abbreviations · web view: wood flows to the sawmills, and sawn timber and intermediate wood...

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

Project title Realizing export potential of the wood and processed wood value chain in Ukraine by strengthening related quality infrastructure.

Thematic area code Trade Capacity Building (TCB), DD 13

Starting date March 2019

Duration 3 years (36 months)

Project site Ukraine

Main Counterparts

Ministry for Economic Development and Trade of Ukraine, Department of Technical RegulationsUkraine Standardization Agency (UAS)National Accreditation Agency of Ukraine (NAAU)Ukrmetrteststandart

Other Counterparts

Conformity assessment bodies (to be defined at the inception phase)Additional QI institutions related to the wood and processed wood valuechainBusiness Support Institutions (to be defined at the inception phase)

Executing agency UNIDO

Project inputs

SECO € 880,000 (incl. support costs)

Government of Ukraine (GoU)

Estimated in-kind contribution of EUR 20,000

TOTAL € 880,000 (+ 20,000 EUR of GoU in-kind contribution)

The objective of the project is to strengthen quality and standards compliance services for Ukrainian wood and processed wood SMEs’ and to promote the use of those services among the value chain participants to ultimately facilitate market access.

To work towards that objective project will focus on three complementary and reinforcing outcomes:Outcome 1: Technical competence and sustainability of the Ukrainian NQIS that serve the selected value chain is enhanced.Outcome 2: SMEs’ awareness of the need to comply with international standards and technical regulations is enhanced.Outcome 3: A culture for quality is promoted.

Approved:

Signature: Date: Name and title:

On behalf ofUkraine ………………………… ……………. …………………………………….

On behalf ofUNIDO: ………………………… ……………. …………………………………….

Witness of honor

On behalf ofSECO: ………………………… ……………. …………………………………….

Table of ContentsABBREVIATIONS 4

1

A. CONTEXT 7

A.1 Socio - Economic Outlook 7

A.2 Ukraine in the WTO and the EU/ EFTA 9

B. THE NATIONAL QUALITY INFRASTRUCTURE OF UKRAINE 10

B.1 The Quality Infrastructure- General context 10

B.2 National Quality Infrastructure in Ukraine 11

B.3 QI legislation 14

C. THE VALUE CHAIN (WOOD AND PROCESSED WOOD) 14

C.1 Global Market Tendencies and the Ukrainian Case 14

C.1.1 Global Market and Tendencies in wood and processed wood VC 14

C.1.2 Ukraine wood and processed wood – main characteristics 17

C.1.3 Export opportunities in Ukraine wood and processed wood 21

C.1.4 International agreements signed by Ukraine 23

C.1.5 Requirements for timber products to comply with to access European market 24

C.1.6 Value chain selection for technical assistance delivery 28

C.2 The principal actors and QI institutions of the VC 30

C.2.1 Producer and sector specific organizations and unions 30

C.2.2 Trade and business support organizations and unions 31

C.2.3 Public Sector/Government Support Institutions 32

C.2.4 Universities and research centers 33

C.2.5 QI-related organizations 33

C.3 Quality bottlenecks along the value chains – problem statement 34

D. REASONS FOR UNIDO ASSISTANCE 36

D.1 The UNIDO approach 37

D.2 The Global Quality and Standards Programme (GQSP) 38

D.3 Theory of Change 39

D.4 Strengthening and consolidating priority export sectors 41

D.5 UNIDO in Ukraine 41

E. THE PROJECT 41

E.1 Objective of the project 41

E.2 Components/Outcomes – general description 42

E.3 Components/Outcomes and Outputs 44

E.4 Beneficiaries 48

E.5 Link with the Global Programme (GSQP) 48

E.6 Project geographical focus area 49

E.7 Cooperation with other ongoing activities and programmes 50

E.8 Relevance of SECO intervention 52

E.9 Project Organization 53

E.10 Project Governance 542

E.11 Gender mainstreaming 55

E.12 Sustainability and exit strategy 55

E.13 Opportunities and risks 56

E.13.1 Opportunities 56

E.13.2 Risks 57

F. INPUTS 58

F.1 Counterpart inputs 58

F.2 UNIDO inputs 59

G. BUDGET 59

G. 1 Project Budget 59

G.2 Government co-finance to the project 61

H. INCEPTION PHASE, MONITORING, REPORTING AND EVALUATION 62

H.1 Inception phase 62

H.2 Monitoring and evaluation 63

ANNEXES 64

Annex 1: Log-frame 64

Annex 2: Stakeholder Matrix 68

Annex 3: Ukraine Country Profile Global Competiveness Index 2017-2018 edition 79

Annex 4: Work plan/Timeline of main activities in Ukraine 80

Annex 5: Timeline for Inception Phase 82

Annex 6: MEDT organigram (in Ukrainian) 84

Annex 7: Terms of Reference of National Technical Advisor (NTA) - draft 85

Annex 8: Terms of Reference of National Project Assistant (NPA) - draft 91

3

ABBREVIATIONS

AA Association AgreementBFH Bern University of Applied SciencesBIMP International Bureau of Weights and MeasuresBSOs Business Support OrganizationsCAB Conformity Assessment Body

CAGR Compound annual growthCB Certification BodyCBI Centre for the promotion of imports from developing countries, NetherlandsCE Conformité Européenne (European Conformity)CIS Commonwealth of Independent StatesCMC Calibration and Measurement CapabilityCoC Chain of CustodyCITES Convention on International Trade in Endangered Species of Wild Fauna and FloraCUTIS Canada-Ukraine Trade Investment Support projectDCFTA Deep and Comprehensive Free Trade AreaEBRD European Bank for Reconstruction and DevelopmentEFTA European Free Trade AgreementEU European UnionFORZA Agency for sustainable development of the Carpathian regionFSC Forest Stewardship CouncilFTA Free Trade AgreementGDP Gross Domestic ProductGEF The Global Environment FacilityGIZ Deutsche Gesellschaft für internationale Zusammenarbeit (GIZ) GmbHGMP Good manufacturing practiceGoU Government of UkraineGSQP Global Standard Quality ProgrammeGVC Global Value ChainsHA Hectares

HQ HeadquartersIAF International Accreditation ForumIB Inspection Body

IEC International Electrotechnical CommissionILAC International Laboratory Accreditation CooperationISO International Organization for StandardizationITC International Trade CentreITFC Ukraine Investment & Trade Facilitation CentreITP Intellectual PropertyKPI Key Performance IndicatorMEDT Ministry for Economic Development and Trade of UkraineNAAU National Accreditation Agency of UkraineNGO Non-Governmental OrganizationNLTUU National Forestry and Wood Technology University of Ukraine

4

NPA National Project Assistant

NQI National Quality InfrastructureNQIS National Quality Infrastructure SystemNQP National Quality Policy

NQS National Quality SystemNSB National Standards BodyNSC National Steering CommitteeNTA National Technical AdvisorNTB Non-Tariff BarriersODG/EVA UNIDO's Evaluation GroupOECD Organization for Economic Cooperation and DevelopmentOIML International Organization of Legal MetrologyPEFC The Programme for the Endorsement of Forest CertificationPM Project ManagerPMC Project Management CommitteePMM Project Management MeetingPMU Project Management UnitPT Proficiency testingQI Quality InfrastructureQMS Quality Management SystemRBM Result-based Management

REACH Registration, Evaluation, Authorization and Restriction of ChemicalsRECP Resource Efficient and Cleaner ProductionROM Results Oriented MonitoringSB Supervisory BodySDG (UN) Sustainable Development GoalsSECO State Secretariat for Economic Affairs (Switzerland)SE State EnterpriseSI International System of UnitsSIPPO Swiss Import Promotion ProgrammeSMEs Small and Medium-Sized Enterprise(s)SMTQ Standard, Metrology, Testing and Quality

SPS Sanitary and Phyto-Sanitary MeasuresSQAM Standards, Quality Assurance, Accreditation and MetrologySTDR Export Strategy of UkraineSUP Union of Ukrainian EntrepreneursTBT Technical Barriers to TradeTC Technical CommitteeTCB Trade Capacity BuildingUAFM Ukrainian Association of Furniture ManufacturersUAQ Ukraine Association of QualityUAS Ukraine Standardization AgencyUkrCSMC UkrmetrteststandartUNDP United Nations Development ProgrammeUNIDO United Nations Industrial Development Organization

5

USAID United States Agency for International Development

VC Value ChainWTO World Trade Organization

6

A. CONTEXT

A.1 Socio - Economic Outlook

General context

Ukraine was hit exceptionally hard by the global financial crisis that started in 2008. A strong economic rebound in 2010-11 was subsequently dampened by political instability, developments in the Crimea and the outbreak of conflict in Eastern Ukraine.

Since 2014 Ukraine has been on a course of economic reforms. Within these reforms, international trade1 is set to be a central component for strengthening national competitiveness and social well-being. Moreover, the Government, which took office in April 2016, has committed to an ambitious and wide-ranging reform agenda.

Table 1 Ukraine - key economic indicators

Source: World Bank (2017)2

According to the IMF, in 2017 the country recorded a 2% GDP growth and a 12% annual inflation rate. Estimates for 2018 forecast a 3.2% growth and 10% inflation. However, since 2014 and the conflict with Russia over Crimea, the country has suffered from territorial division. In 2017, Ukraine cut trade relations with two eastern regions (Donetsk and Lugansk) which are controlled by separatist forces. The conflict in the eastern part of Ukraine - and more generally the souring of relations with Russia - is impairing the economy. Nevertheless, in 2017, the government has passed several reforms in order to foster household consumption and fiscal consolidation. The minimum wage was doubled last year and inflation was better controlled. As decisive presidential elections will take place in 2019, the government is set to pursue its agenda with a clear target to make Ukraine a more competitive country in the long-run.

Ukraine still faces high levels of debt. While it reached 81.2% in 2016, public debt is set to amount to 86.2% of GDP in 2017 before decreasing to 83.5% in 2018 (IMF forecasts).

In September 2014, Ukraine signed an Association Agreement with the European Union, which aims at removing most of the trade barriers with EU member States. Energy independence from Russia has become the government’s top priority.

1 WTO (2016): Ukraine has been a WTO member since 2008, with EFTA (including Switzerland) has free trade agreement (FTA) in force since June 2012, Canada - FTA signed in July 2016 and in process of ratification, EU - Association Agreement (AA) on market liberalization (signed 2014) and established Deep and Comprehensive Free Trade Area (DCFTA) (operational since 1 January 2016)2 http://www.worldbank.org/en/country/ukraine/overview#1

7

http://www.worldbank.org/en/country/ukraine/overview#1

Financial aid from the IMF, the EU and the World Bank has helped the country address economic difficulties. In exchange, Ukraine has agreed to pass numerous reforms towards fiscal consolidation, economic stability, social inclusion, fight against corruption and poor governance. Ukraine’s unemployment amounted to 9.7% of the active population in 2017 and is expected to decrease to 9.3% in 2018. It is estimated that the informal sector in Ukraine represents a third of the country’s GDP.

Supporting existing and new emerging industries towards greater export potentials is a priority for the Ukrainian Government for rebuilding economic growth. This is shared by the key national policy institutions and reflected by e.g. i) active advocacy campaigns, ii) developed trade and quality supporting programmes and iii) strong public involvement in the design and implementation of policies.

Economic growth remained weak in 2017 due to weaknesses in the agriculture and mining sectors, as well as delays with key reforms to further strengthen investor confidence.

Main economic challenges

Going forward, Ukraine will need to advance reforms on multiple fronts to achieve sustainable recovery and shared prosperity.

Developing trade capacities is crucial for successful economic development of Ukraine in general, and especially in a framework of broader economic challenges.

The Ukrainian crisis affected both domestic and international competitiveness of Ukraine’s goods and services. According to an October 2014 estimate by the World Bank, the economy of Ukraine contracted by 8% during the year 2014 as a result of the crisis. This pushed the Ukrainian export policy to undergo a major restructuring: from being mainly oriented towards Russia/CIS countries to new trading partners.

Due to the Ukrainian crisis, a new pipeline in Turkey was proposed with an annual capacity around 63 billion cubic meters, so as to carry natural gas to Europe while completely bypassing Ukraine as a traditional transit hub for Russian gas. This will put an additional strain on the Ukrainian economy.

In Ukraine corruption remains a significant challenge. In 2016's Transparency International Corruption Perceptions Index Ukraine was ranked 131st out of the 176 countries with worsened rank score in comparison to 2015 results. This resulted in constraining and pushing business to move into the shadow economy, reducing potential incomes from tax collection.

Economic growth through trade

The Ukrainian Government priority in export promotion is demonstrated by the key national policy institutions and reflected in, for example, Export Strategy of Ukraine: Strategic Trade Development Roadmap (STDR) 2017-2021 of the Ukraine Ministry of Economic Development and Trade (MEDT). Under a general strategic shift towards “Knowledge- and innovation-based exports for sustainable development and success in global markets”, the STDR elaborates three objectives: 1) to create an enabling environment that stimulates trade and innovation for diversified exports; 2) to develop business and trade support services that enhance competitiveness of enterprises, in particular SMEs; and 3) to strengthen skills and competencies that enterprises, in particular SMEs, require to engage in international trade. The STDR has been developed within the framework of a National Strategy for Sustainable Development «Ukraine 2020» (signed by the President on 12.01.2015), which also recognizes the importance of trade and export promotion for economic development.

8

Since 2014 Ukraine has stepped on the course of development reforms. Within it, trade is set to be a central component for strengthening national competitiveness and social well-being. Enhanced competitiveness and trade will maximize Ukraine economic potentials contributing to sustainable and inclusive economic growth accompanied by job creation and social cohesion.

A.2 Ukraine in the WTO and the EU/ EFTA

WTO

Ukraine has been a member of WTO since 2008 and has successfully undergone its first Trade Policy Review (2016). The WTO Membership locked Ukraine into a generally liberal and non-discriminatory trade regime towards the rest of the world. Ukraine's ratification of the WTO Agreement on Trade Facilitation was completed on 16 December 2015. Since 2010, Ukraine has been involved in four cases as a complainant and three as a defendant.

Despite significant progress and potential, however, Ukrainian trade is still facing some serious constraints mainly due to i) poor competitive standing of Ukrainian low-quality products and services, ii) having a trade structure with predominantly intermediate and under-valued export goods, iii) limited integration of products in global value chains, iv) underdeveloped physical and quality infrastructure resulting in under-trading with foreign markets. These challenges are especially relevant for small and medium enterprises (SMEs), which are considered to be the drivers behind innovation and creating competitive strengths. There is a need to move to medium and high technology manufactured products along the value chain itself, as well as to move up the global value chains (GVCs).

EU/ EFTA

Through implementation of the Association Agreement with the EU, Ukraine has chosen benchmarks for further development and modernization of its economy according to EU standards. The EU orientation was facilitated due to signing of the Association Agreement (AA) on market liberalization 3

with Ukraine in 2014 and establishing the Deep and Comprehensive Free Trade Area (DCFTA) 4

(operational since 1 January 2016). The DCFTA offers Ukraine new opportunities for modernizing its trade relations, by opening markets, progressive removal of customs tariffs and quotas, and an extensive harmonization of laws, norms and regulations in various trade-related sectors, creating the conditions for aligning the Ukrainian economy with EU standards.

Consequently, Ukraine’s recent trade portfolio has been essentially re-structured and diversified from Russian and CIS countries to primarily the EU. Trade with the EU is growing (aggregate share of Ukrainian exports increased from 27.3% in 2008 to 34.1% in 2015).

At the same time, harmonization of the current system with the EU remains a daunting task for the both the authorities and for exporters, who have to comply with new and more demanding quality standards, which are present in the EU/EFTA countries. On top of that, political and economic reforms may face challenges from vested interests and corruption. In the short to medium term, Ukraine's economic performance will be determined by the path for resolving the conflict affecting parts of the country. However, in the long run, consistent and determined implementation of reforms will help lift the Ukrainian economy towards its true potential.

3 https://eeas.europa.eu/sites/eeas/files/association_agreement_ukraine_2014_en.pdf4 https://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_150981.pdf

9

B. THE NATIONAL QUALITY INFRASTRUCTURE OF UKRAINE

B.1 The Quality Infrastructure- General context

The QI is generally defined as the sum of a country’s policy, legal, regulatory and administrative frameworks and the respective public and/or private institutional arrangements necessary to put standardization, metrology (scientific, industrial and legal), accreditation and conformity assessment services (inspection, testing and certification) in operation. The aim is to service enterprises and consumers so as to ensure that products and services meet and can be shown to meet defined requirements, with the appropriate international recognitions to facilitate international trade.

Hence, the standards, metrology and accreditation institutions are imperative for the QI to function and governments need to ensure their establishment and sustainability. In addition, the QI also consists of a wide variety of calibration and conformity assessment service providers. While governments might provide some initial support, the private sector should eventually take over the calibration laboratories, testing laboratories, inspection bodies and certification bodies for systems, services, products and persons.

QIS is a dynamic system. “Dynamic” places the emphasis on actions. These actions are intended to provide results and they are evaluated according to these results. “System” means its parts inter-act with each other to provide overall QIS results which are greater than could be achieved by the parts working individually.

For a proper quality infrastructure development to thrive there needs to be an overall quality culture. A quality culture is an “environment” that has quality embedded at its core and refers to a set of shared and accepted patterns embedded at all levels - individual, organizational, societal and country - which contributes to the development of effective care for quality. It is an awareness of and commitment to quality, in conjunction with a solid culture of evidence and an efficient management of quality (through quality assurance and quality management procedures and practices) as main ingredients of a quality culture.

Developing a quality culture is the most effective, meaningful and sustainable way to ensure and improve quality, and to embed a dynamic system of change for better competitiveness at all levels. As quality does not only refer to products, but extends to all areas of production, distribution and management, a quality culture is required to assist SMEs to strengthen their competitiveness sustainably, in order to effectively compete in the global markets.

10

Figure 1 From policy to consumer – UNIDO systemic approach to QI

Role of QIS:

A QIS system is a catalyst for improving the quality of products and services on a national scale . It therefore helps to stimulate demand for these products and services, which invigorates individual businesses and the economy as a whole. By helping national industry to meet the requirements of export markets, a QIS increases the competitiveness of the nation’s economy and its ability to participate in global trade and in value chains.

A QIS is a powerful tool for defining, developing and verifying quality requirements for products and services. It verifies and demonstrates that products and services actually meet these requirements. It ensures that the quality requirements and the products and services they generate meet the state-of-the-art requirements and best practice essential for participating in international trade.

B.2 National Quality Infrastructure in Ukraine5

Ukraine has been undertaking efforts for many years to adapt to internationally (and in particular EUs) recognized procedures for the elaboration of standards, technical regulations and conformity assessment procedures, the work has taken on a new dimension with the conclusion of the DCFTA. The revision of Ukraine's basic legal framework during 2014 and 2015 forms part of a progressive adaptation of Ukraine's TBT regime to the EU principles of market supervision and consumer rights protection, including an overhaul of the technical regulations framework. During 2017 an Agreement on Conformity Assessment and Acceptance of Industrial Products (ACAA) has been negotiated and added as an individual protocol to the existing Association Agreement and EFTA.

5 This chapter is based on the publication: Uğur, Hüseyin; Mikhnev, Andrei; Kuzmina, Iryna. 2017. Ukraine national quality infrastructure gap assessment (English). Washington, D.C.: World Bank Group. http://documents.worldbank.org/curated/en/407381501738384776/Ukraine-national-quality-infrastructure-gap-assessment

11

Some of the central institutions related to quality infrastructure in Ukraine are as follows (for full organization chart on QI institutions in the Ukraine see Figure 2):

• Ministry for Economic Development and Trade of Ukraine, Department of Technical Regulations (MEDT)

• National Accreditation Agency of Ukraine (NAAU)• Ukraine Standardization Agency (UAS) • Ukrmetrteststandardt

Figure 2 Quality Infrastructure institutions in Ukraine

Source: World Bank (May 2017): Ukraine National Quality Infrastructure Gap Assessment6

• Ministry for Economic Development and Trade of Ukraine, Department of Technical Regulations (MEDT)

MEDT, Department of Technical Regulations is a Department within the Ministry of Economic Development and Trade of Ukraine. Among others quality related issues, this Department oversees, national standards on production compliance; coordinates the Scientific and Technical Board in the area of technical regulations; principal areas related to quality infrastructure, such as standardization, metrology, and conformity assessment. It is also in charge of international cooperation in the fields related to quality infrastructure.

