by the International Trade Centre (Geneva). The MEDT, with donor support, including USAID’s partner the Western NIS Enterprise Fund (WNISEF), has recently established an Export Promotion Office to provide consultations and support to export companies, coordinate initiatives in export promotion, and provide selected services to exporters related to export promotion (http://www.epo.org.ua/ or https://www.facebook.com/exportpromotionoffice/). Additionally, the GOU has established an Investment Promotion Office – UkraineInvest, a not-for-profit structure subordinate to the Cabinet of Ministers, to attract and support investors in Ukraine (https://www.facebook.com/UkraineInvest/).

The SME, export and investment promotion functions are currently separated within the GOU which could reduce their effectiveness. But the bigger picture is positive -the need for supportive policies and institutions in these areas is being discussed and pursued seriously within the GOU and is expected to lead to action and result.

Component 4: WTO participation and compliance (C.4.d.)

Background: Since joining the World Trade Organization (WTO) in 2008, Ukraine has integrated itself into the multilateral rules-based trade system in a number of ways but has faced challenges in administering and implementing specific WTO commitments. More recently, Ukraine has faced increasing trade restrictions on its http://www.epo.org.ua/ https://www.facebook.com/exportpromotionoffice/

Attachment J.5 – Page 6 of 15 exports imposed by the Russian Federation and has been the subject of trade complaints brought against it. Ukraine has sought to utilize WTO jurisprudence to address these threats while diversifying its trade to markets in the EU, Central Asia and the Middle East.

USAID launched the Ukraine Trade Policy Program (UTPP) in April, 2015 to help the Ministry of Economic Development and Trade’s (MEDT) Section on Trade Protection1 improve Ukraine’s legal framework governing trade remedies (anti-dumping, countervailing duties, and safeguards), and develop the capacity to use WTO trade dispute procedures effectively. The project is also working with the State Fiscal Service (SFS) on Customs and trade facilitation and with private sector and academic stakeholders to improve their understanding of the WTO in order to facilitate internal and external coordination on WTO issues in Ukraine.

At the request of Ukraine’s Ministry of Finance, a more targeted Customs Reform Activity (CRA) pilot was initiated in May, 2016 to assist the SFS, which is responsible for both Customs and national revenue, to modernize Customs procedures and reduce corrupt practices by bringing Ukraine into compliance with European Union Customs and border standards.

The CRA is expected to overlap for a period of time with TAC while UTPP will likely be ending as TAC activities begin.

Component 5: Faster and lower-cost trade across Ukraine’s borders (C.4.e.)

Background: The GOU has a critical role to play in facilitating Ukraine’s economic transition by improving border management so that new exports (and imported inputs) flow to new markets across Ukraine’s borders rapidly and at low cost. Border crossings are currently expensive and slow – Ukraine ranks 109th out of 189 countries covered by the Trading Across Borders indicator of the World Bank’s Doing Business Survey.

The movement of goods across Ukraine’s borders is problematic. Numerous government agencies have border control responsibilities, but there is limited cooperation and collaboration between them. Given fiscal pressures on the government, the Customs Administration has been more focused on revenue generation instead of trade facilitation. With over 240 border crossing points and over 11,000 customs officers alone, there is significant need to harmonize policies and professionalize border staff in order to address rampant smuggling, corruption, and costly inefficiencies.

Better border management will depend to a significant degree on how well the GOU implements the WTO’s Trade Facilitation Agreement (TFA) and the quality of collaboration between the public and private sectors in directing that effort. Ukraine ratified the TFA in December, 2015 and notified the WTO of 12 Category A commitments – the provisions which will take effect when the Agreement enters into force.2 But a subsequent assessment by the UTPP concluded that the SFS and other GOU entities are only partially able to implement these provisions and will therefore

1 Within the Section, the Division on Anti-Dumping, Countervailing, and Safeguards (DACS) 2 The Agreement will enter into force (EIF) when two-thirds (108) of the WTO membership ratify the agreement and notify the WTO of their acceptance.

