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Eurointegration in the Transport Sector: Are We Moving Fast Enough?

08/ 07/ 2024
  Dariia Sichkar. Logistics Committee Manager, the European Business Association. In the latest report on the implementation of the Association Agreement in the field of transport, transport infrastructure, postal, and courier services, the progress of the Agreements implementation increased by only +3% for 2023. At this pace, it will take us a little more than 14 years to fully harmonize our rules and regulations in the transport sector with EU standards. The obvious conclusion is that we need to speed up. Undoubtedly, it is fair to note that with the start of the full-scale invasion, many reforms, especially at the legislative level, were put on hold. However, we now understand that even during the war, we need to continue aligning our legislation with that of the EU if we want our accession to the EU to be swift and our integration into their transport system to occur with minimal losses for us. The report mentions trans-European transport networks, inland and international maritime transport, postal services, and road transport. However, there is no mention of reforms in the railway transport sector. This is quite understandable, as the much-debated draft law on railway transport, which Ukraine has committed to adopting and which has been discussed for a long time, has been in the Transport Committee of the Verkhovna Rada of Ukraine without consideration since 2019. Returning to the latest reporting period, Ukraine has a certain level of preparation in the field of transport policy, but with limited progress, which has been seriously hindered by the full-scale Russian military aggression against Ukraine. Nevertheless, despite the war, it is necessary to continue preparing the legislative framework so that after our victory, we are ready to join the EU. Thus, Ukraine, in particular, needs to: Continue further alignment and effective implementation of EU acquis on railway and road transport and create appropriate administrative structures for railway transport, including a regulatory body; Strengthen its administrative capacity to ensure compliance with road safety measures and establish bodies for checking and investigating incidents on railway transport and inland waterways; Implement the National Transport Strategy 2030 as soon as possible, and realize the relevant action plan for 2021-2024. Railway Transport. PJSC Ukrzaliznytsia remains the railway company that manages infrastructure and provides railway transport services without financial and organizational separation between infrastructure management and operations. Only recently, at a meeting on April 25, the Verkhovna Rada voted to reject the draft laws on railway transport of Ukraine (No. 1196 and No. 1196-1), as significant changes have occurred in the legislation of Ukraine and the EU since their registration five years ago, which need to be taken into account. It is worth noting that such activation is related to the fact that the World Bank requires the adoption of a new law On Railway Transport as part of one of the packages providing loans to Ukraine, one aspect of which should be the introduction of private traction. We, from the European Business Association, have repeatedly addressed the Committee on Transport and Infrastructure of the Verkhovna Rada with a request to include us in the working group that is currently developing the new draft law. Unfortunately, this has not happened, and the business community does not understand what the current version of this draft law is. There are concerns that it will not include the main provisions listed below, which, in the opinion of the business community, are very important. Reforming PJSC Ukrzaliznytsia to provide for the organizational and financial separation of Ukrzaliznytsias activities as a carrier and infrastructure operator, the prohibition of cross-subsidization of these areas, the creation of a separate structure to address issues with non-core assets and disputed obligations, etc.; Non-discriminatory access to the general use railway infrastructure; State regulation of the tariff for access to railway infrastructure through the approval of the tariff size by the National Commission for State Regulation in the Field of Transport; Introduction of a transparent and clear tariff calculation scheme; A competitive market for passenger and freight transportation, additional and auxiliary railway infrastructure services; Creating conditions for the efficient functioning of low-activity infrastructure; Expanding the list of mandatory services for access to strategic infrastructure; Implementation of a traffic safety system on railway transport; A new approach to ensuring socially important transportation (moving away from the practice of financing passenger transportation at the expense of freight); Ensuring the safety of cargo and rolling stock and other progressive provisions. Maritime Transport. Unfortunately, in the maritime transport sector, no progress has been made in adopting legislation that complies with the EU acquis. The legislative framework is not aligned with the acquis regarding the Community vessel traffic monitoring and information system. However, it should be noted that at present it is impossible to implement the technical base since Ukraine does not fully control its coastline due to the war. Additionally, Ukraine has not ratified the 2006 Maritime Labour Convention of the International Labour Organization. Its legislation is not fully aligned with the EU Working Time Directive and the EU Control of Working Time Directive. In the area of cargo transportation digitalization, Ukrainian legislation is partially aligned with EU legislation. However, Ukraine still needs to implement legislation that complies with the EU Port Services Regulation. As a flag state, Ukraine must continue efforts and take necessary measures to improve the quality of its fleet. Ukraine is also involved in the Black and Caspian Sea (BCSEA II) project, a technical assistance project of the European Maritime Safety Agency (EMSA). Inland Water Transport. The adoption of the Law of Ukraine On Inland Water Transport in 2020 established legal, regulatory, and institutional prerequisites for ensuring navigational safety. Further legislation on market functioning, access to the profession, river information system, and dangerous goods still needs to be adopted. Ukraine is a member of the EU Danube Region Strategy and an active member country of the Danube Commission. In addition, Ukraine has bilateral agreements with several Danube states on mutual recognition of documents. Meanwhile, Ukraine should continue working on meeting the prerequisite for the recognition of crew navigation certificates in the EU according to Directive (EU) 2017/2397. Aviation Industry. Ukrainian airspace is closed to civil aviation due to the war, resulting in the suspension of air navigation services. Nevertheless, Ukraine has made significant progress in harmonizing with EU aviation rules since 2017 and signed the Common Aviation Area Agreement between Ukraine and the EU in October 2021. Recently, as a result of fruitful cooperation between the Logistics Committee and the Government of Moldova, facilitated by the Logistics Committee and EBA Moldova, the administration of Chisinau International Airport decided to implement free cargo storage for 24 hours after registration at the cargo terminal. This provides companies from Ukraine with access to night and early flights from Moldova to Europe and other countries, reducing business costs and promoting the growth of transit cargo flow from Ukraine. Additionally, the airport administration will consider changing the storage tariff calculation based on volume and weight rather than cargo value by September 2024. Transport Networks. In December 2023, Ukraine and the EU agreed to extend the indicative maps of the Trans-European Transport Network (TEN-T) in Ukraine, ensuring the inclusion of new routes leading to the borders with EU member states and Moldova. Inclusion in the trans-European networks should improve transport connections with the EU, particularly through the use of EU financial instruments for implementing infrastructure projects. Introduction of Electronic Document Management in the Transport Sector. Since 2019, the Ministry of Restoration team, together with international partners and donors, has been working on the digitization of consignment notes. This tool has several advantages for business and the state, including minimizing time and resources, limiting the influence of the human factor, and minimizing corruption risks. The e-consignment note will ensure quick information exchange between all parties involved in transportation. Additionally, the digital consignment note minimizes the risk of document loss or damage. Recently, at a Cabinet of Ministers meeting, a decision was approved to start implementing a pilot project on the introduction of an electronic consignment note for domestic transportation over the next two years. As a country, we still have a lot of work ahead of us. Many legislative changes require political will, such as the law on railway transport. It is entirely understandable that during the war, there are many urgent challenges and issues that require attention, including legislative changes. However, despite everything, work on harmonizing legislation must continue and move at a faster pace. Other directions and sectors demonstrate significantly higher levels of progress, so we believe that everything is possible with desire and diligent work, to which we, as an Association, are ready to actively contribute. Source: Центр транспортних стратегій
Dariia Sichkar Logistics Committee Manager, the European Business Association