• Ukraine Standardization Agency (UAS)

Ukraine Standardization Agency is the new name of the agency formerly known as the Ukrainian Research and Training Center of Standardization, Certification and Quality, established on the Decision of the Cabinet of Ministers of Ukraine from 21 August 2003 Nr. 1337. The Law of Ukraine

6 Uğur, Hüseyin; Mikhnev, Andrei; Kuzmina, Iryna. 2017. Ukraine national quality infrastructure gap assessment (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/407381501738384776/Ukraine-national-quality-infrastructure-gap-assessment

12

“On Standardization” which came into force on January 3, 2015, sets the conditions for the harmonization of the national standardization system to international and European criteria, as well as the implementation of the Association Agreement between Ukraine and the European Union, in particular as regards the implementation of the necessary administrative and institutional reforms. Ukraine’s National Standards Body (NSB) holds membership in the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC), it is also working on membership agreements with the European Committee for Standardization (CEN) and European Committee for Electrotechnical Standardization (CENELEC). The NSB routinely signs bilateral agreements with the standardization bodies of Ukraine’s trade partners.

• Ukrmetrteststandard (UkrCSMC)

As in any other country, the metrology system in Ukraine has three levels: (i) national measurement standards (scientific metrology); (ii) calibration (industrial metrology); and (iii) verifications (legal metrology). MEDT in this system takes the role of the Central Metrology Authority (as defined in OIML D1 document) and is responsible for scientific metrology and for the coordination of industrial and legal metrologies. There are four Designated Institutes (DIs) in the area of metrology, which are referred to as Scientific Metrology Centers in domestic legislation. These Scientific Metrology Centers are located in Kyiv, Kharkiv, Lviv, and Ivano-Frankivsk; from the technical perspective, these, together, constitute a virtual National Metrology Institute (NMI).

In international relations, Ukraine has been an associate of the Metre Convention since 2002, and a corresponding member of OIML since 1997. At the regional level, Ukraine has been a full member of the Euro-Asian Cooperation of National Metrological Institutions (COOMET) since 1992, and MEDT has been a partner organization in European Collaboration in Measurement Standards (EURAMET) since 1998. While MEDT, in its role as the main metrology authority, is the signatory to the CIPM MRA, technical work is carried out by the Scientific Metrology Centers as DIs. The Scientific Metrology Centers provide 238 Calibration and Measurement Capability (CMC) entries in Appendix C of the International Bureau of Weights and Measures (BIPM) Key Comparison Database7.

State Enterprise SE "Ukrmetrteststandard" is the all-Ukrainian state research and production center for metrology, certification, testing and consumers’ rights protection. It is also organizational and methodological center for certification of electro-technical equipment (UkrTEST).

• National Accreditation Agency of Ukraine (NAAU)

The main functions of the NAAU are accreditation of conformity assessment bodies and further control over conformance of accredited bodies to the accreditation requirements. NAAU is a full member of International Laboratory Accreditation Cooperation (ILAC) and a signatory to the Mutual Recognition Arrangement (ILAC MRA). It is also a member of the International Accreditation Forum (IAF) and a signatory to the Multilateral Arrangement on Mutual Recognition (IAF MLA) in the areas of accreditation for bodies certifying products and persons as well as quality and environmental management systems. NAAU takes part in further international, European and regional organizations for accreditation of testing and calibration laboratories. Consequently, accreditation that is provided by NAAU in the above-mentioned areas is equivalent to accreditation that is provided by national accreditation bodies that are signatories to the ILAC MRA and the IAF MLA in more than 80 countries of the world.

7 https://kcdb.bipm.org/13

B.3 QI legislation

The Ukrainian Government has also adopted a Strategy for the Development of Technical Regulation System until 2020 accompanied by a number of legislative acts, e.g. Law “On Standardization” of 5 June 2014; Law “On Metrology and Metrology Activity” of 5 June 2014; Law “on Technical Regulations and Conformity Assessment" of 15 January 2015. The implementation of the Strategy for the Development of the Technical Regulation System until 2020 (including the action plan) will allow creating a modem technical regulation system recognized at the international level. In addition, the Government of Ukraine has a national Technical Regulation in place on General Product Safety which is aligned with the EU TR. The preparation process for the development of Technical Regulations such as REACH (the European ‘Registration, Evaluation, Authorization and Restriction of Chemicals) is planned to be finalized by 2021 by the Department of Industrial Policy.

C. THE VALUE CHAIN (WOOD AND PROCESSED WOOD)

C.1 Global Market Tendencies and the Ukrainian Case

C.1.1 Global Market and Tendencies in wood and processed wood VC

The world’s total area of forest, which provides the central raw material for the wood processing industry/value chain (also further referred as wood and wood products), is about 4 billion hectares, corresponding to 31% of the global land area (BFH 2014)8. As a general rule, in the northern hemisphere the forest area is stable or is actually increasing, whilst in the southern hemisphere the forest area is decreasing. In the meantime, today’s world population of 7.1 billion is expected to increase to 7.5 billion by the year 2020 (demand side) (BFH 2014).

When looking at the wood and wood products– we can distinguish the following main product groups which correspond to the different processing steps (primary, secondary and tertiary)9:

Round wood Sawn wood Wood Based Panels Paper, paperboard and wood pulp Housing and Construction wood / Engineered wood Value-added wood products, such as e.g.

o Doors and Windows o Interior Work / Flooring o Wooden Ware / Furniture o Packing Materials

Overall, the wood processing industry, and in particular value-added wood products such as furniture, is a considerable and profitable business. This sector/industry has traditionally been a resource- and labor-intensive including both local craft-based firms and large volume producers. A schematic view of the wood processing value chain is shown in Figure 3.

8 BFH (2014): “Value Chain Analysis Wood Sector, Ghana” Biel/Kumasi9 FAO/UNECE Forest Products: Annual Market Review 2015-2016, https://www.unece.org/forests/fpamr2016.html

14

https://www.unece.org/forests/fpamr2016.html

Figure 3 Wood and wood products value chain (with export orientation)

Source: Adopted from BFH (2014), p. 11

From the wood processing value chain can be noted that is built on 4 VC blocks

1. Raw material/ Forestry: raw materials such as seed inputs, chemicals, equipment and water feed into the forestry sector.

2. Processing (primary, secondary and tertiary) wood industry: Wood flows to the sawmills, and sawn timber and intermediate wood products move to the processed wooden goods manufacturers that, in turn, obtain inputs from the machinery, textiles, plastics, adhesives and paint industries.

15

3. End product: The processed wooden goods industry also draws on design and branding skills from the service sector. Depending on which market is served, the goods pass through various intermediary buying stages until it reaches the final customer. The buying function can be managed by several organization types including wholesalers, retailers and independent buyers.

4. Re-utilized production: Includes recycling of the utilized products and their disposal. Dependent on the character of the product and technical opportunities, the re-utilized product can vary.

Products from the wood and processed wood sector can be exported at any of the production/ processing stages of the VC.

Table 2 Global exports of wood and wood products from 2012 – 2016

Exporters Exported value in

2012

Exported value in 2013




World 92,559,366 99,280,611 104,337,478 112,225,818 115,511,163

Unit: Euro thousand Source: ITC Trade Map

The size of the world’s exports of wood and wood products shows an upwards trend signaling a growing market.

The two maps below show the biggest world’s exporters (potential competitors) and importers (potential clients) of wood and wood products globally.

16

Figure 4 List of exporters of wood and wood products globally in 2016

Source: ITC Trade Map

Figure 5 List of importers of wood and wood products globally in 2016


C.1.2 Ukraine wood and processed wood – main characteristics

By reserves of industrial stem wood, Ukraine ranks the sixth in Europe (60.370 hectares with 9.491 covered by forest; almost 15,7%), and provides the raw material to be used for the timber, pulp and

17

paper, furniture and resin industries. Commonly produced wood products for domestic and international markets are veneer, plywood, sawn timber, boards, various moulded materials, charcoal, pellets and others.

Ukraine’s wood processing industry includes more than 8,000 enterprises, only 500 of which are large and medium enterprises. 60% of that total is active in the production of wood and wood products, including 25% that are saw mills. About 30% of the enterprises are active in carpentry activities. The remaining 10% covers the pulp and paper industry.

According to the Forestry sector note around 350,000 people are employed by the forest sector and 260,000 of them work in the private sector. The estimated total employment contribution, which also includes indirect positions, is about 500,00010.

In Ukraine, the whole value chain of wood and processed wood, from raw material – forestry via different processing levels to end product, a broad palette of products, is present (see Figure 3). It needs to be noted that the full potential of value-added processing is not fully realized11.

Raw material/ forestry

The total area of forest in Ukraine is 9.4 million ha or 15.7 per cent of the Ukraine’s territory. Forests in Ukraine are predominantly under state ownership: 66 per cent of forest fund are managed by the State Committee of Forestry12, 26 – by the Ministry of Agrarian Policy, and 2 per cent – by the Ministry of Defence. Remaining part of forest is managed by more than 50 other Ministries and agencies. Private forests amount to less than 1 per cent of forests.

The forests of Ukraine are distributed very irregularly over the country, as a result of climatic conditions and anthropogenic influences over a long period of time. The largest forest territories are concentrated on the north and on the west parts of country (mixed forests) and in the Ukrainian Carpathians. The main tree species are Scots pine, European oak, Common beech, Norway spruce, European birch, Common alder, European ash, Hornbeam and Silver fir. Coniferous forests (42% of the total forest cover) and especially Scots pine (33%) are predominant. As for hardwood the most important is oak and beech (32%).

Ukrainian forests are divided in two groups. The forests of the first group mainly fulfil protective functions. Timber management is restricted and rotation ages are much longer than in the commercial forests of the second group.

Annual harvesting is based on annual allowable cut, which is assessed during the forest inventory, planned for each forest enterprise and distinguished by tree species group. The actual harvesting amount usually equals 84–90%13 of the allowable volume of cutting. In general, the intensity of harvesting is substantially less than in other European countries.

10 Lopatin, Marttila, Sikanen and Eklund (2011): Atlas of the forest sector in Ukraine with the focus on wood fuels, http://www.metla.fi/julkaisut/workingpapers/ ISSN 1795-150X 11 FORZA (2008): Cluster analysis of the forest and wood based industries of the Carpathian region of Ukraine and recommendations for cluster management, Summary report12 BukshaI. Foresty sector in Ukraine in transition to market economy, https://www.unece.org/fileadmin/DAM/timber/h3/Warsaw%20doc/Documents/Ukraine.doc13 Source: Lopatin, Marttila, Sikanen and Eklund (2011): Atlas of the forest sector in Ukraine with the focus on wood fuels, http://www.metla.fi/julkaisut/workingpapers/ ISSN 1795-150X

18

https://www.unece.org/fileadmin/DAM/timber/h3/Warsaw%20doc/Documents/Ukraine.doc

After 1990, wood production in Ukrainian forests decreased because of general fall of purchasing capacity in internal market, however wood production exports have recently increased.

Ban - To promote the Ukrainian processing industry, the Verkhovna Rada approved, on 9 April 2015, a series of export restrictions on raw material - wood. The law was promulgated by the President on 10 July 2015. It provides for:

a moratorium (ban) on exports of raw round wood (excluding pine wood) for 10 years as of 1 November 2015;

a moratorium on exports of raw round pine wood for 10 years, to be applied from 1 January 2017;

the obligation for Ukrainian exporters (other than for those covered by the above moratorium) to obtain certificates of origin for round wood and sawn timber, to be issued by the relevant forest districts, in order to be able to export outside Ukraine (applied from 10 October 2015)

Figure 6 Distribution of forest land by administrative district

Source: Lopatin, Marttila, Sikanen and Eklund (2011): Atlas of the forest sector in Ukraine with the focus on wood fuels, http://www.metla.fi/julkaisut/workingpapers/ ISSN 1795-150X

Processing wood industry

The wood-processing sector has deteriorated over the last 10 latest years, because of privatization and actual bankruptcy of most large enterprises that consumed and processed wood. However the number of small wood working enterprises has grown from the beginning of 2000s, mostly due to small and medium firms involved in timber sawing. Corporate or collective (including joint stock companies) and private ownership are the dominant forms of ownership, but joint ventures are also developing. One of the key challenges for the industry is to increase production of high value-added wood products.

19

http://www.metla.fi/julkaisut/workingpapers/

The largest volumes of timber production are attributed to the Kiev region (including the city of Kiev), Lvov, and Zakarpattia regions.

Wood working has a long-established tradition and is an important pillar of the economy, especially in relevant regions and includes: sawmill and chip production, production of wooden railway ties, production of wooden floor and parquetry, furniture, production of veneer, plywood, fibreboard and particle board, other panels and boards, wood drying, wood impregnation, production of wooden construction frames and joinery products, production of wooden containers.

Figure 7 Forest industry

Source: Lopatin, Marttila, Sikanen and Eklund (2011): Atlas of the forest sector in Ukraine with the focus on wood fuels, http://www.metla.fi/julkaisut/workingpapers/ ISSN 1795-150X

End product portfolio

As mentioned earlier a wide-range of fully processed wood products exist in the Ukraine, but mostly of low-quality and primarily targeting the low-income domestic consumption market. Below are mentioned only some of the key manufacturing areas, such as the production of paper and cardboard items (44% of the entire output), production of plywood, plates, panels, and veneer (19%) and wood furniture14.

Wood furniture: There is a large number of furniture manufacturers who are mostly oriented towards producing low-cost furniture with low output per employee as compared to other sectors. The demand for cheap furniture among the local population with low income in Ukraine is ever-increasing. The wood furniture production is characterized by unsophisticated technology which requires minimum start-up capital. Lots of those manufacturers operate in the shadow economy.

14 Source: Lopatin, Marttila, Sikanen and Eklund (2011): Atlas of the forest sector in Ukraine with the focus on wood fuels, http://www.metla.fi/julkaisut/workingpapers/ ISSN 1795-150X

20

http://www.metla.fi/julkaisut/workingpapers/

Pulp and paper: Pulp and paper industry includes the production of pulp, paper and also publishing activities. Growth in turnover results from a permanent increase in demand for these products.

Wood floor material: Stable growth in production output proves unfailing traditional preferences of the population for genuine wooden flooring. The sector performance is enhanced by usage of modern technologies.

Distribution

There are no big companies or agencies involved in the distribution of wood and processed wood products. This happens mainly via the direct sources and means of individual producers.

Active industrial associations and networks, such as clusters or sector organisations, for the coordination and official protection of the sector interests would be very much needed. They could support not only to join individual forces in distributing and exporting VC products, but also address many common challenges and needs of SMEs at different VC stages.

C.1.3 Export opportunities in Ukraine wood and processed wood

The total value of the Ukrainian exports of wood and wood products is shown in the table below. There is a steady upward trend which continues even despite the recent political events and introduction of a ban on raw round wood exports.

Table 3 Total value of exports of wood and wood products from Ukraine, 2012 - 2016

Importers Exported value in

2011

Exported value in

2012

Exported value in

2013

Exported value in

2014

Exported value in

2015

Exported value in

2016

World 773,840 823,907 861,071 949,377 996,749 1,329,451

Unit: Euro thousandSource: ITC Trade Map

Ukraine's exports represent 1.2% of world exports for wood and wood products; its ranking in world exports is 25. The list of importing markets for the wood and articles of wood exported by Ukraine in 2016 can be found below with an indication of the rate of change over time:

Table 4 Importers of wood and wood products from Ukraine, 2016

Importers Value exported in 2016 (USD thousand)

Share in Ukraine's exports (%)

Growth in exported value between 2012-2016 (%,

p.a.)

Total 1,471,386 100 3

Turkey 220,949 15 3

Poland 206,677 14 14

Romania 162,125 11 21

Germany 118,090 8 4

21

China 110,206 7.5 8

Italy 77,528 5.3 0

Hungary 68,778 4.7 14

Austria 53,065 3.6 -3

Lithuania 47,625 3.2 10

Czech Republic 35,170 2.4 7

Unit: USD thousandSource: ITC Trade Map

Following the ITC trade map tool that shows prospects for market diversification for a wood and wood products exported by Ukraine it can be concluded that China, Germany and United Kingdom might be the destinations with the highest market potential.

Figure 8 Prospects for market diversification for Ukrainian exports of wood and articles of wood, 2016


The Basque Institute of Competitiveness has developed a tool for a cluster analysis based on export data. The tool has identified wood products - as one of the clusters in Ukraine - with high potential for exports. In 2015 wood products cluster was the first cluster in the category of "Rising value” clusters, meaning a cluster that is competitive and dynamic, but not yet important. This indicates big

22

development potential for the cluster and its companies, which tend to represent all parts of the value chain.

Figure 9 Traded clusters in Ukraine (data is based on the share in exports)

Source: Orkestra (2017)15 Cluster exports analysis tool

C.1.4 International agreements signed by Ukraine

Ukraine has joined the process to generate the common sustainable forest management (SFM) ideas and principles oriented towards the inexhaustible forest exploitation and regeneration of forest ecosystems’ biodiversity. In this context, the strategic objectives of the national forest policy are related to those enumerated in international agreements of sustainable development, sustainable use and protection of European forests. Ukraine has joined the Pan-European Process of forest protection and signed a number of resolutions of Ministerial Conferences on Protection of Forests in Europe (see below).

Strasbourg Resolutions: S1 - European Network of permanent Sample Plots for Monitoring of Forest Ecosystems; S2 – Conservation of Forest Genetic Resources; S3 - Decentralized European Data Bank on Forest Fires; S4 – Adapting the Management of Mountain Forests to New Environmental Conditions; S6 - European Network for Research into Forest Ecosystems.

Helsinki Resolutions: H1 – General Guidelines for the Sustainable Management of Forests in Europe;H2 – General Guidelines for the Conservation of the Biodiversity of European Forests; H3 – Forestry Cooperation with Countries with Economies in Transition; H4 – Strategies for a Process of Long-term Adaptation of Forests in Europe to Climate Change.

Lisbon Resolutions: L1 – People, Forests and Forestry – Enhancement of the Socio –Economic Aspects of Sustainable Forest Management;

15 http://tools.orkestra.deusto.es/comexcnae/geo/UKR/typification/WLD/2008/2015 23

http://tools.orkestra.deusto.es/comexcnae/geo/UKR/typification/WLD/2008/2015

L2 – Pan-European Criteria, Indicators and Operational Level Guidelines for Sustainable Forest Management.

Vienna Resolutions:V1 - Strengthen synergies for sustainable forest management in Europe through cross-sectoral co-operation and National Forest Programmes;V2 - Enhancing economic viability of sustainable forest management in Europe;V3 - Preserving and enhancing the social and cultural dimensions of sustainable forest management in Europe;V4 - Conserving and enhancing forest biological diversity in Europe;V5 - Climate change and sustainable forest management in Europe.

C.1.5 Requirements for timber products to comply with to access European market1617

Timber products can be sold on the European market only when they comply with several European regulations, such as the European Union Timber Regulation (EUTR) and several product safety requirements. Besides the legal requirements buyers often ask for sustainable forest management certification (Forest Stewardship Council, FSC) and perhaps for some premium or niche market requirements like ISO. All requirements are summarized in the figure below.

Figure 10 Requirements for timber products to comply in EU market

Source: CBI, Market Information – Timber and Timber Products – “What requirements should your product comply with” (https://www.cbi.eu/market-information/timber-products/buyer-requirements/)

16 https://www.cbi.eu/market-information/timber-products/buyer-requirements/17 Other markets will be researched during the inception phase

24

https://www.cbi.eu/market-information/timber-products/buyer-requirements/

When exporting to Europe there is a need to comply with the following legally binding requirements:

European Union Timber Regulation (EUTR): controlling the legal origin of timber.