Attachment J.5 – Page 7 of 15 need prompt support to do so. Provisions of the TFA that will be notified as Category B (those requiring more time to implement) may also need donor support and Category C items (those requiring more time and technical assistance) will undoubtedly need donor support to be fully implemented.

The TFA mandates the establishment of a National Trade Facilitation Committee (NTFC) to obtain broad input into the effort to improve trade facilitation and to focus the actions of WTO member governments in implementing the TFA. Because trade facilitation is ultimately about facilitating commerce, active participation in NFTCs by the business community is especially important. Businesses help to identify challenges and opportunities to enhance trade facilitation and can deliver technical expertise and resources for specific reforms. Some, such as logistics companies, can directly improve trade facilitation by improving their own operations. The benefits of public/private dialog established under a NTFC can accrue over time to trade policy-making more broadly.

At present, Ukraine has a number of entities that have been established to promote public/private dialog on Customs and trade policy matters but they appear to be insular, interacting only with Customs or MEDT. While the existence of these bodies are a positive indication of the government’s willingness to collaborate with the private sector, the effective operation of the NTFC will require institutional strengthening for both public and private sector participants as well as a clearer, unambiguous mandate.

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PART 5:

E3 Trade Facilitation Sequencing

Sequence Results

Sequence 1:

Political Will And Implementation Of Fundamental Principles

Systems that enhance transparency, predictability, and impartiality through the flow of information among all relevant stakeholders.

Sequence 2:

Procedural Simplification

An environment for traders that is characterized by a reduction of unnecessarily burdensome fees and formalities

Appropriate guidance/notifications of procedures, detentions, and other matters issued promptly to save traders time and money and increase transparency and efficiency.

Fees and charges are limited to the approximate cost of services rendered;

number of fees reduced (as appropriate); fees and charges publicly available to traders (e.g.; on trade portal) to reduce incidences of corruption/discretion.

Well-conceived decisions to improve performance can be carried out based on an accurate measure of the elements associated with trade flows.

A system that ensures that formalities and documentary requirements for import, export, and transit foster rapid release and clearance of goods and reduce cost and time.

Sequence 3:

Compliance Management

Includes a set of more complex operational components, that taken together establish a foundation for a proactive compliance management environment.

An Advance Ruling system that supports a more efficient predictable and transparent border process.

A comprehensive risk management regime that includes all border control agencies and that utilizes sophisticated analytical processes in order to identity key industries, ascertain compliance levels, establish measurable compliance goals, and develop public/private collaborative action plans.

An environment where traders who voluntarily comply with customs rules and regulations are rewarded with faster and less costly customs clearance, and Customs’ operational efficiency increases. The relationship between Customs and the trade improves, moving from one of mutual distrust to mutual benefit.

Sequence 4:

Interagency Cooperation

A system that establishes common processes and operations to address operations including duplication of efforts, standard working hours, and joint inspections.

An environment that builds trust between border control authorities in the region by providing a space for dialogue and regulations to support the exchange of information.

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PART 6:

RELATIONSHIP TO MISSION CDCS, RESULTS FRAMEWORK, AND OTHER

USG PROGRAMS

Trade and Competitiveness (TAC) is the last large comp onent of USAID’s increased support for economic growth in Ukraine following the Maidan revolution. The other principal components are support for financial sector development, energy sector reform, and agriculture.

The Financial Sector Transformation (FST) activity will help to develop a financial industry that supports SMEs and offers products for a growing variety of business needs. FST assists to rebuild confidence in Ukraine’s banking system by helping inform the public about measures taken to strengthen the banking system and protect bank deposits. In order to quickly increase the flow of finance to SMEs, FST supports the development of Non-Bank Financial Institutions (NBFIs) including leasing companies, factoring companies, and credit unions as well as commodities markets and systems for crop and warehouse receipts. To build a foundation for long-term finance, FST supports prudent management of the Pension Fund of Ukraine (PFU) and helps to strengthen oversight of Ukraine’s securities market.

