News Analysis: Trade tensions with Russia may help Ukraine seal partnership with EU
News Analysis: Trade tensions with Russia may help Ukraine seal partnership with EU

News Analysis: Trade tensions with Russia may help Ukraine seal partnership with EU

10:02, 02 September 2013
4 min. 2470

With more than two months left before the scheduled signing of key political and economic agreements between Ukraine and the European Union (EU)...

With more than two months left before the scheduled signing of key political and economic agreements between Ukraine and the European Union (EU), the Association Agreement and the Free Trade Agreement are already talked about here as almost a fait accompli, according to Xinhua.

Ukraine has come a long way to rapprochement with Europe and now it has moved closer to satisfy its pro-western aspirations.

Currently not only political declarations, but also reactions from other states have suggested that a close partnership between Europe and Ukraine is a realistic objective.


Russia, which has long been seeking chances to pull Ukraine back into its orbit after the collapse of the Soviet Union, has repeatedly expressed its concerns about Kiev's plan to be closer with the EU.

The ties between the two ex-Soviet neighbors have been soured since March last year, when Ukraine initiated a partnership agreement and a roadmap to create a free trade area with the 28-member block.

Ukrainian experts admitted that after Russian President Vladimir Putin failed to convince his Ukrainian counterpart Viktor Yanukovych to change Kiev's geopolitical course during his visit to Ukraine late July, Russia has taken a tougher stance against its neighbor.

Shortly after Putin's visit, Moscow has banned imports from major Ukrainian candy maker Roshen, saying the carcinogen benzopyrene was found in analyzed product samples.

On Aug. 14, Russia stopped nearly 1,000 Ukrainian cargo cars at the border for laborious checks, saying those actions were "preventative measures" in preparation for changes in customs procedures if Kiev signs the pact with the EU at a summit in Vilnius.

Local experts attributed the move to both political and economic factors.

Some experts said that Kremlin wants to protect its market, because after the free trade deal between Kiev and Brussels comes into force, a large amount of European goods will appear on the Ukrainian market.

Those products will probably be re-exported to the Customs Union (CU) countries of Russia, Belarus and Kazakhstan free of import duties, they said.

By taking tougher measures at the checkpoints, Moscow is preparing to enhance inspection of goods from Ukraine, said the experts.

Other local experts see Russia's actions as a tactic to press Kiev to abandon plans for closer EU integration and instead join the Russian-led CU.

However, all analysts agree that widening trade disputes between the two post-Soviet states may translate into an advantage for Ukraine to speed up its efforts to secure an association pact with the EU.


During the extraordinary meeting of the European Parliament (EP) Committee on Foreign Affairs on Aug. 28, the EP members broadly voiced their support for signing the EU-Ukraine association agreement in the near future.

In interviews with Ukrainian media, Pavel Koval, chairman of the European Parliament delegation for relations with Ukraine, said that the pact should be signed not in Vilnius in mid-November, but the next week in Kiev or Brussels.

However, Ukraine's relations with the EU are still not cordial enough. The bloc has not confirmed whether it will sign the agreement. Many EU member states are concerned about the slow pace of economic, legal and political reforms in Ukraine.

The conviction of Ukraine's former Prime Minister Yulia Tymoshenko is also a key stumbling-block for Ukraine to forge a closer partnership with the EU.

During his recent speech in parliament, EU enlargement commissioner Stefan Fuele emphasized that the union will not deliver an agreement to Ukraine on a silver platter, but will ask Kiev to meet all the specific criteria laid down by the 28-member bloc.

At the same time, the Ukrainian authorities promised within the next two months to remove all barriers for signing the document.

Ukrainian President Viktor Yanukovych said his country has all the instruments to fulfill all preconditions for sealing the pact.

The country's parliament speaker Volodymyr Rybak pledged that Kiev, before the summit in Vilnius, will work out new bills that are aimed at reforming the prosecutor's office, the judicial system and the electoral law.


Even if Ukraine fulfills all the preconditions for the partnership with Europe and the deals are signed, the post-Soviet country may face new challenges.

Entering a trade union with the EU will eliminate trade duties on around 90 percent of the goods traded between the two parties. It will give Ukraine opportunities to increase its exports.

According to the Ukrainian Economic Development and Trade Ministry, the potential trade surplus could reach 624 million U.S. dollars annually. The pact with the EU would also provide a powerful spur for foreign investment into the East European country.

The agreement will open Ukrainian market for affordable and high-quality goods from the European Union. It's no secret that many Ukrainian producers, unable to withstand the competition, will be forced out of the market.

In addition, Russia may adopt a series of protective measures to defend its markets should Kiev sign the document.

Moscow on Tuesday told Kiev that it would lose its "strategic partner" status if it signs the association agreement with the EU.

Ukrainian authorities are aware of the risks after Ukraine signs the agreement, and Kiev is trying to seek a compromise with Russia now.

While saying that political association and free trade with the EU is a "reality" that Russia should accept, Ukrainian Prime Minister Mykola Azarov said whatever the circumstances may be, his country wants to increase trade with Russia, its biggest single trading partner, in the future.

President Yanukovych has also expressed his readiness to further continue close cooperation with the CU and the Eurasian Economic Union, and to even join partial agreements existing within these blocs.

The top priority for the Ukrainian government is to find an acceptable approach for cooperation with both the EU and the Russia-led blocs before Moscow or Brussels takes the opportunity to decide Ukraine's future.


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