All timber imported into the European Union needs to come from verifiable legal sources.

European buyers that place timber or timber products on the market have to show due diligence 18. This can be done on the basis of long-term contracts, or separately for every container that is being shipped. In addition, the EUTR forces operators to trace their products back to the source. This means that when suppliers supply legal timber, but cannot provide well-documented guarantees of legality; they will not be able to supply the European Union market.

The easiest way to prove compliance is through a voluntary legality verification system 19 or regular sustainable forest management certification (provided by the Forestry Stewardship Council, FSC).

The EUTR is part of the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan. Another part of the plan is the Voluntary Partnership Agreements (VPAs). These are voluntary trade agreements between the European Union and timber exporting countries. If a given country is fully implementing its national control scheme, it receives a European FLEGT license, and all timber exported from that country is considered legal.

However, FLEGT does not prove sustainability, nor does it address deforestation; only legality.

At this moment, European buyers consider sustainability certification important, and EUTR essential. Enforced sustainable forest management could be the next step after EUTR. For now, the European Union is working on a stricter implementation of the EUTR.

Regardless of the delays in implementation in many countries, most large and professional buyers comply with the requirements in the EUTR, and are asking their suppliers to prove legal origin of timber. Compliance is especially common in North and West European Union countries where there is a strong commitment towards legality and sustainability.

Product safety

The European Union General Product Safety Directive20 applies to all consumer products. For finished products (for instance, furniture) or parts of a finished product, product specific legislation can apply to the final product depending on its final use. The General Product Safety Directive can therefore be complemented by harmonized safety requirements for specific products (for instance, outdoor furniture, cribs, and cradles).

The obligation of complying will firstly be the responsibility of the European company that places the finished product on the market. However, they will often ask their suppliers to comply with the requirements. For suppliers of parts this can translate into demand for more information, test reports or compliance with standards.

Conformité Européenne (CE) marking for timber products used in construction

Timber or timber products that are permanently incorporated into construction works will have to be CE-marked: this applies to windows, doors, frames, industrial flooring and parquet, stairs, glued laminated timber, panels (plywood etcetera), cladding and structural timber.

18 http://ec.europa.eu/environment/forests/timber_regulation.htm19 http://www.cpet.org.uk/uk-government-timber-procurement-policy/evidence-of-compliance/other-evidence-as-assurance/verification-systems/voluntary-legality-verification-systems20 http://ec.europa.eu/consumers/consumers_safety/index_en.htm

25

This marking shows that the products comply with harmonized requirements regarding mechanical resistance, stability, fire safety, hygiene, health and the environment. Manufacturers of the above-mentioned construction products have had to provide a “Declaration of Performance” (DoP) since July 2013.

CITES

In case of supply of endangered timber species one will only be able to harvest and export them if they are on the list of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), and if the CITES permit has been obtained. With a CITES permit one automatically complies with the requirements of the European Union Timber Regulation (EUTR) and the timber is considered to be legally harvested.

Chemicals in timber: REACH

The preservatives arsenic, creosotes and mercury are used to prevent rot, and improve the durability of timber, especially that used in outdoor applications. The European ‘Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH)’ regulation does not allow the use of these preservatives, with some exceptions, such as wood used in industrial installations, or as railway sleepers.

There are also restrictions for wood (for instance, doors, window frames, and floor parts) treated with certain oils, glue varnishes, and lacquers that may contain harmful substances. For example, painted articles shall not be placed on the market if the concentration of cadmium is equal to or greater than 0.1% by weight of the paint on the painted article.

There are also restrictions for the use of chemicals in processing. Buyers are increasingly implementing sustainable practices in their own company, but also their supply chain. Therefore, they can ask you to also comply with these requirements regarding the use of chemicals during processing and production (for instance, volatile organic compounds (VOCs) used in coatings, formaldehyde and pentachlorophenol).

Painted and lacquered items such as furniture and toys may be a problem. Use of water-based products free from lead and mercury will avoid most problems. Wood products treated with creosotes are prohibited by the European Union.

The use and marketing of arsenic and all chromated copper compounds, including Chromated Copper Arsenate (CCA), Copper Chrome Boron (CCB) and Copper Chrome Fluoride (CCF), in wood preservatives are no longer allowed. Natural oils for garden furniture protection can be used in almost all cases.

Packaging and the use of the International Standards for Phytosanitary Measures 15 (ISPM) packaging logo

There is also non-product-specific legislation on packaging that applies to all goods marketed in the European Union.

All wooden packaging material (mostly pallets) used by producers must display the ISPM 15 logo, together with unique identification number of the producer (if producers in the house). If one does not produce the material himself/herself, one will need to buy it from a licensed producer in his/her

26

country. Producers are licensed by the National Plant Protection Organisation (NPPO) 21 in their country.

Licensed packaging material includes cases, boxes, crates, drums and similar packing, pallets, box pallets and other load boards, and pallet collars. All wood used in this material must be debarked and heat-treated (HT). This means applying a minimum wood core temperature of 56°C for a minimum of 30 minutes.

Kiln drying (KD), chemical pressure impregnation (CPI) or other treatments may be considered HT treatments, as long as they meet HT specifications. Alternatively, fumigation with methyl bromide (MB) at a minimum temperature of 10°C and a minimum exposure time of 24 hours is also allowed.

Additional requirements from buyers

Next to the legally binding requirements, it may also be required to comply with the following non-legal requirements in order to be able to find a buyer:

Sustainable forest management:

Sustainably produced timber goes much further than focusing on the legality of timber and encompasses many more elements relating to environmental, economic and social facts and impact of your forest or company management.

A particularly high proportion of timber and timber products from sustainable sources is marketed in Northern and Western European countries. This proportion is still growing.

There are two main certifications: the FSC (Forest Stewardship Council) and the Programme for the Endorsement of Forest Certification (PEFC).

Corporate responsibility:

Importing companies often also need to address other issues than the origin of wood. European buyers (especially those in western and northern European countries) pay more and more attention to their corporate responsibilities regarding the social and environmental impact of their business. This also affects traders and processors. Important issues are: respect for indigenous rights, land owner’s rights, environmental performance in general (pollution, waste etc), respecting labour laws and healthy and safe working conditions.

Many European companies in the timber and timber sector have policies addressing these issues. Part of these polices can be to ask their suppliers to address these issues. They can ask their suppliers to abide to a code of conduct, or sign suppliers declarations to ensure compliance with applicable local laws and regulations, industry minimum standards, International Labour Organisation (ILO) and UN Conventions.

Requirements for niche markets

Next to the requirements to comply with to be allowed on the European market and / or to find a buyer, complying with the following additional requirements could offer a competitive advantage and makes finding a buyer easier:

Eco-label for timber:

Eco-labels do not only focus on sustainable sourcing, but also on other aspects of the products: processing (for instance, energy consumption, waste management), packaging and the use of

21 https://www.eppo.int/ABOUT_EPPO/global_affairs#rppo27

chemicals. There are several eco-labels but the most widely recognized is the European “Eco-Label” which is available for floor coverings and furniture.

Dual certification:

Smallholders and communities often face tough competition in the global timber market. FSC is looking to differentiate products from communities and smallholders in the marketplace. Dual certification of FSC and Fair Trade has been tested and is available.

In addition to sustainable forest managements practices (FSC), extra attention is paid to the social conditions in the producing areas (the Fair Trade part). FSC/Fairtrade timber is sold with a Fairtrade premium which allows an extra 10% of the total value of the wood to be paid to the certified smallholder communities concerned. The market for dual certification seems to be small.

ISO 14001

The ISO 14001 standard considers multiple aspects of the business procurement, storage, distribution, product development, manufacturing, et cetera, so that it reduces its impact on the environment. It also drives to evaluate how emergency response, customer expectations, stakeholders and relationships with the local community are managed.

Such certification can result in a more efficient business with less cost and with substantial waste reductions. It can also convince buyers of one’s professionalism, because ISO is worldwide recognized as a respectable certification organisation.

C.1.6 Value chain selection for technical assistance delivery

The choice of wood and wood products’ value chain for technical assistance delivery is supported by following arguments:

a) Economic opportunities aligned with the government priorities in Ukraine:

1) Assuring sustainable exploration of existing big reserves of raw material2) Stressing the importance of the processing of wood in view of the Ukraine’s ban on

exporting raw timber3) Digging into opportunities for moving downstream – into higher value-added

products (e.g. furniture) and thereby promoting trade in goods with a higher level of processing

4) Exploring a broad range of potential products in different value categories5) Scaling up opportunities for export in this sector, which are untapped 6) Creating opportunities for jobs in rural areas in Ukraine regions, considering that that

there is already a high share of enterprises and employment engaged in the sector.

b) Existing quality infrastructure related challenges and opportunities, addressing which would open exports of Ukraine in high-value products, specifically due to implementing:

1) EU Technical regulations (in terms of product safety, etc.); building up internationally recognized testing facilities and calibration services, as well as product certification capabilities.

2) The voluntary social/environmental forestry standards like FSC and PEFC, which are considered as “de-facto” market requirements by the end consumers.

28

3) Voluntary management system standards (ISO 9001 (Quality); ISO 14001 (Environment); ISO 45001 (Occupational health & Safety)).

4) Strengthened capabilities of NAAU to accredit local Certification Bodies (specifically focusing on technical competence in wood and wood products).

5) Work with Ukraine Standards Body to achieve greater international exposure and recognition (Ukraine currently holds the Secretariat for ISO/TC 2018 Committee for Timber, and ISO is also in the process of developing a standard (ISO 38200) for Chain of custody of wood and wood-based products (strengthen Ukrainian involvement).

c) Synergies and complementarities - focusing on wood and wood products’ value chain creates opportunities to:

1) Continue and build on the past successful initiatives of SECO´s with SIPPO and FORZA.2) Form a potential partnership with Bern University of Applied Sciences (BFH),

Switzerland. 3) Link up with the ongoing projects in Ukraine of other donors (incl. EBDR and CUTIS) who

provide direct support to export-oriented SMEs active in processed wood sectors (e.g. furniture). This support amounts to access to credit, trainings and advisory services. However, those other initiatives do not address the QI related challenges to access foreign markets which will be the main objective of this project. Therefore, the complementarities and lack of overlaps between the initiatives will be easily ensured. This will also lead to tackling the problems of exporters in a holistic manner.

d) Challenges facing the sector not related to quality:

Below further non-quality related challenges of the VC are listed.

Illegal exploitation - Illegal exploitation of forest resources has increased (illegal cutting, poaching etc.). In regions with extremely high unemployment level (60-70%), it reaches catastrophic levels. This further leads to

o insufficient raw materials;

o poor quality of raw material;

Illegal trade - sawmill is considered illegal if the owner of this sawmill is not registered in the Tax Administration records by the respective activity type, or the one that uses timber obtained illegally.

Low level of technological woodworking leading to low-processed products and lower price ranges for products

Inappropriate quality control or registry/management systems of collected lots according to quality, certifications, stamps resulting in loss of records and hence traceability and incorrect parameters about product available for commercialization.

Lack of proper knowledge and awareness of requirements and pre-conditions for trading internationally.

Business support organizations often lack tools and resources (e.g. trained employees) to support value chain actors in their efforts to access international markets.

29

C.2 The principal actors and QI institutions of the VC

The main players in the wood and processed wood VC are producers (engaged in the primary, secondary or tertiary processing). They tend to be quite dispersed across the country and comprise mainly of small and medium enterprises.

However, considering there are also a range of VC related transversal actors, such as VC-specific business associations and trade unions, which are also relevant for the VC, more detail is given to their description and in the Stakeholder Matrix in Annex 2.

Figure 11 VC stages and principal actors in Ukraine

Source: Own elaboration

C.2.1 Producer and sector specific organizations and unions

• Ukrainian Association of Furniture Manufacturers (http://www.uafm.com.ua )

The Ukrainian Association of Furniture Manufacturers (UAFM) is a voluntary, independent, nonprofit association of enterprises established on the basis of equality, self-determination and community of economic, legal, social and other interests of its members. The association has for its object combining of efforts of furniture manufacturers for the purpose of protecting and expanding their rights and interests, as well as promoting the national furniture manufacturing business.

• FORZA agency (http://www.forza.org.ua/en )

FORZA NGO aims at promoting the sustainable development of the Carpathian region of Ukraine in the economic, environmental and social aspects of natural resource management and community development. It is the offspring of the FORZA project – was created in mid-2009 and has been working actively in the region since that time. It was created by the project coordination team with the goal of accomplishing the long-term sustainability of the FORZA project achievements. Despite the fact that the NGO is quite young, it is already participating in a range of trans-border (ENPI) and international

30

http://www.forza.org.ua/en

https://xmail1.unido.org/canit/urlproxy.php?_q=aHR0cDovL3d3dy51YWZtLmNvbS51YQ%3D%3D&_s=dW5pZG8ub3Jn&_c=c1ead621

projects (FP7) aimed at supporting, for example, forest cluster development, strengthened understanding of environmentally friendly means of transport, and forest based ecotourism development. Proposals for a number of other projects (such as preparedness of local government for climate change challenges, capacity building of foresters in close to nature silviculture, forest pedagogy and environmental awareness promotion activities) have been submitted and are currently under evaluation.

• Association of Furniture, Woodworking Enterprises and Organizations of Ukraine “MEBLIDEREVPROM” (https://assomebli.wordpress.com/english/)

Association of furniture and woodworking enterprises of Ukraine “Mebliderevprom” was founded in December 1998. Today, the Association unites leading companies for the production of, furniture and other woodworking products. Enterprises of the Association use more than 5 million cubic meters. Enterprises included in the Association produce for domestic consumption and for export.

The main purpose of the Association’s activity is to develop domestic production, increase the competitiveness of wood products, and expand its sales on the domestic and foreign markets. The main objective of the Association is to achieve the statutory goals of its activities within the framework of the current legislation of Ukraine, namely: the formation and implementation of a strategy for the development of the furniture and woodworking industry; to promote and provide practical assistance to the members of the Association in developing and strengthening their production and economic base; resolving issues of stable raw material provision; organization of exhibitions, conferences and seminars. Аctively cooperates with the Verkhovna Rada and the Government of Ukraine and other state bodies of government, mass media. Association “Mebliderevprom” is a member of European Federation of Furniture Manufacturers (UEA) and World Furniture Confederation.

C.2.2 Trade and business support organizations and unions

• Ukraine Chamber of Commerce and Industry (https://www.ucci.org.ua/en/about)

The Ukrainian Chamber of Commerce and Industry is a non-governmental, non-profit, self-governing organization which unites legal persons and citizens of Ukraine, registered as entrepreneurs, and also their associations, on a voluntary basis. The goal of the chamber is to develop competitive Ukrainian business on world markets.

• Ukraine Investment & Trade Facilitation Centre (ITFC) (http://tradecenter.org.ua/)

Ukraine Investment & Trade Facilitation Center (ITFC) is an independent non-profit organization serving as an expert platform of highly specialized professionals focusing on investment, trade, and trade-related policy matters offering both international expertise and local insight.

31

https://assomebli.wordpress.com/english/

C.2.3 Public Sector/Government Support Institutions22 23

• Ministry for Economic Development and Trade/ (MEDT)

MEDT is the main authority in the system of central government of Ukraine responsible for formation and realization of state economic and social development policies (business economics); regulation of consumer prices; industrial, investment and trade economic policies; development of entrepreneurship; technical regulation and security of consumer rights; inter-agency coordination of economic and social cooperation of Ukraine with the European Union. The ministry is headed by a minister, first deputy and other deputies to assist the minister.

• National Accreditation Agency of Ukraine (NAAU)

The main functions of the NAAU are accreditation of conformity assessment bodies and further control over conformance of accredited bodies to the accreditation requirements. NAAU is a full member of International Laboratory Accreditation Cooperation (ILAC) and a signatory to the Mutual Recognition Arrangement (ILAC MRA).

• Ukraine Standardization Agency (UAS)

Ukraine Standardization Agency is the new name of the agency formerly known as the Ukrainian Research and Training Center of Standardization, Certification and Quality. The Law of Ukraine “On Standardization” which came into force on January 3, 2015, sets the conditions for the harmonization of the national standardization system to international and European criteria, as well as the implementation of the Association Agreement between Ukraine and the European Union, in particular as regards the implementation of the necessary administrative and institutional reforms.

• State Enterprise (SE) "Ukrmetrteststandard"

SE "Ukrmetrteststandard is the all-Ukrainian state research and production center for metrology, certification, testing and consumers’ rights protection. It is also organizational and methodological center for certification of electro-technical equipment (UkrTEST).

• Ukrainian State Committee of Forestry (USCF)

About 70% of forests are managed by the Ukrainian State Committee of Forestry (USCF) that is a part of the Ukrainian Ministry of Ecology and Natural Resources. Since 2004, regional forest directorates, one for each province, serve as the Committee’s regional bodies. Development and realization of forestry policy in Ukraine is based on the data of wood supply and changes in economy. It balances protection of forest ecosystems with sustainable, multifunctional forest management.

The Ukrainian State Committee of Forestry is responsible for the implementation of the national forest and hunting policy. State Forest Resource Agency (SFRA) is responsible for the state control and forest management in Ukraine. These institutions fulfill

22 See also description on pages 12-13.23 Section based on the publication: Uğur, Hüseyin; Mikhnev, Andrei; Kuzmina, Iryna. 2017. Ukraine national quality infrastructure gap assessment (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/407381501738384776/Ukraine-national-quality-infrastructure-gap-assessment

32

combined functions of the control, administration, legislation with management and commercial activities what is the main weakness of this system.

C.2.4 Universities and research centers

National Forestry and Wood Technology University of Ukraine (NLTUU) (https://nltuu.com.ua/ )

The National Forestry University of Ukraine is the Ukrainian higher education institution with the specialization in the forestry profile. During its history, the university has become a prominent center of forest engineering education and science in Ukraine, which actively integrates into the European education system.

Ukrainian Research Institute of Forestry and Forest Melioration (URIF&FM) (https://forestry-forestmelioration.org.ua/ )

URIF&FM is the leading forestry research center in Ukraine. URIF&FM has a Steppe division in Kherson and a Polesia division in Zhytomyr. It also has 7 forest research stations: in Vinnytsa, Kiev, Krasnotrostyatets, Crimea, Luhansk, Mariupol and Novgorod-Siverskiy

Ukrainian Mountain Forestry Research Institute (UMFRI) (http://rada.com.ua/eng/catalog/16350/ )

UMFRI is a research center which carries out research related to forest management in mountainous areas. UMFRI conducts research in the mountainous Carpathian region (in Ivano-Frankivsk, Zakarpattia, Lviv and Chernivtsi Oblasts). The institute has a research and experimental base in Mukacheve, control station in Ternopil and also hydro-stations.

C.2.5 QI-related organizations

In addition to the institutions related to National Quality infrastructure already addressed in Section B, additional ones, closely related to the selected VC are listed here:

FSC in Ukraine (https://ua.fsc.org/ua-ua/ )

The Forest Stewardship Council (FSC) is an international non-profit, multi-stakeholder organization established in 1993 to promote responsible management of the world’s forests. The FSC does this by setting standards on forest products, along with certifying and labeling them as eco-friendly.

The FSC’s stated mission is to "promote environmentally appropriate, socially beneficial and economically viable management of the world's forests". To this end the body has published a global strategy with five goals:

Advancing globally responsible forest management. Ensure equitable access to the benefits of FSC systems. Ensure integrity, credibility and transparency of the FSC system. Create business value for products from FSC certified forests. Strengthen the global network to deliver on goals 1 through 4.

The institutionalization of FSC Ukraine is directly related to the development of voluntary forest certification and the drafting of a national standard for responsible forest management based on the Principles and Criteria of the Forestry Trustees' Council.