The Ukraine Competitive Energy Markets (U-CEM) activity promotes the reliable and consistent supply of energy at a competitive price by assisting to develop the policies and institutions needed for an efficient, market-based energy system to serve individuals and business. Short-term objectives include improving system management for greater resilience in the face of disruptions, facilitating Ukraine’s integration into the EU electricity market, and removing policy barriers to increased energy efficiency. Long-term activities support energy supply diversification, interconnection with the EU grid, and the promotion of new energy sector investment. A parallel USAID program is helping to privatize an initial number of energy distribution companies and developing privatization procedures for the sale of more distribution companies as well as companies in other sectors.

The Agriculture and Rural Development Support (ARDS) Program assists to improve the enabling environment and governance of the agriculture sector; increase agricultural investment, productivity, employment and incomes; and improve the welfare of rural communities and marginalized producers. Agriculture is already an important sector in Ukraine’s economy and has the potential to grow much larger while reducing rural poverty.

ARDS will focus on small- and medium-sized farms and processing primarily for fruits, vegetables and dairy.

TAC is consistent with the Mission’s pre-Maidan CDCS and directly implements adjustments USAID has made to that Strategy to reflect the post-Maidan situation in Ukraine. TAC will primarily contribute to Mission CDCS Intermediate Result 2.1 Increased Investment Availability to the Emerging Middle Class. It will also contribute to Intermediate Result 2.2 Strengthened Private Sector Capacity and Intermediate Result 2.3 Local Government More Efficient and Accountable. These IRs fall under the overarching Development Objective 2 Broad-Based, Resilient Economic Development as a Means to Sustain Ukrainian Democracy.

More specifically, Trade and Competitiveness seeks to achieve sub-intermediate result outcomes including IR2.1.1 More Transparent Legal and Regulatory Framework, IR2.2.1 Business Community More Effectively Advocates for Reform, and IR2.2.2 Improved Business Support Services for MSMEs. (See Annex 1 for the CDCS Economic Growth Results Framework.)

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TAC complements ongoing and other new programs in USAID’s economic growth portfolio and will draw on their knowledge, contacts and resources to leverage TAC’s impact in related areas.

The Commercial Law Project for Ukraine (CLPU II) (October 2011- July 2018). CLPU II improves the overall business climate and facilitates investment in Ukraine by 1) assisting the government to draft and implement modern commercial laws in areas such as corporate governance, shareholder rights, property ownership, bankruptcy, and competition law; 2) assisting the government to mainstream regulatory impact analysis into policy processes and build policy-makers’ capacity to assess the positive and negative effects of proposed and existing regulations; and 3) increasing the capacity of lawyers, businesses, and the public to use the commercial legal system.

Leadership in Economic Governance (LEV) (December 2014 - December 2019). LEV strives to improve Ukraine’s business enabling environment in line with EU principles and practices through the work of local organizations with recognized proficiency and knowledge in this area and further strengthens their capacity to identify and encourage policy and institutional reforms. More specifically, LEV works to improve the business environment for SMEs while increasing compliance with EU norms and standards. It assists central and local governments to draft and implement appropriate laws, regulations, and procedures. LEV also supports efforts by stakeholders in the business community to promote economic reforms and Ukraine’s economic integration with European and global markets.

Ukraine Trade Policy Program (UTPP) (April 2015 – April 2017). The purpose of the UTPP program is to expand export opportunities for Ukraine’s private sector, improve Ukraine’s ability to prevent and address foreign trade pressures, and promote the diversification of Ukraine’s export markets. UTPP is strengthening Ukraine’s capacity to utilize tools available through the WTO, improving communication and coordination on WTO issues within the Government of Ukraine and with external stakeholders, and assisting Ukraine to comply with its WTO obligations generally.

