The Association Agreement will replace a Partnership and Cooperation which has been in force since 1998. The agreement covers four primary areas of activity: political dialogue and foreign and security policy; justice, freedom and security issues; economic and sectoral cooperation and the establishment of a deep and comprehensive Free Trade Area.

Since the start of negotiations in 2007, nine negotiating rounds have been conducted. Provisional agreement has been reached on all the first two areas and on the majority of issues concerning economic and sectoral cooperation. Talks on a Free Trade Area will continue into 2009 as negotiations only began once a decision had been taken for Ukraine to join the World Trade Organisation.

The EU is Ukraine's largest trading partner. EU-Ukraine trade reached over €34 billion in 2007, and has been growing by two-digit rates steadily in the recent years. It is also by far the largest foreign investor in Ukraine. According to Ukraine’s State Statistics Committee, in 2007 the total stock of FDI into Ukraine was USD 29.5 billion or USD 636.5 per capita. This was a 36.5% increase from January 2007. Most FDI went into the financial sector, followed by domestic trade, real estate, metallurgical sector, food, beverages and tobacco production, construction and machine building. For the EU Ukraine is its 16th largest trading partner and 13th largest export market.

The EU is the largest donor to Ukraine. Assistance provided by the European Community alone has amounted to approximately € 2.8 billion since 1991, and national assistance budgets (ENPI) to Ukraine have tripled over the last years (€40 million in 2002 to €138.6 million in 2008, Governance Facility allocation included). This includes assistance under the Tacis Programme (including its national, regional, cross-border-cooperation and nuclear safety components) as well as macro-financial assistance and support under thematic budget lines such as the European Initiative for Democracy and Human Rights (EIDHR), Migration and Asylum, Environment. The EC is also providing an annual contribution to the Science and Technology Centre of Ukraine (STCU) dedicated to the non-proliferation of technologies and expertise related to weapons of mass destruction. For full details please refer to the attached overview table.

In the area of nuclear safety, the EC has provided extensive support since the early nineties to Energoatom, the operator of nuclear power plants in Ukraine, to upgrade its plants’ operation to internationally recognized safety standards. In addition, the EC is the largest contributor to projects to recover the Chernobyl site, either through direct funding or through funds managed by the EBRD.

The financial envelope of the ENPI Indicative Programme 2007-2010 amounts to € 494.5 million, starting with an allocation of € 120 million in 2007. To top up this allocation, the Annual Action Programme 2007, has been increased by a € 22 million allocation from the Governance facility. This amount has been to the Energy component of the Action Programme. The allocation for 2008 is 122 million, topped up by 16.6 million from the Governance Facility.