Ukraine Association of Quality (UAQ) (http://www.uaq.org.ua )

33

http://www.uaq.org.ua/

https://ua.fsc.org/ua-ua/

http://rada.com.ua/eng/catalog/16350/

https://forestry-forestmelioration.org.ua/

https://nltuu.com.ua/

In 1989 according to the plan of the Union of the engineering-research societies of Ukraine and with support of the State Committee of Ukraine for Technical Regulation and Consumer Policy a national non-governmental association in the quality area was established for the first time in Ukraine – it was Ukrainian Association for Quality (UAQ), which initiated the public movement towards quality in the Ukraine and became its leader.

Nowadays UAQ unites about 450 leading enterprises form all regions of Ukraine and about 1000 specialists in the quality area from different countries. UAQ has regional branches, branch technical committees, units, clubs, and professional organizations for quality. Among UAQ’s public structures there is Quality Leader’s Club, which united 10 years ago best Ukrainian enterprises - winners and laureates of the Ukrainian National Quality Award. UAQ has wide international recognition. UAQ conducts its activity without government financial support and pays fees to international quality organizations from its own budget.

In accordance with Statute the main goal of UAQ is formation of the public opinion and policy in the quality sphere. During last 15 years the main activity of UAQ was focused on the formation in Ukraine of the new quality philosophy, summarizing and promotion of the national and international best practices in business management, support of Ukrainian enterprises in business excellence improvement and competitiveness and on their integration at the world markets and on Ukraine’s integration to the WTO and to the European Union.

C.3 Quality bottlenecks along the value chains – problem statement

Generally, the international trade of (wood) products is subject to the regulations of the World Trade Organization (WTO). Technical regulations and product standards (referring to product safety and quality) may vary from country to country, which makes it difficult for producers and exporters to trade across borders.

Technical and environmental standards have become an issue in the international trade. Producers need to comply with the requirements of the relevant technical and environmental standards in order to access more demanding international markets. An appropriately adopted QIS should help them to demonstrate compliance with those norms and standards in an internationally recognized way.

Wood products categories show various levels of adherence to national and international standards. Normally, the relevance of standards grows along with the degree of processing. In lower-value-added primary products, the main purpose of standards is to help the buyer and seller agree on the physical dimensions, volumes, grades and ultimately the prices of primary goods and environmental friendliness (including biodiversity) of forest/territories, which are used for the raw material - wood. In some important markets like the EU and the USA, strict rules on the legality and certification are applied, also for primary wood products.

In the higher categories of processed wood products for sale to customers, the role of standards becomes more orientated towards fitness for purpose and consumer safety. This is where good practices in manufacturing, the testing of strength and durability, and issues related to flammability and toxic emissions of substances like formaldehyde come into play. Until accredited laboratories have been established to support the local industry, it will remain difficult for countries to penetrate the higher categories of processed wood products.

34

Globally, there are more than 50 certification programs which pertain to the forest – and wood processing sectors. The two most important international certification programs related to the sustainability of wood and wood-based products are:

1) Forest Stewardship Council (FSC)

2) Programme for the Endorsement of Forest Certification (PEFC).

Certified forests produce certified wood which may be further processed and sold on the market. In order that a labelled wood product may be sold to a client, it is compulsory that all actors along the production process are also certified according to the same system and this is verified by a “chain of custody” verification programme.

Forest contamination (radioactive)

Unique and important problem for Ukrainian forestry is that around 3.5 million 24 hectares of forest that was contaminated after the Chernobyl Nuclear Power Plant catastrophe. 157,000 hectares of forest have a high level of radioactive contamination by cesium-137 (above 15 Ki/square km). Therefore, these forests are not exploited. 43.8% of the total contaminated territory is polluted by cesium-137 above 1 Ki/cubic km, forest exploitation is limited there.

The greatest territories of contaminated forest are situated in Zhytomyr (60%), Kyiv (52,2%), Rivny (56,2%) Regions. In Volyn, Chernigiv, Cherkasy, Vinnitsa and Sumy Regions there are 20% of contaminated forests. That is why all raw materials and wood products need to checked for radiation. In the State Committee of Forestry a Radiological Service was organized which controls radiation in timber. It consists of 8 radiation laboratories, as well as radiologists working in state forest enterprises that are situated in contaminated areas. Radiological service is equipped with modern dose and radiation measuring devices

The table below indicates the principal QI bottlenecks of wood and processed wood of the VC. This is only the preliminary view on the main bottlenecks in the VC, which has been identified based on the desk-research and two missions to Ukraine in September 2017 and March 2018. During the inception phase it is envisaged to conduct a more detailed assessment of QI challenges at each stage of the wood and processed wood value chain.

QIS area Needs/challenges

Standardization Local capacities to develop (adopt) national standards for the wood and wood products sector following international best practices need strengthening

Ukraine needs to assume an active role on the international stage in relation to the standardisation work related to the VC – Ukraine needs to contribute and influence the development of international standards (e.g. ISO 38200, ISO/TC 218) for the wood and wood-based products value chain (to be a standard maker rather than a standard taker);

Awareness on the international voluntary standards needs to be build and their contribution to the competitiveness of the SMEs needs to be promoted (ISO 9001; ISO 14001; ISO 45001, etc.)

Metrology Local competence and skills need to be developed in the areas such as (e.g.) : conducting testing of woodworking equipment, methods of

24 BukshaI. Foresty sector in Ukraine in transition to market economy, https://www.unece.org/fileadmin/DAM/timber/h3/Warsaw%20doc/Documents/Ukraine.doc

35

https://www.unece.org/fileadmin/DAM/timber/h3/Warsaw%20doc/Documents/Ukraine.doc

measurement to test noise levels (of woodworking equipment), etc.

Accreditation Competence and number of assessors needs to be increased (ISO 9001 / ISO 14001 / ISO 45001 / ISO 38200).

Assuming an active role in the international accreditation work related to the processed wood value chain, e.g. participation in the IAF TC WG on Forest.

Practical knowledge transfer through possible mentoring arrangement with a possibly European Accreditation Body considered a center of excellence in the technical area.

Testing Need for internationally recognized testing services including but not limited to: testing of strength and durability and flammability testing for toxic emissions of substances like formaldehyde testing for radioactivityInternational recognition of those locally available tests needs to be ensured as per new version of the standard ISO 17025:2017.

Certification Internationally recognized certification services (ISO 9001; ISO 14001; ISO 45001, etc.) need to be available locally. Their availability needs to be also widely promoted to the private sector.Number of competent auditors available locally needs to increase.

Voluntary Sustainability Standards

VSS are demanded by the consumers/markets and become de facto market requirements challenges here are linked to:

- Awareness about the schemes, their applicability and requirements (there are 17 VSS schemes applicable only to wood and wood products exported from Ukraine).

- Adherence to the voluntary social/environmental standards like FSC and PEFC – implementation at the company level and certification.

- Cost of the certification.

SMEs and business support institutions

SMEs need to have better and updated information and tools on:- technical regulations of the domestic and export markets;- national and international standards;- understanding of the voluntary social/environmental standards like

FSC and PEFC.SMEs need to have access to the technical support in the form of advice, couching or training to implement the changes as per requirements of the export markets (compliance with technical regulation or standards).Local pool of qualified national experts needs to be available to offer those services to the SMEs as demanded by the market.Business support institutions need to be an active and demand driven player in the value chain – providing real support to their members (information, training, tool kits and advice).

D. REASONS FOR UNIDO ASSISTANCE

Strengthening and consolidation of the QI

The Government of Ukraine wishes to ensure that Ukraine wood products and related services are designed, manufactured and traded in a sustainable manner to match the needs, expectations and requirements of the consumers. They should also conform to international standards, in particular to those of the regulatory authorities in the domestic and international markets. To enable Ukrainian SMEs to benefit from those market opportunities and to ensure market access the proposed project’s objective is to strengthen the quality infrastructure in Ukraine along the selected value

36

chain, unlocking its market potential for SMEs. Project design is aligned with the UNIDO approach to QI strengthening and the agreed project structure under Global Quality and Standards Programme (GQSP)25.

D.1 The UNIDO approach

UNIDO has unique global expertise in QIS

The organization is consistently acknowledged by its stakeholders as a center of excellence for quality infrastructure development. It is the largest multilateral player in quality infrastructure development and a preferred partner of many developing countries.

For more than 40 years, UNIDO has been supporting partner countries to increase their competitiveness through stronger quality infrastructure systems and compliance with standards.

It develops quality infrastructure systems through targeted interventions that enhance national capabilities of standardization, metrology, conformity assessment, accreditation and market surveillance in order to develop productive capacity, expand their export base and increase domestic and foreign investment.

UNIDO has more than 500 experts and technical advisors who form a unique multidisciplinary team to support strategic and sustainable quality infrastructure development.

Based on the extensive experience and following international best practices it can be concluded that:

Trade facilitation requires a systemic approach. No change is possible with a partial view, focusing technical assistance only on SME or in a particular aspect.

An effective business environment is necessary to help SMEs and other actors to face market requirements and overall standards and quality issues. Strengthening the QIS is a critical pillar for intervention; if there is not an effective QIS in place, SMEs will face extra costs that will negatively affect their competitiveness.

Quality culture can create an appropriate environment to improve quality, so supporting a dynamic of change at all levels for better competitiveness.

UNIDO applies a systemic, demand-driven approach to quality infrastructure development, focusing on private sector and consumer needs which are necessary for countries to create a healthy business environment for trade and competitiveness. UNIDO has been involved in a large number of value chain focused quality infrastructure development projects, which focus on addressing specific quality related constraints faced by SMEs (from specific VC) and by doing so unlocking their market and export potential.

For any technical to succeed it is necessary to address simultaneously the following spheres: i) raise awareness and enhance quality culture; ii) enhance QI capacity and services in order to help SMEs to comply with international standards and raise quality; iii) enhance SME capacity to comply with those standards. According to the systemic approach, in line with private sector needs, all actors of the VC in particular with regard to their influence of the overall quality, need to be involved in the process.

25 https://www.unido.org/sites/default/files/files/2017-11/UNIDO_GQSP.PDF37

D.2 The Global Quality and Standards Programme (GQSP)

SECO and UNIDO have been cooperating on providing technical assistance for over 15 years, supporting partner countries to increase their international competitiveness through stronger National Quality Infrastructure System and compliance with standards, resulting in a very active partnership.

UNIDO is SECO’s main implementing partner in the thematic area of standards compliance and quality infrastructure. UNIDO is determined to be a constructive partner in the implementation of Switzerland’s International Cooperation Strategy, which is closely aligned with the 2030 Agenda for Sustainable Development, and supports the implementation of Sustainable Development Goal 9, “build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”. In light of the continued and growing relevance of standards compliance, and the solid and positive track record of joint cooperation projects, SECO and UNIDO have taken their cooperation to the next level: a programmatic approach. The GQSP will consolidate UNIDO/SECO interventions on trade standards compliance, adding the benefit of a global component facilitating synergies and enhancing coherence among the national interventions. Henceforth, SECO and UNIDO have developed a coherent programmatic approach: the Global Quality and Standards Programme (GQSP).

This GQSP will support selected countries to align the demand for and supply of quality services required to prove and verify the quality of products. It will specifically intervene at the following three levels:

1) National Quality Infrastructure (NQI) Institutions and Service Providers - Strengthen the NQI system to offer quality services demanded by SME’s at market price.

2) SMEs - Support SMEs to use available quality services to produce goods and services in line with international market requirements

3) Quality Culture - Support SMEs and institutions to embed the need for quality at individual, institutional and policy level to ensure sustainability of the quality system.

The three programme outcomes will be achieved through two Components:

1) Global Knowledge Management (C1)

2) Country Projects (C2).

C1 is a strategic and transversal component with the objective to generate and disseminate knowledge from research and past endeavors, which can be used to tackle quality and standards related challenges. This knowledge will be globally disseminated to country projects within the C2 and to the general public through an online platform hosted by UNIDO – the Knowledge Hub. C1 will have a direct feedback link with C2 by responding to the common needs in line with the three outcomes of the programme. C1 will support development of skills and competences and provide visibility and advocacy of the tools produced. It will be a catalyst to achieve greater effectiveness, while optimizing efficiency in the use of resources.

C2 will address country-specific standards and quality compliance issues by implementing tailor made interventions for:

Type 1: Priority country projects (3-4 years) will address standard compliance challenges in a holistic and tailor-made manner and intervene on all three outcome levels, giving priority

38

according to country needs in one or a limited number of specific sectors, with a focus on value chains.

Type 2: Special measures (1-2 years) will consist of short term strategic activities in the area of standards compliance and quality. It will be limited in scope and focus on targeted issues, not necessarily intervening on all three outcome-levels. In both types, coordination with existing projects – thematic or country– will be actively promoted, to avoid overlaps and create synergies.

The proposed project “strengthen the quality infrastructure in Ukraine along the selected value chain in wood and processed wood unlocking its market potential especially for SMEs.” has been developed to be considered under component 2 Type 1 of the GQSP.

D.3 Theory of Change

In its cooperation projects UNIDO, based on its empirical experience and research-based knowledge, applies the Theory of Change, which is a comprehensive description and illustration of how the desired change is expected to happen, from conceptualization to implementation. The Theory of Change of the Ukraine country project, which is illustrated in Table 5 (page 39), uses as a baseline the concepts from the Theory of Change designed for the GQSP Programme and is aligned with the overall objectives and outcomes of the global component. It will be looked in detailed at the Inception Phase and revised if needed.

39

Table 5 – Theory of Change for Ukraine country project

40

D.4 Strengthening and consolidating priority export sectors

Given the export-oriented quality infrastructure challenges of the wood and wood products in Ukraine, especially related to SMEs, Ukraine has been identified by SECO Global Component as a target country, where technical assistance would significantly contribute to achieving the set goals and respond to existing quality infrastructure challenges.

During September 2017 and March 2018 – two UNIDO missions have taken place to Ukraine, Kyiv with the aim to identify and discuss the existing challenges with a number of key stakeholders and resulted in development a project that could assist in developing capacity in the standards, accreditation, metrology, testing and certification infrastructure of Ukraine, with specific focus wood and wood products capacitating QI institutions in general with the business support institutions in the aforementioned value chain.

Therefore, the developed project would significantly contribute to the development of quality infrastructure in Ukraine in general and specifically for the development of the value chain in wood and wood products and herewith unlocking export potential for the small and medium enterprise in this sector.

D.5 UNIDO in Ukraine

Beyond that Ukraine has been a member of UNIDO since 1966 with a Country Focal Point in Kyiv placed in the premises of Ukraine MEDT since 1999. UNIDO has experience in designing and implementing a number of technical assistance projects in the country, as well as in the region. UNIDO is currently implementing the following project in Ukraine including 2 GEF projects:

- “Improving Energy Efficiency and promoting Renewable Energy in the Agro-Food and other Small and Medium Enterprises (SMEs)” – GEF project (2011-2018).

- “Introduction of energy management system standards in Ukrainian industry (UKR IEE) – GEF project (2013-2020).

- “Promoting the Adaptation and Adoption of Resource Efficient and Cleaner Production (RECP) through the Establishment and Operation of a Cleaner Production Centre (CPC) in Ukraine” – funded by SECO (2011-2018).

E. THE PROJECT

E.1 Objective of the project

The expected objective of the project can be summarized as follows: Quality and standards compliance services for Ukrainian wood and processed wood SMEs’ are strengthened and their use is promoted among the value chain participants to ultimately facilitate market access. In alignment with the UNIDO approach to QI strengthening the project entails three coordinated components over a project life span of three years in line and cooperation with the Global Standards and Quality Programme (GSQP). The exact project structure and setting of the KPI and baselines is subject to further refinement at the Inception Phase taking into account the KPIs developed in the inception report of the Global Programme.

The project will contribute towards Sustainable Development Goal (SDG) 9 on industrial development.

41

E.2 Components/Outcomes – general description

Outcome 1: Technical competence and sustainability of the Ukrainian NQIS that serves the selected value chain is enhanced.

Key quality infrastructure institutions relevant for wood and processed wood will be strengthened through capacity building, use of best practices, skills development, equipment purchase and implementation of management systems to ensure quality and international recognition of their services.

This outcome will be composed of the following outputs:

1.1 In-depth analysis of the capacity of the NQIS institutions and service providers conducted, gaps identified and action plan prepared (inception phase).

During the inception phase UNIDO will carry out an in-depth analysis of capacities of the institutions forming quality infrastructure system (NQIS) in Ukraine (supply side study). At the same time the need and the demand for those services from the wood and wood products sector will be also evaluated (demand side study) – which will lead to the gaps identification, action plan and roadmap and refinement of the project document.

As a result of the inception phase a sectoral roadmap for the strengthening of the QI and business support institutions addressing the needs of the wood and processed wood value chain will be developed. At the inception phase it will be also decided which regions and products (with the highest export potential) the project should target.

1.2 Technical competence of the QI (serving the selected value chain) at the institutional level strengthened.

This output will focus on institutional QI strengthening related to standardization, metrology and accreditation functions as demanded by the selected value chain. All those institutions constitute the NQI, an “invisible” infrastructure that is essential for market access, economic growth and overall competitiveness. These institutions will be strengthened, in line with the needs of the selected VC, according to the action plan/roadmap. Project among others will focus on training to enhance technical skills, advisory services, and technical assistance to improve processes or to implement management systems, as necessary.

Standardization and technical regulations: Support will be provided to the Ukrainian Agency for Standardization (UAS) to strengthen the institutional capacities to develop national standards for the wood and wood products, to enhance competence and skills of local experts in the area of standardization as well as to assist UAS in assuming an active role on the international stage in the standardization work related to the VC (ISO/TC 218, ISO 38200). MEDT has also recently launched an electronic platform for Technical Regulations outreach which can be supported and further developed for use in standardization and greater private sector (SMEs) involvement into the standardization processes.

Metrology: The project will work with Ukrmetrteststandart and other Metrology Centers to help disseminate the importance of calibration and metrology in the processed wood sector and particularly in conformity assessment activities. In practical terms Ukrmetrteststandart will be supported to further build competence of their staff in the areas related to the selected VC. These initiatives will also contribute to improving the health and safety of those involved in the value chain,

42

which is a component of the social responsibility expectations in the more advanced international markets.

Accreditation: The National Accreditation Agency of Ukraine will be supported to provide internationally recognized services to conformity assessment bodies (testing and calibration laboratories, inspection bodies, certification bodies) as required by the VC. In particular, skills will be developed of the technical assessors, NAAU will be strengthened in assuming an active role on the international fora in the areas related to the processed wood value chain (e.g. IAF TC WG on Forest) and possible mentoring arrangement with a European accreditation body considered a center of excellence in the field will be arranged for.

1.3 Technical competence of the QI (serving the selected value chain) at the service providers’ level strengthened.

Conformity assessment plays a crucial role in national and international trade as it provides evidence of compliance. It is therefore essential that QI service providers have the appropriate technical competence in accordance to international standards . As per gaps identified (1.1) the project will work towards the international recognition of testing facilities and calibration services, as well as certification bodies to facilitate demonstration of compliance with:

- EU technical regulations, specifically the General Product Safety Directive, as well as various regulations related to environmental considerations for production and treatment of wooden furniture (as well as TR of other destination markets),

- the voluntary management system standards (ISO 9001; ISO 14001; ISO 45001) and their specific application in the processed wood sector.

With regard to the testing laboratories the following issues will be looked at among others: the compliance with the new version of ISO/IEC 17025:2017 as well as testing for flammability, toxic emissions of substances like formaldehyde, strength and durability.

Outcome 2: SMEs’ awareness of the need to comply with international standards and technical regulations is enhanced.