Competition Law and Policy for Ukraine (CLP) (2016 – 2020). Through an agreement with the U.S. Federal Trade Commission (FTC), CLP helps to strengthen the ability of the GOU to promote competition in domestic markets, protect consumer interests, and prosecute anti-competitive behavior.

Office of Transition Initiatives’ Ukraine Confidence Building Initiative (UCBI) (2014-2017).

UCBI provides fast, flexible, short-term assistance to Ukrainian partners to support peaceful democratic transition and community cohesion in the wake of social tensions and conflict in Ukraine’s East. UCBI enables communities and government to mitigate the conflict’s destabilizing effects, and enhances public engagement in the GOU’s response to the crisis and the broader political transition. UCBI assistance comes in the form of small in-kind grants (goods, services and technical support) to a range of partners, including national and local civilian government entities, civil society organizations and community leaders.

Western NIS Enterprise Fund Legacy Program (2015-2018). The Western NIS Enterprise Fund implements a legacy program funded by $30 million of the profits earned by the Fund from its investment activities in the region. There are four components:

• An Impact Investing Program provides accessible capital, coaching and mentoring to private enterprises that have social and environmental impact objectives in Ukraine and Moldova;

• A Local Economic Development Program develops market-based solutions to link local government and the business community in improving the provision of services to citizens while supporting the SME sector;

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• An Economic Leadership Program provides scholarships for students to attend U.S.

universities in order to strengthen the human capacity for private sector development in Ukraine and Moldova;

• An Export Promotion Policy Program is helping the GOU to develop a strategy to assist Ukrainian and Moldovan exporters to access new markets.

Reform Communications Activity (2016). USAID is planning a short, six-month activity to increase citizen awareness of and confidence in select reforms. Working with a local communications/PR firm to assess the communications landscape, USAID will support nationwide communications campaigns on behalf of the GOU on critical reform topics.

While this activity will likely not overlap with TAC, some communications materials produced by USAID’s partner may be relevant to TAC activities and provided to the Contractor.

Responsible, Accountable and Democratic Assembly (RADA) (2013-2018). RADA works to build an effective and independent legislature in Ukraine, and increase citizen participation in the policy-making process. Specifically, RADA assists members of parliament to build constituent relations and improve their representation functions. RADA also expands citizen education and the monitoring of members of parliament in order to increase their accountability. It promotes parliamentary independence by reinforcing its governing rules.

The Ukraine Civil Society Enabling Environment (2014 – 2019) seeks to make the legislative and policy environment in Ukraine more responsive to civil society needs and more consistent with European standards by improving the quality of civil society enabling legislation and policy, and increasing the capacity of public officials and Civil Society Organizations to implement related legislation and policy effectively.

Policy for Ukraine Local Self Governance (PULSE) (2015-2020). PULSE strengthens local governance in order to deepen democracy, improve conditions for development of communities, and promote stability. PULSE seeks to create a positive environment for local government reforms and ensure broad-based support for decentralization. It promotes a bottom up approach to decentralization policy development, constructive dialogue between local governments and the central government, and an improved legal and institutional framework for the development of local government in Ukraine.

Decentralization Offering Better Results and Efficiency (DOBRE) (2016 - 2021). DOBRE will provide comprehensive assistance to local communities by building effective and responsive local government that delivers tangible benefits to citizens and helps them quickly implement reforms in key sectors. DOBRE is part of a coordinated package of international donor assistance to the Government of Ukraine to implement decentralization reforms across Ukraine and ensure the success of newly consolidated communities. The activity has two primary objectives: (1) build the capacity of consolidated communities to carry out their responsibilities and provide quality services to their constituents, and (2) increase the engagement of local residents and civil society organizations in local government decision making, while holding local officials accountable through monitoring and oversight.