In the latest report on the implementation of the Association Agreement in the field of transport, transport infrastructure, postal, and courier services, the progress of the Agreement’s implementation increased by only +3% for 2023. At this pace, it will take us a little more than 14 years to fully harmonize our rules and regulations in the transport sector with EU standards. The obvious conclusion is that we need to speed up.

Undoubtedly, it is fair to note that with the start of the full-scale invasion, many reforms, especially at the legislative level, were put on hold. However, we now understand that even during the war, we need to continue aligning our legislation with that of the EU if we want our accession to the EU to be swift and our integration into their transport system to occur with minimal losses for us.

The report mentions trans-European transport networks, inland and international maritime transport, postal services, and road transport. However, there is no mention of reforms in the railway transport sector. This is quite understandable, as the much-debated draft law on railway transport, which Ukraine has committed to adopting and which has been discussed for a long time, has been in the Transport Committee of the Verkhovna Rada of Ukraine without consideration since 2019.

Returning to the latest reporting period, Ukraine has a certain level of preparation in the field of transport policy, but with limited progress, which has been seriously hindered by the full-scale Russian military aggression against Ukraine. Nevertheless, despite the war, it is necessary to continue preparing the legislative framework so that after our victory, we are ready to join the EU.

Thus, Ukraine, in particular, needs to:

  • Continue further alignment and effective implementation of EU acquis on railway and road transport and create appropriate administrative structures for railway transport, including a regulatory body;
  • Strengthen its administrative capacity to ensure compliance with road safety measures and establish bodies for checking and investigating incidents on railway transport and inland waterways;
  • Implement the National Transport Strategy 2030 as soon as possible, and realize the relevant action plan for 2021-2024.

Railway Transport

PJSC “Ukrzaliznytsia” remains the railway company that manages infrastructure and provides railway transport services without financial and organizational separation between infrastructure management and operations.

Only recently, at a meeting on April 25, the Verkhovna Rada voted to reject the draft laws on railway transport of Ukraine (No. 1196 and No. 1196-1), as significant changes have occurred in the legislation of Ukraine and the EU since their registration five years ago, which need to be taken into account. It is worth noting that such activation is related to the fact that the World Bank requires the adoption of a new law “On Railway Transport” as part of one of the packages providing loans to Ukraine, one aspect of which should be the introduction of private traction.