Ukraine is striving to strengthen the wood processing sector in order to generate more jobs and to increase added-value production in the country. To address challenges and to embrace the market access opportunity the project will support mainly the business support institutions which will be identified at the inception phase (e.g. FORZA, Ukrainian Association of Furniture Manufacturers, etc) in the wood and wood products sector to improve market competitiveness, market intelligence and compliance with market requirements, standards and technical regulations to increase export potential. The gender dimensions and gender-equality considerations included in many of the voluntary standards (such as the gender equality strategy of the FSC Global Strategic Plan 2015-2020), or the gender-equality considerations which inform standard developing and setting processes by QI actors, will be taken into consideration and addressed during the inception phase.

2.1 In-depth analysis/assessment of the relevant market requirements (technical regulations and standards) conducted and action plan prepared (inception phase).

The export-oriented companies are facing a wide variety of technical regulations and standards (national and international) for wood products. These might include:

Technical regulations of the domestic and export markets (e.g. EU technical regulations such as the General Product Safety Directive, as well as various regulations related to environmental considerations for production and treatment of wooden furniture),

43

Voluntary management system standards (ISO 9001; ISO 14001; ISO 45001, etc.).

Voluntary social/environmental standards like FSC and PEFC that are required by the end consumers. As per ITC standards map there are around 17 standards, codes of conduct audit protocols addressing sustainability hotspots in the timber and wooden furniture sectors (for products originating from Ukraine).

The aim of that activity is to identify the relevant standards and market requirements that SME need to comply with (demand side study) and to design a technical assistance roadmap/action plan which would enhance SMEs capacity to meet those requirements.

The gender-dimensions included in many of the voluntary standards, or the gender-equality considerations which inform standard developing and setting processes by QI-actors.

2.2 Strengthening the quality services offered by the sectoral business associations.

Based on the action plan prepared in output 2.1, UNIDO will provide capacity building to strengthen the capacity of the business support entities to offer demand driven quality related services, as per needs identified to the SMEs (output 2.1.). The technical assistance will take the form of trainings, advisory services, couching, development of tools and awareness sessions to business support associations and SMEs along the VC to enhance their understanding of the need to comply with technical regulations and standards (such as management standards and voluntary sustainability standards (VSS)). Specific attention will be given to trainings of trainers, and study tours. The need for the active involvement of the private sector in the standard setting process (at local, regional and international level) will be promoted. Outcome 3: A culture for quality promoted.

A NQIS can only grow up and mature with the joint effort of the public authorities in charge and the private sector. The voluntary participation of society in that effort needs to be mobilized creating a pressure on the offer of quality services.

3.1 Activities to raise quality awareness developed.

This outcome aims to raise quality awareness by promoting a quality culture through various means: promotional materials, meetings, seminars, trainings, awareness campaigns, etc.

Awareness activities will be organized through local private sector associations, institutions from the NQIS and other local partners. The project can contribute (e.g. by bringing speakers) to the national conferences on the topics related to the QI by organizing thematic sessions/panels related to the VC. The project will consider the possibility to organize seminar on the topic of using the methodology developed by UNIDO concerning Quality Policy.

Relevant stakeholders (public sector, private sector, academia and consumers, among others) will be included in these activities, thus contributing to their sustainability.

E.3 Components/Outcomes and Outputs

Outcome 1: Technical competence and sustainability of the Ukrainian NQIS that serves the selected value chain is enhanced.

Responsibilities/

Actors

Output 1.1. In-depth analysis of the capacity of the NQIS institutions and service providers conducted, gaps identified and action plan prepared.

UNIDO, QI institutions, BFH,

44

Main Activities:

Conduct a mapping with in-depth analysis of Ukraine NQIS (supply side study);

Conduct a survey on Needs and Demands from private sector (demand side study);

Based on the gaps identified draft a roadmap for strengthening NQIS that serves the selected value chain

experts, National Technical Advisor (NTA)

Output 1.2. Technical competence of the QI (serving the selected value chain) at the institutional level strengthened.

On standardization & technical regulations:

Facilitate development (adoption) of national standards for the wood and wood products sector following international best practices (including translation and dissemination).

Competence and skills development of local experts through trainings and workshops in the area of standardization specifically related to the processed wood sector.

Support UAS in assuming an active role on the international stage in the standardization work related to the VC. E.g. Ukraine is holding the Secretariat for ISO/TC 218 Committee for Timber which needs re-activation; also Ukrainian contribution to the development of the ISO standard (ISO 38200) for the chain of custody of wood and wood-based products will be supported.

On metrology:

Competence and skills will be developed through trainings and advisory services to allow Ukrmetrteststandart to gain practical experience in the areas such as; conducting testing of equipment (woodworking, etc.) in compliance with the requirements of EU Directive 2006/42 / EC; applying methods of measurement to test noise levels (which are being generated by the e.g. woodworking machinery) according to the international standard ISO 3747, EN ISO 3744: 2010 standards; EN ISO 3745: 2012 and EN ISO 3746: 2010.

On accreditation:

Competence and skills development through specialized trainings and workshops for assessors in technical fields related to application of ISO 9001 / ISO 14001 / ISO 45001 / and the future ISO 38200 (Chain of custody), etc. to the processed wood sector.

Support NAAU in assuming an active role in the international accreditation work related to the processed wood value chain. E.g. participation in the IAF TC WG on Forest.

Possible mentoring arrangement with a European accreditation body (e.g. FINAS; Finland), being a center of excellence in the areas related to

UNIDO, UAS, Ukrmetrteststandart, NAAU, experts, NTA

45

the wood processing.

Output 1.3. Technical competence of the QI (serving the selected value chain) at the service providers’ level strengthened.

Main activities:

Testing:

Based on the in-depth analysis of Ukraine NQIS conducted during inception phase testing laboratory/ies, supporting the selected value chain, will be selected for assistance.

Ensure international recognition of selected testing laboratories according to a new version of a standard ISO 17025:2017 which might include increase in the technical competence of staff, purchase equipment and services to increase the scope and reach of accredited testing services as demanded by private sector from the selected value chain.

Facilitate business and marketing planning at the testing laboratories by facilitated workshops, couching and carrying out promotional activities (sustainability dimension).

Certification:

Increase the technical competence of staff (auditors) for ISO 9001, ISO 14001 and ISO 45001 as identified during the inception phase and purchase services to increase the scope and the reach of accredited certification services demanded by private sector from the selected value chain.

UNIDO, testing laboratories, certification bodies, experts, NTA

Outcome 2: SMEs’ awareness of the need to comply with international standards and technical regulations is enhanced.

Responsibilities/

Actors

Output 2.1 In-depth analysis/assessment of the relevant market requirements (technical regulations and standards) conducted and action plan prepared.

Main activities:

Conduct a mapping with in-depth analysis of the relevant market requirements for SMEs to access markets (demand side study);

Draft an operational plan roadmap/action plan for the assistance to the sectoral business associations.

UNIDO,

Specialized sector organizations, NTA, provider of value chain study (e.g. BFH), SMEs from the VC

Output 2.2 Strengthening the quality services offered by the sectoral business associations.

Main activities:

Strengthen the capacity of the business support entities to offer demand

UNIDO, experts, business support organizations, SMEs, NTA

46

driven quality related services, as per needs identified in the selected value chain (e.g. training, trainings of trainers, advisory services, strategic business plans, study tours, etc.). Training sessions (including e-learning) for the business associations and SMEs on the importance of compliance and certification and on how to participate and contribute to TCs, also virtually.

Awareness sessions (regional and national) to business support organizations and SMEs on relevant market requirements and other actors along the VC, to enhance their knowledge and capacity to comply with standards (such as management standards and voluntary sustainability standards (VSS).

Development and dissemination of guidance tools for compliance with export market requirements for the VCs.

Outcome 3: A culture for quality is promoted. Responsibilities/

Actors

Output 3.1 Activities to raise quality awareness developed.

Main activities:

Draft an action plan on conduction of awareness campaigns and activities in all spheres of QI related to the selected VC.

Organize awareness seminars and workshops to exchange good practices among the stakeholders from wood and processed wood sector relating to quality / good management practices. These events would bring together public and private sector representatives. Participation at international forums as well as participation to QI forums organized in Ukraine by organizing VC specific sessions.

Develop promotional materials (incl. those produced under Component 1 of GQSP, success stories, guides, relating to the selected VC etc.) together with the dissemination strategy. These materials will be prepared in gender-inclusive language and pursuing equal representation.

Engage private and public institutions in QI along the wood and processed wood VC to distribute promotion materials in accordance with the action plan.

UNIDO, National sector organizations; QI institutions; SMEs; international and national experts

E.4 Beneficiaries

QI institutions

47

MEDT will benefit directly through strengthened institutions comprising the National Quality Infrastructure, in particular UAS as the main body of the NQI. Other institutions of the QI will also benefit with regard to their role as quality service providers, such as Ukrmetrteststandard and NAAU, as well as conformity assessment service providers, (including testing and calibration laboratories and certification bodies) in terms of the increased competence of their staff, international exposure and implementation of international best practices.

SMEs and business support institutions

The principal beneficiaries of this project are the actors of the wood and processed wood value chain in Ukraine. They will be able to take advantage of improved quality infrastructure services to the sector resulting in provision of high quality products meeting international quality standards leading to improved export earnings which should further contribute to the increased economic growth. SMEs and business support institutions that will directly benefit from the project will be selected based on objective criteria during the inception phase.

Consumers

Further indirect beneficiaries are consumers (in Ukraine and internationally) who will gain access to high quality wooden products through a strengthened national quality infrastructure which will contribute to the products quality (fit for purpose) and safety.

E.5 Link with the Global Programme (GSQP)

The Global Knowledge Development component (Component 1) serves as a transversal component of the GQSP providing a mechanism of coordination, exploitation of synergies, feedback and knowledge dissemination/transfer especially on methodologies to be used, best practices and the development and supply of promotional materials (particularly in support of outcome 3).

There will be a two-way flow of information and know-how between the country project and the Global Component:

from the Global Component to the Project ; the project will use knowledge accumulated, tools and methodologies developed under the global component (e.g. e-learning tool on QI, QI publications, QI index, etc.)

from the Project to the Global Component – the project will share any successfully developed methodologies and best practices, that could also benefit other country projects, with the global component.

Given that an effort will be made to quantify the economic impact of quality infrastructure in unlocking export promotion, productivity and innovation, through collecting data and impact studies, this data will be used by the global component to develop a universal tool.

The activities that will link the proposed project – under component 2 (C2 – Country Projects) with component (C1 – Global Knowledge Development) will include:

1. Products/materials/indexes created and made available through Knowledge Hub (C1 – Global Knowledge Development) - will be used when delivering technical assistance in Ukraine and these might include:

a. Methodology to identify gaps of quality infrastructure along the value chain (developed under the global component) will be used during the inception phase of this project to identify key missing gaps and bottlenecks affecting development of exports for the selected value chain.

48

b. QI index – will be used (once available) to identify the baseline as well measure project’s progress.

c. QI e-learning tool (translated into local language) – will be used for training and awareness purposes throughput the project implementation.

d. Publication on good practices in strengthening the QIS (which will be available and disseminated through knowledge hub) will be used and promoted during project implementation.

2. Products/materials created under the national country project will feed into the Knowledge Hub (e.g. value chain studies, success stories, etc.).

E.6 Project geographical focus area

Considering the pilot character of the project, the project will concentrate on selected intervention area which will be decided at the inception phase. Principal selection criteria will include:

area with high representation of the core resources for this VC, such as forest and timber;

a good potential for employment generation in wood and processed wood products,

existence organizations who consider expansion into export markets,

the existence of business support organizations with some basic level of quality-oriented services, such as laboratory testing – which would constitute a foundation for building further capacity for promoting compliance with technical regulation, standards and international best practices,

commitment from the government (national or regional).

One of the considered regions will be the Carpathian region is rich in forest resources and represents the largest continuous forest area in Ukraine. Figure 13 shows the forest cover of four Carpathian oblasts (marked in shades of green).

49

Figure 13 Forest cover in the Carpathian region

Source: FORZA in2wood project26

E.7 Cooperation with other ongoing activities and programmes

The successful achievement of the outputs will require a concerted effort and full commitment from all the stakeholders in the public and private domain. Furthermore, there are a number of sector support activities ongoing, and in order to ensure that potential synergies are fully utilized; the project will coordinate closely with all relevant partners. The following listing does not claim to be complete, additional sector activities could be identified in the course of the project and analyzed for their relevance and complementary. It is understood that the project intends to maximize impact by leveraging with all possible partners.

Category List of project/ Description

Work currently ongoing in the area of QI

1) EBRD runs a project directed at the export facilitation for furniture producers. They work directly with private sector actors through Ukrainian Association of Furniture Manufacturers and the Ukrainian Entrepreneurs Union (SUP). Currently the project carries out a detailed assessment of the furniture sector with the end objective of agreeing on a road map and the sector strategy. Following those activities, the implementation of the strategy will commence. The project will provide credit resources and advisory services to the companies interested in exporting furniture.

26 https://s3-eu-west-1.amazonaws.com/static.wm3.se/sites/400/media/164609_Carpathia_profile_final.pdf?1506693564

50


2) CUTIS - this project aims to increase trade and investment between Canada and Ukraine by helping Ukrainian companies, especially small and medium-sized enterprises (SMEs), to meet Canadian standards and by helping to increase their access to Canadian and global markets. One of the sectors chosen for the project to work in is the furniture sector. The project will provide direct support to SMEs in the form of: market analysis, match making, advisory and training.

3) EU funded Twinning Project on "Strengthening the capacity of the Ukrainian National Standardization Body“. The overall objective of the project is to strengthen the Ukraine Standardization Agency (UAS) and align their operation with the EU best practices through twinning arrangements with national standardization bodies of Austria, Germany, Romania and Spain.27

4) Other related projects will be mapped out at the inception phase to promote cooperation and avoid overlaps.

Ongoing activities on SMEs/private sector development

1) UNDP project on building capacity of local business membership associations (BMOs) - this project aims at accelerating the development of the SME sector in Ukraine by strengthening the capacities of the BMOs (among which the Ukrainian Association of Furniture Manufactures), thus allowing for more effective operations and the sustainability of these organizations in the medium to long term. Through the institutional strengthening of BMOs, the project will significantly contribute to a more active, responsive, professional and policy-oriented dialogue between public and private sectors.

Possible synergies 1) Potential cooperation with: Bern University of Applied Sciences (BFH), Switzerland;

2) Collaboration with ITC will be sought with regards to the Sustainability Map in implementing and identifying key sustainability standards to facilitate market access. The support of other ITC tools such as the Trade Helpdesk will be used and disseminated to beneficiaries.

Other UNIDO projects in the country

1) “Promoting the Adaptation and Adoption of Resource Efficient and Cleaner Production (RECP) through the Establishment and Operation of a Cleaner Production Centre (CPC) in Ukraine”- implemented by UNIDO; SECO funded. The primary goal of the Centre is to enhance the resource productivity, competitiveness

27 The EU funded Twinning Project has been discussed between UNIDO HQ and MEDT. The activities planned with UAS through this project will be further discussed and analyzed during the inception phase in order to avoid duplications and build synergies with the two projects.

51


and environmental performance of the companies in Ukraine, supporting the adaptation and adoption of Resource Efficient and Cleaner Production methods, practices, technologies and policies in the country providing national industries with the necessary tools to facilitate access to national and regional markets with environmentally sound products and improve the ability of national enterprises to successfully negotiate their position in the global market. RECP helps to reduce production costs and to improve the quality of the product or service output, helping to comply with (future) quality standards; as a consequence, a boost in competitiveness can be expected.

RECP project works with companies active in the wood value chain which creates opportunities for collaborations between the two projects. During the march mission to Ukraine (2018), a joint visit with the RECP team to the wood processing SMEs already took place.

2) Project UNIDO GEF “Introduction of energy management system standards in Ukrainian industry (UKR IEE) (2013-2020) is currently in place and would align well with the support for quality infrastructure towards sustainable and inclusive growth.

E.8 Relevance of SECO intervention

Enhancing the capacities of partner countries allowing producers to comply with international and private quality and sustainability standards is a key objective of Switzerland's trade promotion efforts28.

SECO Ukraine priorities are being shaped by the “Swiss cooperation strategy for Ukraine 2015–2018” which focuses on four main domains of intervention: governance and peacebuilding, health, sustainable energy management and urban development as well as sustainable economic development. The project will contribute to:

Domain of intervention 4: Sustainable economic development

Goal: The economy and in particular small and medium enterprises (SMEs) grow sustainably, and their role in the Ukrainian economy increases.

Outcome statement 1: The private sector benefits from new trade opportunities, better access to finance and increased business skills.

Moreover, this national project is part of the Global Standards Quality Programme which brings SECO’s cooperation with UNIDO’s TII Department to a new level. The overall objective of the GQSP is to strengthen the quality and standards compliance capacity in SECO partner countries to facilitate market access for SME by working in emblematic value chains per country.

28 See "Botschaft über die internationale Zusammenarbeit 2013-2016" of 15 February 2012, pp. 2635-2636.52

E.9 Project Organization

UNIDO will be responsible for overall management and coordination of the project (see Figure 14). The Standards and Quality Infrastructure division of the department of Trade, Investment and Innovation (TII/SQI) will have the overall responsibility on behalf of UNIDO. TII/SQI will assign the task of project implementation to a TII Project Manager based in Vienna (position not funded by the project). In line with the UN administrative rules and regulations, UNIDO will: (i) take all decisions regarding staff recruitment, contractual arrangements/agreements, technical assistance, backstopping, and project supervision, monitoring and reporting; and (ii) consider both local and international procurement sources taking into account specification, quality and price (best value for money) as per UNIDO procurement rules.

Project Management: The overall coordination of project implementation will be ensured by the TII/SQI Project Manager; the National Technical Advisor (NTA) will act as Team Leader for the coordination, supervising and working closely with the Focal Point appointed by the MEDT Technical Regulations Division for the best planning and implementation of the project. Additionally, he/she will provide strategic guidance and maintain close relationships with the SECO Kiev and Bern and counterparts. The management of the technical project components will be ensured by the TII/SQI Project Manager. The TII/SQI Project Manager through the NTA will represent UNIDO at National Steering Committee (NSC) and Project Management Committee (PMC) meetings and will be the main focal point for coordination with SECO and other NSC and PMC members nationally.

Operational level: Project Management Unit (PMU), will be established in Kiev hosted at the premises of one of the project beneficiaries (to be agreed at the Inception Phase). It will be headed by a full time National Technical Advisor (NTA), who will be in charge of providing technical advice as well as overlooking the day to day operations, coordination and administration, under the supervision of the Project Manager in Vienna, Austria. He/she will be supported by a full-time (100%) National Project Assistant (NPA). Both positions are to be funded by the project.

Counterparts (MEDT): From the side of the counterparts a Focal Point for all matters related to the project will be assigned to facilitate project implementation as well as streamline communication efforts.

International and national technical experts will be recruited as per the technical requirements of the activities on a short term basis. Technical assistance will be provided in a sustainable manner ensuring knowledge transfer to the beneficiaries. Coordination with the global component will be done at UNIDO headquarters, Vienna, Austria.

The draft Terms of Reference for the position of the NTA as well as NPA can be found in Annex 7 and 8.

53

Figure 14 Project Management Structure

E.10 Project Governance

The project foresees the establishment of two committees: i) a National Steering Committee (NSC), which will be built up of key national and international stakeholders (as detailed below) with decision-making authority; and ii) a Project Management Committee (PMC) consisting of the direct project beneficiaries (MEDT Dep. Technical Regulations, the core QI institutions, etc.) and UNIDO.

The National Steering Committee’s (NSC) will have a decision making function: it will provide strategic direction and offer governance and guidance towards the project’s agreed objective and outcomes. To this end the NSC may invite experts as reference persons and/or observers as deemed appropriate (i.e. beneficiaries, implementing agencies). It will be responsible to verify and approve the inception report, to oversee project implementation, monitoring and evaluation (on the basis of progress reports); to evaluate constraints and risks and to offer guidance and assistance for re-alignment where necessary. In addition, ad-hoc sub-committees to the NSC may be formed to assess thematic/output results and take adequate corrective actions.