In addition to the Reform Communications Activity, the UNITER and U-Media activities managed by USAID’s Office of Democracy and Governance support several media venues and media development efforts that could facilitate public outreach activities conducted under TAC. See (http://uniter.org.ua/) and U-Media (http://www.umedia.kiev.ua/news).

http://uniter.org.ua/ http://www.umedia.kiev.ua/news

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PART 7:

RELATIONSHIP TO PARTNER COUNTRY PRIORITIES AND OTHER DONOR

PROGRAMS

The activities planned under TAC are closely aligned with Ukraine’s economic priorities. The government’s strategy documents and principal programs emphasize the central importance of boosting Ukraine’s competitiveness and integration with world markets. Ukraine’s June 2014 Association Agreement with the EU requires the GOU to make numerous reforms directly related to trade and competitiveness. The Coalition Agreement (CA) of the ruling parliamentary bloc “European Ukraine” calls for reforms to create favorable conditions for business to build a competitive economy, manufacture competitive products, and expand exports. It also calls for improving access to external markets by reducing the time to import and export goods. The Strategy for Sustainable Development “Ukraine – 2020” signed by President Poroshenko in January 2015 calls for reforming Customs and integrating Ukraine into the EU Customs framework, developing Ukrainian exports, and implementing deregulation, investment attraction, and business development programs.

Some of these reforms lack effective strategies but others are in progress. An export promotion concept was prepared in 2015 and presented by the MEDT in April, 2016. The design of the strategy will follow this year. A long-term strategy through 2025 for the development of high-technology industries as drivers of economic growth has been drafted and is currently under review and discussion. One area that has remained uncovered till now is Customs reform. That is about to change. The Prime Minister has made Customs reform a top priority which gives TAC the opportunity to help shape the reform and connect it to a broader effort to improve trade facilitation.

More than ten international organizations and donors support trade and competitiveness-related activities in Ukraine, creating many opportunities for direct collaboration and the need for active coordination. USAID/Ukraine meets regularly with other donors through a Private Sector Development Thematic Donors’ Working Group. USAID plays a lead role among donors in this area in many respects through its long history of work in the trade and competitiveness field. But the growing resources directed to trade and competitiveness by others mean there will be a number of important players at the table. USAID officers will have the primary responsibility for donor coordination but the Contractor will be flexible in adjusting to actions taken in conjunction with other donors and will actively seek opportunities to collaborate with and complement the work of others to achieve the greatest impact for Ukraine. Related donor programs are described below.

The EU’s Support to Ukraine to Re-launch the Economy (EU SURE) is a €6.8 million program that provides technical assistance and policy advice to promote deregulation in support of SMEs and the development of national and regional economic development strategies.

The Financial Sector and Enterprise Recovery project supported by Sweden and the World Bank supports deregulation, SOE reforms, entrepreneurship and innovation. The project offers short and medium term technical assistance to support policy dialogue and institutional capacity building. It has Financial Sector and Enterprise Sector components. SOE reforms, banking reforms and deregulation have received the most attention so far.

EU4Business: Network of Business Support Centers in Ukraine Project is a €40 million program implemented in partnership with the European Bank for Reconstruction and Development that will provide business advice, information, training and other support to SMEs in Ukraine. It will create a network of business support centers in 15 oblasts across

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Ukraine to strengthen SME competitiveness in domestic and international markets through advisory services, training courses and awareness-raising activities. EU4Business will also provide access to finance for Ukrainian SMEs and technical assistance to the Ukrainian government for deregulation and the implementation of sound policies to support the private sector.

The Partnership for Local Economic Development and Democratic Governance Project (PLEDDG) is financed by the Government of Canada. This six-year, $19.5 million technical assistance project aims to strengthen Ukraine’s municipalities by increasing their capacity to create an enabling environment for entrepreneurship and local economic development, by facilitating decentralization of authorities, and by supporting integrated development planning at the local, regional and national level. The project’s target oblasts are Vinnytsia, Zaporizhia, Ivano-Frankivsk and Poltava.

