IFC Supports the Reform of the Technical Regulatory Environment for Business in Ukraine

Kyiv, Ukraine, June 25, 2008 — IFC, a member of the World Bank Group, has published the results of its latest survey covering the Technical Regulations System in Ukraine and its impact on the country economic development and consumer protection.

The survey, conducted by the IFC Business Enabling Environment Project in 2007 demonstrated that the current Technical Regulation System in Ukraine needs urgent reform. IFC identified the following key issues as constraints limiting the pace of the development of Ukrainian enterprises and harming the country’s economic competitiveness:

1. Mandatory compliance with state standards applicable de facto to all goods and many services, i.e. the introduction of any innovation requires the registration of a new standard or a “technical specification”.
2. Excessive use of mandatory certification for over 400 types of goods and services, irrespective of their actual risk level for consumers.
3. Excessive number of business inspections, in particular at the production level, instead of focusing on product sample checks in the marketplace to ensure safety and standards compliance.
4. The majority of existing standards originated during the Soviet Union era. These are not only inconsistent with European standards but are also prohibitively prescriptive and restrictive.
5. All Technical Regulations functions are concentrated within one institution. This diversity of activity and range of responsibility within one institution leads to conflicts of interests, and prevents a focused approach to the issues.

The survey concludes that Ukraine’s WTO integration and the forthcoming negotiations of a Free Trade Agreement with the European Union offer exceptionally positive conditions to achieve a breakthrough in reforms. These could, for a start, focus on:

• Making standards voluntary and introducing instead compulsory safety requirements
• Reducing the scope of compulsory certification
• Transitioning to a control system based on market checks and producer responsibility
• Rapid introduction of international standards by combining translation of the most important ones and direct introduction in the original language for others.

The full survey in both English and Ukrainian can be downloaded on the Project website www.ifc.org/Ukraine/BEE.