The NSC will meet twice a year in Kiev. The list of members and the ones with a voting right will be discussed during the inception phase. Some of the members of the NSC may comprise:

- MEDT Dep. Tech. Reg. as main government counterpart, other relevant Ministries might be also included,

- core QI related institutions, such as UAS, Ukrmetrteststandart and NAAU,

- sector partners and stakeholders such as Ukraine Chamber of Commerce and Industry, Ukrainian Association of Furniture Manufacturers, Ukraine Association of Quality, FORZA agency, National Forestry and Wood Technology University of Ukraine.

54

While the NSC will have a decision-making function, the Project Management Committee’s (PMC) main function will be monitoring and consultative: it will monitor the project progress and implementation, address matters as they arise in the day-to-day implementation, review work plans and budget as well as coordinate and prepare for the NSC meeting.The PMC will meet every 3 months, including immediately before the NSC meeting. The members of the PMC will all be also members of the NSC however PMC will be a much smaller “working” committee of representatives of institutions directly involved with day-to-day project implementation.

The terms of reference for the NSC and PMC will be defined during the Inception Phase.

E.11 Gender mainstreaming

UNIDO and SECO recognize that gender equality and the empowerment of women has a significant positive impact on sustained economic growth and sustainable industrial development, which are drivers of poverty reduction and social integration.

The gender mainstreaming strategy and gender equality and empowerment of women objectives is based on three dimensions (Resources, Rights and Voice):

Resources: promoting equal access to resources and training opportunities by ensuring that women are given opportunities for skills development.

Rights: ensuring that quality infrastructure-related (QI) policy and legislative environments are not conducive to discrimination against women. In addition, the safe and non-discriminatory delivery of national quality infrastructure-related (NQI) services favorable to trade will be promoted.

Voice: enhancing the leverage of women in gaining power and control over their own lives through the promotion of gender-balance within the work environment.

The Project will bring benefits to support institutions and other actors along the VC in which both men and women staff will have a chance to improve their skills and knowledge. All required efforts will be made by the Project to enrol as much as possible women to give equal opportunity in its planned training activities, both at management and technical levels, and encourage them to participate in all relevant Project activities, including decision-making activities.

The project presents ample opportunity for gender mainstreaming. The area of quality infrastructure and conformity assessment is also suitable for gender promotion, women being often leading the institutions both at management and technical levels. Further gender promotion will be systematically undertaken where possible. The proposed project will ensure the representation of both men and women among the stakeholders and beneficiaries, for meeting events and training, to support the advancement of women’s equal participation with men as decision makers. Access to information, resource empowerment and inclusion will give both women and men the opportunity to take advantage of the value chain and play an equal role in the market development.

E.12 Sustainability and exit strategy

The project aims to ensure financial and technical sustainability at the end of the project through a number of activities. The project is designed from the outset to develop local expertise with the adequate knowledge and experience and to transfer the knowhow and technical expertise to the local institutions and experts (through Training of the Trainer approach) that will support the NQIS during and after the project has ended.

The project is designed in close collaboration with country stakeholders, is demand-driven and will need to benefit from strong country ownership which will contribute to sustain its results. The Project is integrated into the national priorities and in line with the strategic development.

55

More specifically, the project will rely on the following operational principles:

• Ensuring national leadership and ownership: close collaboration with the government coordinating agency ensures that project initiatives, lessons and best practices easily become focal areas for government to build on in their future plans and programmes.

• Ensuring multi-stakeholder participation and consultation: The project will foster a high degree of participation and engaging stakeholders from both public and private sector will ensure high-level support and a strong sense of ownership. Regular Steering Committee meetings will be conducted to assess progress, identify potential risks and determine the strategic direction of the project.

• Avoiding duplication and maximizing on past investments and programmes: The project will build on the existing capacities and networks. Lessons learnt from previous programmes will be taken into account.

• Adopting a long-term approach: The project will support the promotion of policy frameworks for long term change and develop critical capacities at local and national levels for value chain development, standards compliance and conformity assessment.

• Requiring a GoU contribution for equipment (min. 20% of the value of the equipment): Form of the contribution to be confirmed. The equipment must be deemed necessary for the overall success of the component/expected results. At the end of the project all equipment will become property of the supported institutions upon presentation of a sustainable maintenance plan prepared for the equipment.

E.13 Opportunities and risks

E.13.1 Opportunities

The selected value chain in wood and wood products has a wide range of opportunities for the export promotion and economic growth, which can be unlocked by addressing a number of quality infrastructure related challenges. The central opportunities for the development of this VC have been listed in Section C.1.5 Justification for technical assistance.

Here to summarize, the main opportunities for the technical assistance for strengthening quality infrastructure in Ukraine along the furniture value chain are seen in:

Engaging the key counterpart into the project (MEDT/ Dep. TR) and thereby addressing inclusively the whole range of central national QI-related institutions, and maximizing the project results and impact on developing a sustainable QIS and culture in Ukraine;

Developing export oriented product/value chain, this would present new product and market opportunities for export promotion of Ukraine.

The targeted value chain is dominantly present in the Western Ukraine , which is mostly a rural area, and therefore would stimulate job creation (with higher wages and therefore higher household income) and contribute to increasing employment29.

Ban on exports of raw material – the restrictions on the exports of raw material create a favorable conditions for growth of processing industry (greater value addition).

29 http://foresteurope.org/wp-content/uploads/2017/07/O_Kiyko.pdf 56

http://foresteurope.org/wp-content/uploads/2017/07/O_Kiyko.pdf

E.13.2 Risks

Following the above presented opportunities a number of risks should also be mentioned. The central medium-low risk presents state and market-related constraints (foremost illegal logging, shadow economy manufacturing, absence of transparent procedures of timber sales, and management in forest sectors) that without good leveraging might affect the final results of the project.

The detailed list of risks with the foreseen mitigation measures is further elaborated in the table below.

Risk Level Mitigation

Low stakeholder engagement

low To assure high level of commitment and engagement of the key stakeholders in Ukraine a set of meetings have been already done during the project development phase. In this way a basis for stronger interest, trust and understanding of the project among stakeholders and UNIDO team has been initiated.

Illegal logging and corruption

medium A set of reforms have been undertaken recently in Ukraine in order to mitigate the corruption and illegal logging, and a number of actions and projects are envisioned to start in the near future. This will support the project in its implementation. In addition, bringing on board a number of trusted partners, such as e.g. FSC should also increase transparency.

Political turmoil medium Ukraine has recently experienced a strong change in the government system of the country, which has embarked on the route of reforms. This is also accompanied by the active engagement of professional staff in many public and private institutions. Initiated relations with a number of international and European partners have assured positive results from technical assistance and other development projects. UNIDO will also contribute to strengthening the stability by building a sound team of experts, committed and accountable.

Shadow manufacturing

medium It is estimated that around 40% of wood and furniture companies are operating in the shadow economy, thereby limiting their accessibility and income/export potentials. UNIDO aims to strengthen cooperation with a number of sector and overall business organizations, such as e.g. Ukraine Chamber of Commerce and Industry and Ukrainian Association of Furniture Manufacturers, through which a set of awareness raising activities will be organized on quantitative and qualitative benefits from open and transparent exports/ production of high quality products.

Economic situation

low Ukraine has recently undergone a number of strong reforms to enhance economic development of the country, especially in the area of export promotion, which resulted in positive change in a number of economic indicators, e.g. GDP growth. A special agency to the Cabinet of Ministers of Ukraine, the State Enterprise for Export Promotion (former Export Promotion Office, EPO), is actively engaged

57

in strengthening the impact of export related reform. Close cooperation between the UNIDO team and this Office is envisioned in order to support and exchange information in relation to sector/industry and value chain development, which is of key interest of the project.

Human Resources capacity issues

medium Project will work closely with stakeholders and provide on the job training, focus will be mostly on the competence and technical capacity building.

Limited resources and commitment from the SMEs to participate in the project

medium Sensitization of the enterprises on the benefits of quality upgrading and careful selection procedure for the SMEs who will receive technical assistance.

National law against corruption which limits TA delivery (mainly equipment purchase) to private institutions, e.g. private laboratories.

medium According to national legislation – the technical assistance in the form of the equipment purchase or payment for the accreditation fees can be only delivered to the state enterprises under the power of MEDT (main beneficiary) – otherwise it can be considered as a corruption case. To deliver e.g. equipment to the state enterprise the following conditions need to be met:

- the state enterprise needs to be named as a project beneficiary

- there needs to be a MoU signed between the project and the state enterprise.

F. INPUTS

F.1 Counterpart inputs

The contribution of the counterpart institutions will be an in kind contribution, which can cover the following specific items:

Hosting of project office at the Ministry premises. The office would constitute of a National Technical Advisor (full-time) and a National Project Assistant (full time), which would include space for 2 desks, office cabinets and access on per-demand basis to the common meeting room. The Wi-Fi will be also provided.

Assigning a project Focal Point to facilitate projects day to day implementation as well as streamline communication efforts.

The Ministry will take a lead on the project registration process. Ensure that sufficient staff of an appropriate professional level and seniority within their

organizations is made available for project activities and consultations where appropriate; ensure continuity of personnel during the project. Any change in the staff assigned to the project should be promptly notified to UNIDO

• The respective counterpart agencies involved in the project will nominate participants to meetings, workshops and other events held inside the country as part of the normal functioning of its organization.

58

• Counterpart organization should provide local administrative support for organizing meetings and training programmes if applicable.

• Provide support and facilitate the processing of any legal documents or decrees to be produced under the project if applicable.

These contributions will be further refined and validated in the inception phase.

F.2 UNIDO inputs

UNIDO will provide know-how, expertise, facilities and staff time, in general terms:• Identification and recruitment of the project personnel • Identification, preparation of Job Description(s) of all the international and/or

regional/national experts and consultants required for the project. These would include, but not limited to, metrology and accreditation experts, product testing experts, experts with a sound background in NQI development (i.e. standardization, quality assurance, metrology, accreditation, conformity assessment), trainers with a proven track record, sector-specific experts and technical-regulation-type policy and legislation/policy development

• Identification of suppliers (national/international), preparation of Terms of Reference(s) and Technical Specification(s), and procurement of services and equipment (e.g. metrology and test equipment as envisaged)

• Preparation and arrangement for training(s), awareness sessions, and study tours, etc.

G. BUDGET

G. 1 Project Budget

Total budget (TBD): € 880,000 (incl. support costs)Duration: 2019- 2021Government of Ukraine Contribution:

Estimated contribution EUR 20,000 (form of contribution to be determined)

Contribution of other donors:

N/A

Table 6 - Budget breakdown per outcome (€)

Components Subtotal

Outcome 1 Technical policy complianceTechnical competence and sustainability of the Ukrainian QI is enhanced.

Output 1.1. In-depth analysis of the capacity of the NQIS institutions and service providers conducted and action plan prepared. 42,400.00

Output 1.2. Technical competence of the QI at the institutional level strengthened. Targeted QI institutions: 158,760.00

Output 1.3. Technical competence of the QI at the service providers level strengthened. 165,960.00

Subtotal Outcome 1 367,120.00Outcome 2 SMEs' awareness

SMEs' awareness of the need to comply with international standards and technical regulations is enhanced.

Output 2.1. In-depth analysis/assessment of the relevant market requirements (technical regulations and standards) conducted 48,500.00

59

and action plan prepared.Output 2.2. Strengthening the quality services offered by the sectoral

business associations. 128,141.00

Subtotal Outcome 2 176,641.00Outcome 3 Quality culture

A culture for quality is promoted.

Output 3.1. Activities to raise quality awareness developed.46,000.00

Subtotal Outcome 3 46,000.00Project Management 189,000.00Subtotal Management 189,000.00

Total (excl. 13% support costs) 778,761.00

Supporting costs (13%) 101,238.93

TOTAL (incl. 13% support costs) 879,999.93

Table 7 - Budget breakdown per budget line and year (€)

Outcome 1 Technical policy compliance

BL Activity Amount Y1 Y2 Y311-00 International experts 109,620.00 38,367.00 60,291.00 10,962.0015-00 Project travel 0.00 0.00 0.00 0.0016-00 Mission costs 0.00 0.00 0.00 0.0017-00 National experts 54,000.00 18,900.00 29,700.00 5,400.0021-00 Sub-contracts 52,500.00 18,375.00 28,875.00 5,250.0030-00 Local trainings 42,000.00 14,700.00 23,100.00 4,200.0035-00 International trainings 18,000.00 6,300.00 9,900.00 1,800.0043-00 Facilities 0.00 0.00 0.00 0.0045-00 Equipment30 80,000.00 28,000.00 44,000.00 8,000.0051-00 Miscellaneous 11,000.00 3,850.00 6,050.00 1,100.00Total (excl. 13% support costs) 367,120.00 128,492.00 201,916.00 36,712.00

Outcome 2 SMEs' awareness

BL Activity Amount Y1 Y2 Y311-00 International experts 38,000.00 13,300.00 20,900.00 3,800.0015-00 Project travel 0.00 0.00 0.00 0.0016-00 Mission costs 0.00 0.00 0.00 0.0017-00 National experts 83,000.00 29,050.00 45,650.00 8,300.00

30 According to national legislation – the technical assistance in the form of the equipment purchase or payment for the accreditation fees can be only delivered to the state enterprises under the power of MEDT (main beneficiary).

60

21-00 Sub-contracts 27,500.00 9,625.00 15,125.00 2,750.0030-00 Local trainings 20,000.00 7,000.00 11,000.00 2,000.0035-00 International trainings 0.00 0.00 0.00 0.0043-00 Facilities 0.00 0.00 0.00 0.0045-00 Equipment 0.00 0.00 0.00 0.0051-00 Miscellaneous 8,141.00 2,849.35 4,477.55 814.10Total (excl. 13% support costs) 176,641.00 61,824.35 97,152.55 17,664.10

Outcome 3 Quality Culture

BL Activity Amount Y1 Y2 Y311-00 International experts 13,500.00 4,725.00 7,425.00 1,350.0015-00 Project travel 2,000.00 700.00 1,100.00 200.0016-00 Mission costs 0.00 0.00 0.00 0.0017-00 National experts 16,500.00 5,775.00 9,075.00 1,650.0021-00 Sub-contracts 0.00 0.00 0.00 0.0030-00 Local trainings 8,000.00 2,800.00 4,400.00 800.0035-00 International trainings 0.00 0.00 0.00 0.0043-00 Facilities 0.00 0.00 0.00 0.0045-00 Equipment 0.00 0.00 0.00 0.0051-00 Miscellaneous 6,000.00 2,100.00 3,300.00 600.00Total (excl. 13% support costs) 46,000.00 16,100.00 25,300.00 4,600.00

Outcome 4 PMU

BL Activity Amount Y1 Y2 Y311-00 International experts 0.00 0.00 0.00 0.0015-00 Project travel 8,000.00 2,800.00 4,400.00 800.0016-00 Mission costs 20,000.00 5,000.00 5,000.00 10,000.0017-00 National experts 130,000.00 43,333.33 43,333.33 43,333.3321-00 Sub-contracts 0.00 0.00 0.00 0.0030-00 Local trainings 0.00 0.00 0.00 0.0035-00 International trainings 0.00 0.00 0.00 0.0043-00 Facilities 18,000.00 6,000.00 6,000.00 6,000.0045-00 Equipment 8,000.00 4,000.00 2,800.00 1,200.0051-00 Miscellaneous 5,000.00 2,000.00 2,000.00 1,000.00Total (excl. 13% support costs) 189,000.00 63,133.33 63,533.33 62,333.33

As per UNIDO rules, changes to the budgetary allocations (up to 10%) of the total allocation per output can happen as per project needs without any additional approvals. However changes larger than that require Steering Committee and donor’s approval.

61

G.2 Government co-finance to the project

A contribution for the purchase of equipment (min. 20% of the value) required for strengthening conformity assessment bodies (Output 1.3) and an in-kind contribution will be confirmed.

H. INCEPTION PHASE, MONITORING, REPORTING AND EVALUATION

H.1 Inception phase

The project envisages an inception phase, for a more detailed specification of QI-related challenges in the selected sector/value chain. The inception phase is planned for no longer than six (6) months, and will include the following:

Technical tasks:

Conduct a detailed sectoral analysis of the Ukrainian wood and wood products sector together with the private sector associations, relevant government departments and research institutions (e.g. BFH).

Conduct an in-depth analysis of QI institutions and services that respond to the needs of the selected product/s value chain (VC approach), identify gaps and opportunities.

Inception Report – The report will include refined project work plan, logframe (with KPIs and baselines) and budget as per needs and gaps identified in the above studies, in collaboration with the industry associations and government representatives. Inception report will need to be approved by the project NSC and will be a basis for the further project implementation.

Establish a data-base of technical expertise relevant to the project. Establish a monitoring system according to result-based management. Validate the approaches and concepts proposed in the project document taking into

consideration the latest developments in the country (incl. theory of change). Logical frame-work updated and confirmed (the log frame will be also be revised after the

inception phase in order to better account for gender-considerations and the collection of sex-disaggregated data, and that the target will be set at 40% for the lesser represented gender);

Progress report template should be in line with the GQSP Programme progress report template; this report should reconcile both donor’s and MEDT requirements; reporting will be done in two languages – Ukrainian and English;

Conduct gender analysis to confirm baseline and targeted gender indicators in the logical framework;

Geographical region for the pilot assistance to the selected business support institutions will be decided on.

Governance:

Establish the NSC and PMC and their modus operandi (Terms of Reference). Ownership of the project by key stakeholders and partners to secure their active

involvement through sensitization and awareness building and formalization of cooperation.

Organizational/logistics:

Recruitment of the PMU staff (full time NTA and NPA) and training of staff on UNIDO’s operating procedures.

Setting up the PMU office and putting in place related arrangement.62

Agreeing on the office location – most preferably at one of the main project beneficiaries. Present the action plans, results and outcomes of the inception phase for discussion at the

first Steering Committee meeting for approval and endorsement.

The proposed timeline and milestones for the Inception Phase are contained in Annex 5.

H.2 Monitoring and evaluation

The project will establish a Result-Based Monitoring (RBM) mechanism to ensure timely identification of possible implementation challenges and provide support in addressing them. The baseline data identified in the inception phase will form the basis of the monitoring system.

Monitoring at country level will happen internally for day-to-day monitoring of implementation, activities and results, and externally through strategic monitoring missions. Day to day monitoring will be done by the PMU. The NTA together with NPA will monitor the project against the project Logical Framework with a results-based management approach, oriented towards delivering outputs and achieving desired outcomes. The project staff will be required to monitor the gender compositions and indicators in project activities. The PMU will identify possible implementation challenges and obtain opportune support to address them. Progress will be reported at the NSC meeting. On this basis, UNIDO will prepare narrative project progress reports every six months and financial reports every 12 months. The progress report template will be in line with the progress report template agreed on the GQSP Inception Report. This should meet the requirements of the Ministry and of the donor.

Besides day-to-day monitoring of implementation, strategic monitoring will be conducted at country level in projects with an increased implementation risk, for example given their content and context. Strategic monitoring missions are foreseen for every country project after the first year of implementation. This will allow for timely assessment and timely initiation of corrective actions (if required) for optimized project performance.

The project will be evaluated as part of the GQSP in accordance with the Guidelines for the Technical Cooperation Programme and Project Cycle. (DG AI.17 Rev. 1 – 24 Aug 2006), for which the evaluation plan will be defined at the inception phase and include a mid-term evaluation and a final independent evaluation with selected country components. The final evaluation will be carried out in accordance with the global programme.

63

ANNEXES

Annex 1: Log-frame

Outcomes/outputs Indicators31 Means of verification External Factors(assumptions / risks)

IMPACT: Improved framework conditions for SME and greater international competitiveness of the country in the selected VC

- Increase in export volumes (as a % and in mio. USD) of goods and services in the wood and processed wood value chain

- Increased market access as perceived by the VC actors (survey)

- Export reports and statistics- Surveys/questionnaires

- Government is committed to enhancing quality and providing necessary resources (human and financial)

- Participating SME and laboratories are committed

- External economic factors

OVERALL OUTCOME:Quality and standards compliance services for Ukrainian wood and processed wood SMEs’ are strengthened and promoted among the value chain participants to ultimately facilitate market access.