The Ukraine Local Empowerment, Accountability and Development Program (U-LEAD) is a more than €100 million effort jointly funded by the EU, Germany and Poland to support decentralization reform and strengthen local governance. The program will enhance the capacity of key actors at central, regional and local levels to implement decentralization and improve the delivery of local administrative services.

The Canada – Ukraine Trade and Investment Support Program Support (CUTIS) program assists export-ready SMEs to benefit from a Canada - Ukraine Free Trade Agreement. This $13.8 million project helps Ukrainian companies to meet Canadian import standards (which in most cases also means EU standards) and opens the door to increased EU-Ukrainian trade and investment. CUTIS also helps to build the capacity of the Ukrainian government to put new systems and processes in place to facilitate greater trade and investment flows between Canada and Ukraine.

The Ukraine Investment Climate Reform Project ($3.5 million) is supported by Switzerland’s SECO, the World Bank and IFC. Its goal is to increase exports by improving the competitiveness of Ukrainian producers and facilitating their compliance with foreign markets’ access requirements. The project focuses on licensing, inspections, food chain safety, and river and sea port logistics.

In the trade policy and trade facilitation area, in addition to USAID’s UTPP and CRA, there are four efforts supported by other donors or international organizations that TAC must collaborate with. The World Bank and IFC are working with the Port of Odessa on agri-business-related issues in order to reduce the fees and charges associated with the export of grains. The project is also working with the SPS and Veterinary authorities to simplify and streamline documentary requirements and to introduce risk management approaches to food-safety inspections.

The European Union has a wide variety of twinning projects in support of the EU-Ukraine Association Agreement and its Deep and Comprehensive Free Trade Area. These projects provide technical assistance for the harmonization of laws, norms and regulations in various trade-related sectors.

The European Union Border Assistance Mission to Moldova and Ukraine (EUBAM) has been working with Moldova and Ukraine to harmonize border control, and Customs and trade standards and procedures with those in EU Member States. It has worked in a number of trade facilitation areas and helps to improve cross-border cooperation between border guard and Customs agencies and other law enforcement bodies.

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The German Development Corporation (GIZ) is developing a trade facilitation project that it expects to initiate sometime in 2016/7. A significant focus of the effort will be on border issues with the EU in keeping with provisions of the DCFTA.

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PART 8:

List of Background Documents

1. Strategy for Sustainable Development "Ukraine-2020" http://www.president.gov.ua/en/news/glava-derzhavi-zatverdiv-strategiyu-stalogo-rozvitku-ukrayin-34506

2. Reforms Progress Monitoring, April 2016, National Reforms Council http://reforms.in.ua/sites/default/files/report_eng.pdf

3. World Bank. 2014. Opportunities and challenges to private sector development in Ukraine.

Washington DC; World Bank Group.

http://documents.worldbank.org/curated/en/2014/01/18793736/opportunities-challenges-private-sector-development-ukraine

4. Doing business 2016: measuring regulatory quality and efficiency – Ukraine http://documents.worldbank.org/curated/en/2015/11/25479881/doing-business-2016-measuring-regulatory-quality-efficiency-ukraine

5. USAID Local Investment and National Competitiveness (LINC) Ukraine, Final Report http://pdf.usaid.gov/pdf_docs/pa00j2bx.pdf

6. WTO Trade Facilitation Agreement Conformity Assessment for Ukraine (DRAFT) https://dec.usaid.gov/dec/content/Detail.aspx?ctID=ODVhZjk4NWQtM2YyMi00YjRmLTkx NjktZTcxMjM2NDBmY2Uy&rID=Mzc0NzA3

7. WEF Gender Index 2015 http://www3.weforum.org/docs/GGGR2015/cover.pdf

8. Value Chain Analysis Report, Ukraine, 2015 http://ukraine.nlembassy.org/binaries/content/assets/postenweb/o/oekraine/netherlands-embassy-in-kiev/import/the_embassy/departments/economic_department/vca-ukraine.pdf

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