We, from the European Business Association, have repeatedly addressed the Committee on Transport and Infrastructure of the Verkhovna Rada with a request to include us in the working group that is currently developing the new draft law. Unfortunately, this has not happened, and the business community does not understand what the current version of this draft law is. There are concerns that it will not include the main provisions listed below, which, in the opinion of the business community, are very important.

  1. Reforming PJSC “Ukrzaliznytsia” to provide for the organizational and financial separation of Ukrzaliznytsia’s activities as a carrier and infrastructure operator, the prohibition of cross-subsidization of these areas, the creation of a separate structure to address issues with non-core assets and disputed obligations, etc.;
  2. Non-discriminatory access to the general use railway infrastructure;
  3. State regulation of the tariff for access to railway infrastructure through the approval of the tariff size by the National Commission for State Regulation in the Field of Transport;
  4. Introduction of a transparent and clear tariff calculation scheme;
  5. A competitive market for passenger and freight transportation, additional and auxiliary railway infrastructure services;
  6. Creating conditions for the efficient functioning of low-activity infrastructure;
  7. Expanding the list of mandatory services for access to strategic infrastructure;
  8. Implementation of a traffic safety system on railway transport;
  9. A new approach to ensuring socially important transportation (moving away from the practice of financing passenger transportation at the expense of freight);
  10. Ensuring the safety of cargo and rolling stock and other progressive provisions.

Maritime Transport

Unfortunately, in the maritime transport sector, no progress has been made in adopting legislation that complies with the EU acquis. The legislative framework is not aligned with the acquis regarding the Community vessel traffic monitoring and information system. However, it should be noted that at present it is impossible to implement the technical base since Ukraine does not fully control its coastline due to the war. Additionally, Ukraine has not ratified the 2006 Maritime Labour Convention of the International Labour Organization. Its legislation is not fully aligned with the EU Working Time Directive and the EU Control of Working Time Directive.

In the area of cargo transportation digitalization, Ukrainian legislation is partially aligned with EU legislation. However, Ukraine still needs to implement legislation that complies with the EU Port Services Regulation. As a flag state, Ukraine must continue efforts and take necessary measures to improve the quality of its fleet. Ukraine is also involved in the Black and Caspian Sea (BCSEA II) project, a technical assistance project of the European Maritime Safety Agency (EMSA).

Inland Water Transport

The adoption of the Law of Ukraine “On Inland Water Transport” in 2020 established legal, regulatory, and institutional prerequisites for ensuring navigational safety. Further legislation on market functioning, access to the profession, river information system, and dangerous goods still needs to be adopted. Ukraine is a member of the EU Danube Region Strategy and an active member country of the Danube Commission. In addition, Ukraine has bilateral agreements with several Danube states on mutual recognition of documents. Meanwhile, Ukraine should continue working on meeting the prerequisite for the recognition of crew navigation certificates in the EU according to Directive (EU) 2017/2397.

Aviation Industry

Ukrainian airspace is closed to civil aviation due to the war, resulting in the suspension of air navigation services. Nevertheless, Ukraine has made significant progress in harmonizing with EU aviation rules since 2017 and signed the Common Aviation Area Agreement between Ukraine and the EU in October 2021.

Recently, as a result of fruitful cooperation between the Logistics Committee and the Government of Moldova, facilitated by the Logistics Committee and EBA Moldova, the administration of Chisinau International Airport decided to implement free cargo storage for 24 hours after registration at the cargo terminal. This provides companies from Ukraine with access to night and early flights from Moldova to Europe and other countries, reducing business costs and promoting the growth of transit cargo flow from Ukraine. Additionally, the airport administration will consider changing the storage tariff calculation based on volume and weight rather than cargo value by September 2024.

Transport Networks

In December 2023, Ukraine and the EU agreed to extend the indicative maps of the Trans-European Transport Network (TEN-T) in Ukraine, ensuring the inclusion of new routes leading to the borders with EU member states and Moldova. Inclusion in the trans-European networks should improve transport connections with the EU, particularly through the use of EU financial instruments for implementing infrastructure projects.

Introduction of Electronic Document Management in the Transport Sector

Since 2019, the Ministry of Restoration team, together with international partners and donors, has been working on the digitization of consignment notes. This tool has several advantages for business and the state, including minimizing time and resources, limiting the influence of the human factor, and minimizing corruption risks. The e-consignment note will ensure quick information exchange between all parties involved in transportation. Additionally, the digital consignment note minimizes the risk of document loss or damage.

Recently, at a Cabinet of Ministers meeting, a decision was approved to start implementing a pilot project on the introduction of an electronic consignment note for domestic transportation over the next two years.

As a country, we still have a lot of work ahead of us. Many legislative changes require political will, such as the law on railway transport. It is entirely understandable that during the war, there are many urgent challenges and issues that require attention, including legislative changes. However, despite everything, work on harmonizing legislation must continue and move at a faster pace. Other directions and sectors demonstrate significantly higher levels of progress, so we believe that everything is possible with desire and diligent work, to which we, as an Association, are ready to actively contribute.

Source: Центр транспортних стратегій

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