- # of certifications issued by institutions that received support under the project

- # of value chain stakeholders that are aware of the compliance requirements with international standards

- Project monitoring and evaluation reports.

- Data/reports from QI institutions

- Survey/questionnaires

- Government is committed to enhancing quality and providing necessary resources (human and financial)

- Overall stability both at government and at country level

- Participating SME and laboratories are committed

- High degree of coordination between all relevant stakeholders and effective participation in the project activities.

- External economic factors

Outcome 1: Technical competence and - # of accredited or ready for - Report from the NQIS - Government is committed to providing

31 Targets to be set upon base line. Training and awareness activities indicators will be disaggregated by gender.

64

Outcomes/outputs Indicators Means of verification External Factors(assumptions / risks)

sustainability of the Ukrainian NQIS that serve the selected VC is enhanced.

accreditation conformity assessment services

- # of staff at the QI institutions whose competence increased as a result of project trainings

- List of participants and certificates awarded

- Surveys/questionnaires of trainees

necessary resources (human and financial)

- Effective participation by the target beneficiaries in the planned project activities and in accordance to the set timeline.

Output 1.1 In-depth analysis of the capacity of the NQIS institutions and service providers conducted, gaps identified and action plan prepared.

- # of action plans developed per VC - Inception and Project reports- Implementation

strategies/action plans

- Responsible political authorities are committed to accept the findings and integrate them into their operational plans.

- # of assessment reports prepared (baseline)

Output 1.2 Technical competence of the QI (serving selected VC) at the institutional level strengthened.- Standardization- Accreditation- Metrology

- # of certificates issued (online and offline trainings)

- of Technical Committees (TC) established per VC

- # of members of the TC per VC and stakeholder group

- # of international TC in which the UAS participates

- # of accreditation schemes with international recognition, or prepared (ready) to receive the international recognition

- # of accreditation evaluators available and part of the NAAU (with collaboration agreement) to perform accreditation evaluations/audits.

- # of staff from Ukrmetrteststandart

- Project reports- List of participants and

certificates awarded- Survey/questionnaires

- Effective participation by the target beneficiaries in the planned project activities.

65


trained (e.g on compliance with EU Directive 2006/42/EC)

Output 1.3 Technical competence of the QI (serving selected VC) at the service providers’ level strengthened.

- # of tests accredited or ready for accreditation

- # of certification services accredited or ready for accreditation

- # of certificates issued on training- # of technical assistance / expert

hours provided

- Applications submitted, or accreditation received, or final audit reports

- List of participants and certificates awarded

- Reports from the NSB, NMI, NAB

- Project monitoring and evaluation reports

- Training material

- Responsible political authorities accept the cooperation and provide adequate infrastructure and sufficient human and financial resources to carry out the activities (for public laboratories).

- Target beneficiaries commit and participate in the planned project activities and in accordance to the set timeline.

Outcome 2. SMEs’ awareness of the need to comply with international standards and technical regulations is enhanced.

- # of Business Support Institutions and SME within the targeted value chains which are aware of the market requirement (E.g. certification requirements)

- # of Business Support Institutions which provide a better service to their membership base (E.g. increased # of services)

- Project reportsSurvey/questionnaires

- Producers and exporters from targeted VC are keen to participate in the project activities

Output 2.1 In-depth analysis/assessment of the relevant market requirements (technical regulations and standards) conducted and action plan prepared.

- # of action plans per VC - Project reports- Implementation

strategies/action plans

- Producers and exporters and other stakeholders from targeted VC are committed to comply with standards and collaborate to conduct the assessment and to agree on an action plan.

66


Output 2.2 Strengthening the quality services offered by the sectoral business associations.

- # of businesses reached by the awareness building campaign on the need for compliance with international standards per VC / # of trainings conducted

- # of training certificates issued / # of staff trained

- # of organizations that participated in the training

- Project reports- List of participants and

certificates awarded- Training material- Constitution agreements

(linkages/clusters)

- Effective participation by the target beneficiaries in the planned project activities and in accordance to the set timeline.

Outcome 3. A culture for quality promoted.

- # of value chain actors aware of QI requirements per selected VC

- Project reports- Data/statistics from the online

platform- Survey/questionnaires

- Local institutions are committed to enhance quality and support the project activities.

Output 3.1 Activities to raise quality awareness developed.

- # of awareness raising activities organized in coordination with local beneficiaries

- # of people attending awareness activities

- # of online tools/guides created and made available through the Knowledge Hub to raise awareness

- Agendas of the activities- Lists of participants- Project reports

- Local institutions are committed to enhance quality and support the project activities.

67

Annex 2: Stakeholder Matrix (to be updated during inception phase)

Stakeholder Direct Beneficiary (DB), Indirect Beneficiary (IB) and/or Partner (P)

Impact

How much does the project impact them

Influence

How much influence do they have over the project

Mandate Gaps and/or needs How they will benefit from the project

What is important to the stakeholder

Strategy for engaging the stakeholder

Public Sector/Government Support InstitutionsMinistry for Economic Development and Trade/ (MEDT), (particularly Department of Technical Regulations)

DB/P High High Formulation and regulation of state economic and social development policies and environment; regulation of quality policy; industrial, investment and trade economic policies; development of entrepreneurship and SME support; technical regulations and security of consumer rights; inter-agency coordination of economic and social cooperation of Ukraine with the European Union. The lead Ministry for Quality Infrastructure.

Need for compliance/ harmonization of Ukraine QI system to EU in framework of DCFTA.Need to address sectoral legislation, implementation of EU standards, EU directives and QI institutions upgrade.

Relevant activities related to the harmonization of Ukrainian QI system to the EU framework (for the selected VC).Strengthening of institutions comprising the National Quality Infrastructure, in particular UAS, NAAU as the main bodies of the NQI.

MEDT priorities are: 1) EU Ukraine ACA Agreement, which includes Roadmap to harmonization and development of technical regulations. 2) Legislation related to standardization, conformity assessment, and metrology.3) Compliance/ harmonization of Ukraine QI system to EU in framework of DCFTA.

Engagement through NSC and PMC meetings; as MEDT is the lead Ministry for the QI in Ukraine – MEDT will be the primary beneficiary of majority of the project activities leading to QI strengthening (outcome 1); MEDT will be providing inputs, support and hold coordination function.

National Accreditation DB/P High High The national Compliance/ Training and capacity Raise awareness and Benefit from

68


Impact


Influence





Agency of Ukraine (NAAU)

accreditation body with the main functions of accreditation of conformity assessment bodies and further control over conformance of accredited bodies to the accreditation requirements.

harmonization of Ukraine QI system with the EU in framework of DFTA.Weak international exposure and knowledge transfer with regard to the selected VC

building, assure taking an active role in the international accreditation work related to the processed wood value chain, build practical knowledge transfer and guarantee implementation of international best practices through possible mentoring arrangements, increased competence and number of assessors (ISO 9001 / ISO 14001 / ISO 45001 / ISO 38200).

culture of QI, and accreditation.Increase competence of their staff through training and capacity building, international exposure through participation in different international events and meetings and implementation of international best practices.

capacity building activities (technical trainings, mentoring, study tours, etc)NAAU will be a part of the project governance (PSC, PMC), Invited to all project events.

Ukraine Standardization Agency (UAS)

DB/P High High Scientific-research institute of standardization carries out scientific-methodical management of development, introduction and provision of national standardization

Need for capacity building to develop (adopt and harmonize) national standards for the wood and wood processed products following international best practices, need for

Increased competence of the staff, international exposure and implementation of international best practices.Ukraine will be able to contribute and influence the development of international standards.

Interest/need for activities, which could address/facilitate automatization processes related to new/transfer of standards, which could specifically address certain niches and product

Benefit from capacity building activities (technical trainings, mentoring, study tours, etc)UAS will be a part of the project

69


Impact


Influence





functions. international exposure and engagement in the work on international standards.

groups within the sector/value chain; facilitation of information accessibility and virtual participation in different meetings; translation of standards, preparing information materials, etc.

governance (PSC, PMC), Invited to all project events.

State Enterprise (SE) Ukrmetrteststandard

DB/P Medium Medium All-Ukrainian State Scientific and Research Centre of Standardization, Metrology, Certification and Consumer Protection.

Poor local competences and skills in the areas of testing of woodworking equipment, methods of measurement to test noise levels (of woodworking equipment), etc.Need for internationally recognized testing services in the requested areas.

Increased competence and skills of the staff through training programs and exposure to international best practices.

Development of staff competence and skills on specific areas.

Benefit from capacity building activities (technical trainings, mentoring)They will be a part of the project governance (PSC, PMC), Invited to all project events.

70


Impact


Influence





Ukrainian State Committee of Forestry (USCF)

P Medium Medium Public entity that is in charge of assuring that national forest and its resources are protected along the set regulations protecting the eco-system and environment.

Awareness on the international best practices in the field of natural resources management in wood and timber.

Knowledge and application of internationally recognized certification and standards in forestry.

Protection of natural resources, assuring eco and environmental sustainability of resources in different regions in Ukraine; increasing and maximizing efficiency of their utilisation.

Invited to project activities. Further involvement to be defined at the project inception phase.

The State Enterprise for Export Promotion (former Export Promotion Office, EPO), advisory body to the Ministry of Economic Development and Trade of Ukraine

IB/P Medium Medium Advisory body to the MEDT in terms of export promotion and support. Acts as an institution of specific expertise.

To be defined at inception phase

Enrich their capacity to provide advice and tools to private sector representatives interested in export of wood and processed wood products.

Export promotion and export growth.

Involvement in the capacity building (outcome 2) and awareness raising.

QI organizationsUkraine Association of Quality (UAQ)

IB/P Medium Medium Non-governmental association, leader of the public movement towards quality in the Ukraine. Formation of the public opinion and policy in quality.

Need for support in technical regulations harmonisation and business/quality culture,QI related

Disseminate and promote quality culture among all the actors along the VC, important outreach from producers, via suppliers to consumers.

Promotion of the national and international best practices in business management, support of Ukrainian enterprises in

Partnership in organization of the awareness seminars on quality culture.

Additional

71


Impact


Influence





constrains in all sectors, especially wood/timber and furniture, agricultural products, sustainable tourism, light industry/ textiles, machinery.

business excellence improvement and competitiveness, and in their integration into the world markets, especially Ukraine’s integration to the WTO and to the EU.

channel for dissemination of publications, guides and tools developed by the project.

Testing laboratories DB High High Provide analytical data on the quality of a product.

Need for internationally recognized testing services.as per ISO 17025:2017 – to be further defined at inception phase

Supply reliable test results, have an action plan to prepare for accreditation, coaching on method validation and uncertainty methods – to be further defined at inception phase.

Provide reliable test results and be prepared for accreditation – to be further defined at inception phase

Benefit from capacity building activities (technical trainings, mentoring, equipment purchase)Be part of the project governance (PSC, PMC), invited to all project events.

Forest Stewardship Council (FSC) in Ukraine

IB/P Medium Medium Promotion of the responsible management of the

Constraints in terms of the local certification

Promotion of the sustainability standards among the wider

Advancing globally responsible forest management.

Collaboration in the organization of the awareness

72


Impact


Influence





world’s forests by setting standards on forest products, along with certifying and labelling them as eco-friendly.

capacity. Lack of quality culture and low awareness of the Ukrainian SMEs and consumer on sustainability standards and the advantages they bring.

audience of the sectoral business associations.Promotions of quality culture.

Ensure equal access to the benefits of FSC systems.Ensure integrity, credibility and transparency of the FSC system.Create business value for products from FSC certified forests.

raising activities, preparation of guides and tools – to be further defined at inception phase

Universities and research centresNational Forestry and Wood Technology University of Ukraine (NLTUU)

P Low Medium Provide higher education in forestry. Prominent centre of forest engineering education and science in Ukraine, which actively integrates into the European education system.

Lack of European and/or international practical expertise on latest regulations and standards in the of quality infrastructure in the sector.

Direct expertise and latest information on quality challenges in the selected sector.Knowledge transfer between University and the subject matter experts brought in by the project.

Building pool of competent local experts – capacity building.Information sharing and dissemination.

Participation and contribution to the project activities.

Further involvement to be defined at inception phase

Ukrainian Research Institute of Forestry and Forest Melioration (URIF&FM)

P Low Medium The leading research institute on the issues of forestry and forest melioration in Ukraine. Acts as the





73


Impact


Influence





national coordination centre of forest monitoring.

Trade and business support organizations and unions

Ukraine Chamber of Commerce and Industry

IB/P Medium Medium Non-governmental, non-profit, self-governing organization with the goal of developing competitive Ukrainian business on the world markets.

Provide quality related expertise to businesses, including start-up, SMEs, and large corporations in the selected VC

Enriched expertise and tools, which would be shared.

Having latest information at hand, establishing direct contact to the diverse business related expertise.

Involvement into awareness raising seminars and events organized by the project.

Ukraine Investment & Trade Facilitation Centre

IB/P Medium Medium Expert platform of highly specialized professionals focusing on investment, trade, and trade-related policy matters offering both international expertise and local insight. Provide advice to government and businesses. It considers itself as a bridge between these

Lack of comprehensive information in the field of QI, especially for some export markets.

Information on the sector specific national and international technical regulations, standards to comply with. This information could be used to strengthen policy advice to SMEs, policy makers and other institutions along the value chain. This would also support in accessing high demand driven international value

To have the highest and latest level of expertise in the field, providing support to multiple stakeholders (information, training, tool kits and tailored SME advice).

Involvement in awareness raising seminars, workshops and events organized by the project.Possibility to conduct studies and needs assessments needed by the project.

74


Impact


Influence





two. chains.Union of Ukrainian Entrepreneurs (SUP)

IB Medium Low Institution, that represents and support the interest of companies, including SMEs in the furniture sector.

Need for information sharing on best practices to ensure quality and to comply with the requirements of the relevant technical and environmental standards in order to access more demanding international markets.

The project will aim to establish a quality of culture through awareness seminars and workshops.Expertise and tools for ensuring awareness of the export market requirements (for selected VC) will be also available and easily accessible.

Information on best practices to ensure quality and compliance with technical requirements to gain access to international markets and to better meet the demand.Internationally recognized conformity assessment services will be available locally for SMEs.

Contribute to and benefit from the project activities such as awareness raising seminars, capacity building trainings and workshops, mentoring. Full engagement to be further defined at the Inception Phase etc.

Producer and sector specific organizations and unionsSMEs IB Medium Medium Produce goods which

are demanded by the costumers and which meet an export market requirement, which ultimately leads to increased sales and income generation.

Need to comply with the requirements of the relevant technical and environmental standards, technical regulations and

SMEs will receive better services, advice and tools through the strengthened by the project Business Support Institutions.Through participation in the awareness activities SMEs will gain access to information on export

Income generation and business growth.Access to the internationally recognized conformity assessment services.

SMEs will participate in awareness raising activities and activities related to the creation of quality culture.

75


Impact


Influence





other market requirements to access international markets.

market requirements for the selected value chain.Internationally recognized conformity assessment services will be available locally for SMEs.

Ukrainian Association of Furniture Manufacturers (UAFM)

DB/P High Medium Institution, representing the interest of companies and research centres in the furniture sector, especially manufacturing companies.

Need to ensure quality products and to comply with the requirements of the relevant technical and environmental standards in order to access more demanding international markets.

Better and updated information and tools on technical regulations of the domestic and export markets, national and international standards, understanding of the voluntary social/environmental standards like FSC and PEFC.

Access to the technical support in the form of advice, couching or training to better assist their members to comply with the requirements of the export markets. Internationally recognized conformity assessment services will be available locally for SMEs.

Contribute to and benefit from the project activities such as awareness raising seminars, capacity building trainings and workshops, mentoring, etc.Full engagement to be further defined at the Inception Phase.

FORZA agency IB/P Medium Low Promoting the sustainable development of the Carpathian region of

To be defined at the inception phase.

The project will aim to establish a quality of culture through awareness seminars and

Supporting forest cluster development, strengthening understanding of

Contribute to and benefit from the project activities such as

76


Impact


Influence





Ukraine in the economic, environmental and social aspects of natural resource management and community development.

workshops.Expertise and tools for ensuring awareness of the export market requirements (for selected VC) will be also available and easily accessible.

environmentally friendly means of transport, and forest based ecotourism development, preparedness of local government for climate change challenges, capacity building of foresters in close to nature silviculture, forest pedagogy and environmental awareness promotion activities.

awareness raising seminars, capacity building trainings and workshops, mentoring. Full engagement to be further defined at the Inception Phase etc.

Business Support Institutions (others than the ones listed above)

DB/P High High Institutions with the interest of assuring and defending the right and opportunities of small and medium enterprises, especially in front of big corporations.

Need to improve support to their members (information, training, tool kits and advice).

Technical support in the form of advice, couching or training and tool kits to support their members and implement the changes as per requirements of the export markets.Access to the internationally recognized conformity

To be an active and demand driven player in the value chain – providing real support to their members (information, training, tool kits and tailored to SME advice).

Contribute to and benefit from the project activities (outcome 2).

77


Impact


Influence





assessment services as demanded by the market for their members.

78

Annex 3: Ukraine Country Profile Global Competiveness Index 2017-2018 edition

Source: Global Competitiveness report 2017-2018/ Ukraine profile http://reports.weforum.org/global-competitiveness-index-2017-2018/countryeconomy-profiles/#economy=UKR

79

Annex 4: Work plan/Timeline of main activities in Ukraine

Implementation (quarterly)

ComponentsY1 Y2 Y3

1 2 3 4 1 2 3 4 1 2 3 4Outcome 1.

Technical policy compliance:Technical competence and sustainability of the Ukrainian QI is enhanced.

Output 1.1 In-depth analysis of the capacity of the NQIS institutions and service providers conducted, gaps identified and action plan prepared.

1.1.1 Conduct a mapping with in-depth analysis of Ukraine NQIS (supply)

1.1.2 Conduct a survey on Needs and Demands from private sector (demand)

1.1.3 Draft a roadmap with an Action plan for strengthening NQIS

1.1.4 Mapping with in-depth analysis of the relevant market requirements for SMEs to access markets

1.1.5 Draft an operational plan roadmap/action plan based on in-depth report

Output 1.2 Technical competence of the QI (serving the selected value chain) at the institutional level strengthened.

1.2.1 Standardization & technical regulations

1.2.1.1 Facilitate development (adoption) of national standards for the wood and wood products sector following international best practices (including translation and dissemination).

1.2.1.2 Competence and skills development of local experts through trainings and workshops in the area of standardization specifically related to the processed wood sector.

1.2.1.3 Support UAS in assuming an active role on the international stage in the standardization work related to the VC

1.2.2 Metrology

1.2.2.1 Competence and skills will be developed through trainings and advisory services to allow Ukrmetrteststandart

1.2.3 Accreditation

1.2.3.1 Training and workshops for assessors in technical fields related to application of ISO 9001, ISO 14001, ISO 45001 and future ISO 38200 (Chain of custody), etc. to the processed wood sector.

1.2.3.2 Support NAAU in assuming an active role in the international accreditation work related to the processed wood value chain. E.g. participation in the IAF TC WG on Forest.

1.2.3.3 Mentoring arrangement with a European accreditation body (e.g. FINAS; Finland)

Output 1.3 Technical competence of the QI at the service providers level strengthened.

1.3.1 Ensure international recognition of selected testing facilities according to a new version of a standard ISO 17025:2017 which will include increase in the technical competence of staff, purchase equipment and services to increase the scope and reach of accredited testing services as demanded by private sector from the selected value chain.

1.3.1 Facilitate business and marketing planning at the testing laboratories by facilitated workshops, on the job couching

80

and carrying out promotional activities.1.3.1 Increase the technical competence of staff (auditors) and

purchase services to increase the scope and the reach of accredited certification services demanded by private sector from the selected value chain.

