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State Aid Regulation and Future Industrial Policy in Ukraine

Eugene Stuart, Iana Roginska

The regulation of State aid can pose a range of challenges for policy-makers in the areas of industrial and economic development within the countries where such rules apply. These difficulties are not limited to European Union (EU) Member States. They also concern an increasing number of non-EU countries, to which EU State aid rules have been extended via various trade agreements. This article examines these challenges in the context of Ukraine, which adopted State aid legislation in July 2014. This legislation will take effect from 2017, with the Anti-Monopoly Committee of Ukraine acting as national State aid regulator. There is generally a strong tradition of State support for business and industry in Ukraine. The trend of future intervention remains unclear. With public finance so constrained and the present Government’s policy less favourable towards State aid, less scope for future measures is to be expected. The importance of the present economic crisis in Ukraine could act as a catalyst for change in Government policy. What is clear is that the State aid regulator in Ukraine will need extensive insight into economic and industrial policy to enable successful implementation of State aid legislation. Furthermore, a campaign creating create awareness about State aid policies, as well as limitations, cannot begin soon enough. The authors conclude, that after a potentially difficult start in the next 3 to 4 years, the Ukrainian State aid regulatory system could bring important benefits to the country through improving the management of public finances, creating a more competitive, and better-functioning, economy and by ensuring that support measures to the business sector (whatever form they take) are indeed justifiable, as well as leading to tangible economic growth in the Ukraine.
Keywords: Ukraine; Industrial Policy; Emerging State aid system; Association Agreement; ECT; Public finance management.


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