Outcome 2

SME awareness:SMEs' awareness of the need to comply with international standards and technical regulations is enhanced.

Output 2.1.

In-depth analysis/assessment of the relevant market requirements (technical regulations and standards) conducted and action plan prepared.

2.1.1 Mapping with in-depth analysis of the relevant market requirements for SMEs to access markets

2.1.2 Draft an operational plan roadmap/action plan

Output 2.2. Strengthening the quality services offered by the sectoral business associations.

2.2.1 Strengthen the capacity of the business support entities to offer demand driven quality related services, as per needs identified (e.g. training, advisory services, etc.).

2.2.2 Awareness sessions to business support entities and SMEs on relevant market requirements and other actors along the VC, to enhance their capacity to comply with standards (such as management standards and voluntary sustainability standards (VSS))

2.2.3 Development and dissemination of guidance tools for compliance with export market requirements for the VCs.

Outcome 3

Quality culture:A culture for quality is promoted.

Output 3.1. Activities to raise quality awareness developed.

3.1.1 Draft an action plan on conduction of awareness campaigns and activities in all spheres of QI related to the VC.

3.1.2 Organize awareness seminars and workshops to exchange good practices among the stakeholders from wood and wood products sector relating to quality / good management practices.

3.1.3 Develop promotional materials (incl. those produced under Component 1 of GQSP, success stories, guides, relating to the selected VC etc.) together with the dissemination strategy.

3.1.5 Engage private and public institutions in QI along the wood and processed wood VC to distribute promotion materials in accordance with the action plan.

Outcome 4

Project Management

Project Management Unit

81

Annex 5: Timeline for Inception Phase

The project envisages an Inception Phase of no longer than six (6) months to carry out the activities below:Milestones:

1. Set up of Project Management Unit (PMU) (incl. office and training of the staff on UNIDO operating procedures) and establish the National Steering Committee (NSC) and Project Management Committee (PMC);

2. Project Signing Ceremony and Registration32;3. Supply study report on selected value chain ready;4. Demand study report on selected value chain ready;5. Roadmap on awareness campaigns and related activities ready;6. Logical framework updated and confirmed;7. Inception Phase Report ready;8. Confirmation of the financial and in-kind contributions;9. First NSC Meeting and PMC Meeting held

Activity Month

1 2 3 4 5 6

Management

i. Set up the PMU (incl. office and training of staff), establish the NSC & PMC and the modus operandi (Terms of Reference, ToRs)

ii. Project Signing Ceremony, Project Registration and related preparations

Outcome 1iii. In-depth analysis of the capacity of the NQIS institutions and service providers

conducted (supply side study), gaps identified and action plan/roadmap prepared serving the selected value chain

Outcome 2iv. In-depth analysis/assessment of the relevant market requirements (technical

regulations and standards) conducted (demand side study) and action plan/roadmap prepared serving the selected value chain

Outcome 3v. Roadmap/action plan on conduction of awareness campaigns and activities in

all spheres of QI related to the selected value chain

Cross Cuttingvi. Logical framework updated and confirmed, including the establishment of a

baseline for the impact indicators

vii. Establishment of a monitoring system according to result-based management

viii. Inception Phase Report: validation of the approaches and concepts proposed in the project document taking into consideration the latest developments in the country

32 MEDT will initiate the project registration.

Milestone 2

Milestone 1

Milestone 4

Milestone 5

Milestone 3

Milestone 6

Milestone 7

82

ix. Validation of the budget, including the Government of Ukraine financial and in-kind contributions and adjustment as necessary

x. Present the action plans, results and outcomes of the inception phase for discussion at the first PMC meeting and then to the first NSC meeting for endorsement and approval.

xi. Compile an inventory of projects being conducted in the selected value chain and establish a data-base of technical expertise relevant to the project

Milestone 9

Milestone 8

83

Annex 6: MEDT organigram (in Ukrainian)

84

Annex 7: Terms of Reference of National Technical Advisor (NTA) - draft


TERMS OF REFERENCE FOR PERSONNEL UNDER INDIVIDUAL SERVICE AGREEMENT (ISA)

Title: National Technical Advisor (NTA) – full-timeMain Duty Station and Location: Kyiv, UkraineProject: Realizing export potential of the wood and processed wood

value chain in Ukraine by strengthening quality infrastructure.SAP: 180245

Start of Contract (EOD): 1 January 2019End of Contract (COB): 31 December 2019 (with possibility of renewal)

ORGANIZATIONAL CONTEXT

The United Nations Industrial Development Organization (UNIDO) is the specialized agency of the United Nations that promotes industrial development for poverty reduction, inclusive globalization and environmental sustainability. The mandate of the UNIDO is to promote and accelerate sustainable industrial development in developing countries and economies in transition. With this mandate, the Organization carries out two core functions: as a global forum, it generates and disseminates industry-related knowledge; as a technical cooperation agency, it provides technical support, policy advice and implements projects. UNIDO's vision is a world where economic development is sustainable and economic progress is equitable.

At UNIDO the Department of Trade, Investment and Innovation (TII) is responsible for helping developing countries to participate effectively in the rule-based global trading system, in which they face key constraints arising from the lack of a competitive supply capacity of tradable goods, and the need to ensure internationally recognized conformity of their goods to quality and safety requirements.

The Division of Standards and Quality Infrastructure (TII/SQI) at UNIDO is responsible for providing services to strengthen national capacities to establish the legal and institutional frameworks for standards and conformity assessment. Specifically, the Division provides policy guidance and institutional capacity-building interventions related to standards, metrology, testing, inspection, certification and accreditation, which are needed to participate effectively in the multilateral trading system. The demonstration of market compliance enables exporters to reduce the cost of compliance and facilitate access to global markets. Assistance is also provided to strengthen consumer authorities and consumer associations in developing countries.

PROJECT CONTEXT:

As part of the Global Quality and Standards Program (GQSP), the overall objective of the country project for Ukraine is to enhance the existing quality infrastructure in the country for the wood and

85

processed wood value chain, unlocking its export market potential especially for SMEs. The outcome of the project is to strengthen and support Ukraine’s capacity for trade along the wood and processed wood value chain by enhancing services offered by the quality infrastructure thereby facilitating exports into existing and new markets. This objective and outcome is to be achieved by implementation of a three-year project with the Ministry for Economic Development and Trade (MEDT) of Ukraine as the main counterpart.

The project will pursue three outcomes, thus responding to the main compliance challenges identified in the country in alignment with the outcomes of the GQSP, which are:

Outcome 1: Technical competence and sustainability of the Ukrainian NQIS is enhanced. Key quality infrastructure institutions relevant for wood and wood products will be strengthened through capacity building, use of best practices, skills development, equipment purchase and implementation of management systems to ensure quality and international recognition of their services.

Outcome 2: SMEs’ awareness of the need to comply with international standards and technical regulations is enhanced. Ukraine is striving to strengthen the wood processing sector in order to generate more jobs and to increase added-value production in the country. To address challenges and to embrace the market access opportunity the project will support mainly the business support institutions which will be identified at the inception phase (e.g. FORZA, Ukrainian Association of Furniture Manufacturers, etc) in the wood and wood products sector to improve market competitiveness, market intelligence and compliance with market requirements, standards and technical regulations to increase export potential.

Outcome 3: A culture for quality promoted. NQIS can only grow up and mature with the joint effort of the public authorities in charge and the private sector. The voluntary participation of society in that effort needs to be mobilized creating a pressure on the offer of quality services.

MAIN FUNCTIONS:

The National Technical Advisor (NTA), competent in Quality Infrastructure (QI) shall, under the overall guidance of the UNIDO Project Manager and in close cooperation with the National Counterpart(s) and National Project Assistant (NPA), provide expert technical advice on all QI related issues and support the implementation of activities. The NTA is responsible for the overall technical and policy direction of the project and is accountable for the achievement of outputs.

He/she shall provide specialist technical advice to the national implementation partners and stakeholders with regard to the implementation of the project by ensuring that all activities are technically sound, properly planned and conducted, assisting in the design and implementation of all activities required to achieve the Projects’ objectives.

The NTA should ensure efficiency and effectiveness of the financial, administrative, and technical management of the project and ensure permanent support and general follow-up of project activities, in accordance with UNIDO rules and regulations.

The NTA will also have knowledge of integrating gender-concerns and gender related tasks.

86

With the objective of assuring technically sound and smooth implementation of the Project, the NTA will be providing advisory services to the project counterpart(s). Specifically the NTA will perform the following duties:

MAIN DUTIESConcrete/measurableOutputs to be achieved

Location

1. Provide technical leadership in all Quality Infrastructure (QI) related issues falling under the project.

a) Contribute to the advancement of policies pertaining to the National Quality, national strategies and delivery mechanisms in the field of QI;

b) Provide technical assistance on all activities under various components of the project such as business planning, surveys, databases, training sessions, etc.

c) Advise on the elaboration of guidelines, methodologies, manuals and supporting documentation relevant to QI and the project outcome;

d) Provide technical guidance on the procurement of goods (conformity assessment equipment and other facilities) and services related to the project, through:

- formulation of specifications for the intended goods and services;

- formulation of appropriate procurement documents, including bids and contracts;

- evaluation of procurement documents submitted by prospective suppliers;

- assessment of compliance of delivered goods and services against specified requirements and international standards.

e) Liaise with the Ministry for Economic Development and Trade (MEDT) for all related policy issues pertaining to the National Quality Infrastructure.

f) Elaborate ToRs for national and international experts and the supervision of their missions.

g) Provide technical guidance on the procurement of goods (conformity assessment equipment and other facilities) and services related to the project, through:

o formulation of specifications for the intended goods and services;

o formulation of appropriate procurement documents, including bids and contracts;

o evaluation of procurement documents submitted by prospective suppliers;

o assessment of compliance of delivered goods and services against specified requirements and international standards.

Efficient Project ManagementKyiv, Ukraine

87

2. Ensure effective implementation and monitoring of the project focusing on quality technical and policy advise throughout the implementation phase:

a) Provide strategic advice in the revision of the operational planning and budgeting system for the project;

b) Constant monitoring and analysis of the project environment, and guidance to MEDT in undertaking timely adjustments for the project;

c) Develop and maintain harmonious relationships with government colleagues, as well as with other stakeholders involved in the project;

d) Skills transfer and capacity development of personnel from the beneficiary institutions attached to the project through on- the-job coaching, briefings and technical study sessions, etc.

e) Coordinate the monitoring and evaluation for the activities of the project using appropriate tools with output verifiable indicators;

f) Maintain close links with other QI initiatives to ensure a consistent and integrated approach;

g) Assist in the design and implementation of all activities required to achieve the Projects’ objectives;

h) Assist the National Counterparts in developing strategies for improving project delivery and incorporating cross-cutting themes.

i) Prepare reports as required by the Project and the Donor.

Effective implementationKyiv, Ukraine

3. Undertake advocacy and information, communication and knowledge management focusing on:

a) Facilitate the process of creating and raising the level of awareness on issues emerging in the field of QI;

b) Contribution to learning in the area of competence to the beneficiary institutions, and contribution to the knowledge management under the project;

c) Successes and best practices generated and communicated, with the aim of informing the national-level policy and political dialogue in the field of QI;

d) Create high-level advocacy on relevant development policies in relation to QI and across the representatives of top echelon of the country’s stakeholders;

e) Determine appropriate media for reaching out to the public and design strategies for reaching target;

f) Develop knowledge management products and communication plans;

g) Prepare monthly, semi-annual and yearly ad hoc

Efficient communication and monitoring

Kyiv, Ukraine

88

project reports.

4. Takes an active role in the coordination and preparation of governance meetings (SCs) for both projects and provides relevant documentation, this includes reporting:

a) Collect inputs, prepare and finalize progress reports as specified in the project document for monitoring purposes.

Project is well coordinated and adheres to good governance principles

Kyiv, Ukraine

5. Ad-hoc requests:

a) Any other assignments related to a timely and effective implementation of the project as requested by the Project Team of TII/SQI.

Requests attended to

Kyiv, Ukraine

REQUIRED COMPETENCIES

Core values:

1. Integrity2. Professionalism3. Respect for diversity

Core competencies:

1. Results orientation and accountability2. Planning and organizing3. Communication and trust4. Team orientation5. Client orientation6. Organizational development and innovation

Managerial competencies (as applicable):

1. Strategy and direction2. Managing people and performance3. Judgement and decision making4. Conflict resolution

MINIMUM ORGANIZATIONAL REQUIREMENTS

Education: Advanced university degree preferably in science/engineering and business administration, or any related field.

Technical and Functional Experience: A minimum of 10 years practical experience in the field of Quality Infrastructure (i.e. standards development, metrology, upgrading of testing and calibration laboratories and certification capabilities), including experience involving technical cooperation.

89

Specific experience in wood and processed wood value chains would be an asset.Proven communication and drafting skills, both written and verbal.

Proficient knowledge of quality infrastructure. Proven competence in the area of standardization, certification, accreditation and metrology; knowledge in economic aspects of TCB, technical barriers to trade and conformity infrastructure;

Analytical thinking; planning, organizing and problem solving abilities; proven ability to work under pressure and to meet tight deadlines; proven experience in overcoming deadlocks and difficulties in the implementation of complex projects and in bringing them back on track; proven ability to lead and coordinate multidisciplinary teams; demonstrated diplomatic and negotiating skills. Excellent interpersonal and communication skills. Sensitivity to cultural, socio-economic and political differences. Knowledge and experience of work with UN constituents and knowledge of UN procedures would be an asset.

Languages: Fluency in written and spoken English and Ukrainian is required. Knowledge of Russian will be an asset.

90

Annex 8: Terms of Reference of National Project Assistant (NPA) - draft


TERMS OF REFERENCE FOR PERSONNEL UNDER INDIVIDUAL SERVICE AGREEMENT (ISA)

Title: National Project Assistant (NPA) – full timeMain Duty Station and Location: Kiev, UkraineProject: Realizing export potential of the wood and processed wood

value chain in Ukraine by strengthening quality infrastructure.SAP: 180245

Start of Contract (EOD): 1 January 2019End of Contract (COB): 31 December 2019 (with possibility of renewal)

ORGANIZATIONAL CONTEXT

The United Nations Industrial Development Organization (UNIDO) is the specialized agency of the United Nations that promotes industrial development for poverty reduction, inclusive globalization and environmental sustainability. The mandate of the UNIDO is to promote and accelerate sustainable industrial development in developing countries and economies in transition. With this mandate, the Organization carries out two core functions: as a global forum, it generates and disseminates industry-related knowledge; as a technical cooperation agency, it provides technical support, policy advice and implements projects. UNIDO's vision is a world where economic development is sustainable and economic progress is equitable.

At UNIDO the Department of Trade, Investment and Innovation (TII) is responsible for helping developing countries to participate effectively in the rule-based global trading system, in which they face key constraints arising from the lack of a competitive supply capacity of tradable goods, and the need to ensure internationally recognized conformity of their goods to quality and safety requirements.

The Division of Standards and Quality Infrastructure (TII/SQI) at UNIDO is responsible for providing services to strengthen national capacities to establish the legal and institutional frameworks for standards and conformity assessment. Specifically, the Division provides policy guidance and institutional capacity-building interventions related to standards, metrology, testing, inspection, certification and accreditation, which are needed to participate effectively in the multilateral trading system. The demonstration of market compliance enables exporters to reduce the cost of compliance and facilitate access to global markets. Assistance is also provided to strengthen consumer authorities and consumer associations in developing countries.

91

PROJECT CONTEXT:As part of the Global Quality and Standards Program (GQSP), the overall objective of the country project for Ukraine is to enhance the existing quality infrastructure in the country for the wood and processed wood value chain, unlocking its export market potential especially for SMEs. The outcome of the project is to strengthen and support Ukraine’s capacity for trade along the wood and processed wood value chain by enhancing services offered by the quality infrastructure thereby facilitating exports into existing and new markets. This objective and outcome is to be achieved by implementation of a three-year project with the Ministry for Economic Development and Trade of Ukraine as the main counterpart.The project will pursue three outcomes, thus responding to the main compliance challenges identified in the country in alignment with the outcomes of the GQSP, which are:

Outcome 1: Technical competence and sustainability of the Ukrainian NQIS is enhanced. Key quality infrastructure institutions relevant for wood and wood products will be strengthened through capacity building, use of best practices, skills development, equipment purchase and implementation of management systems to ensure quality and international recognition of their services.

Outcome 2: SMEs’ awareness of the need to comply with international standards and technical regulations is enhanced. Ukraine is striving to strengthen the wood processing sector in order to generate more jobs and to increase added-value production in the country. To address challenges and to embrace the market access opportunity the project will support mainly the business support institutions which will be identified at the inception phase (e.g. FORZA, Ukrainian Association of Furniture Manufacturers, etc) in the wood and wood products sector to improve market competitiveness, market intelligence and compliance with market requirements, standards and technical regulations to increase export potential.

Outcome 3: A culture for quality promoted. NQIS can only grow up and mature with the joint effort of the public authorities in charge and the private sector. The voluntary participation of society in that effort needs to be mobilized creating a pressure on the offer of quality services.

Duties: Under the overall supervision and coordination of the Project Manager at the Division of SQI at UNIDO HQ, and of the National Technical Advisor (NTA), the National Project Assistant (NPA) provides support in the development and administration of technical cooperation programmes and projects as well as secretarial and administrative support and is responsible for the following key functions:

MAIN DUTIESConcrete/measurableOutputs to be achieved

Location

Support the preparation of work plans, fielding of experts, trainings, fellowships, sub-contracts, purchase of equipment, etc.

Support managerial and financial monitoring of the project and its activities and collect relevant information (including a possible review of indicators and budget revisions).

Facilitate requisitions/purchase orders, terms of reference, and assists in ensuring the technical evaluation of received offers according to UNIDO rules and regulations. In particular, support the monitoring of proper delivery of procured equipment and services to the country.

Assist with the organization Steering Committee meetings and other governance and non-

Efficient administration of the project management office.

Contribute to the efficient implementation of the project.

Project duties carried in line with UNIDO rules and processes.

Meetings/events are effectively executed.

Records of meetings/events are produced and properly filed.

Mission itinerary developed, efficient missions.

Kyiv, Ukraine

92

governance meetings.

Performance of relevant tasks in SAP necessary for the smooth project implementation.

Support the preparation of mid-year and year-end progress reports, including financial reports, to the donor based on relevant specifications.

Support the project manager and NTA in their day-to-day operational work and in the administrative monitoring of the programme and its activities.

Ad-hoc requests: Any other assignments related to a timely and effective implementation of the project as requested by the Project Team of TII/SQI.

Maintain all project records, filing system and regularly update them.

Handle routine administrative processes, including, but not limited to project inventory, operational advance report, fuel report, leave report, follow up of payments to vendors/experts, etc.

Provide support to incoming mission of UNIDO Officials and of international experts contracted in terms of the project

Maintain a database of the project stakeholders, including contact details of key individuals.

Prepare a final report of the activities carried out during the assignment.

The NPA will have knowledge of integrating gender-concerns and gender related tasks.

Maintaining effective communication with project stakeholders.

Maintaining of good working relationship with stakeholders.

REQUIRED COMPETENCIES

Core values:1. Integrity2. Professionalism3. Respect for diversity

Core competencies:1. Results orientation and accountability2. Planning and organizing3. Communication and trust4. Team orientation5. Client orientation6. Organizational development and innovation

MINIMUM ORGANIZATIONAL REQUIREMENTS

Education: - Completed Secondary School Education.- Diploma in Business Administration is an asset.

93

Technical and Functional Experience: - A minimum of 3 years of experience in a position providing support to managerial/professional

staff requiring administrative and computerized abilities and preferably in an international environment.

- UN/NGO technical cooperation project implementation experience would be an asset.

Languages: Fluency in written and spoken English and Ukrainian is required. Knowledge of Russian will be an asset.

94