Between Zone and Union

Ukrainian government, which was practicing “multidirectional international policy” for many years, for the first time faced the necessity to make a final choice: whether to sign the EU-Ukraine Free Trade Area Agreement (FTA) or to join the Customs Union of Russia, Belarus and Kazakhstan (CU)

The representatives of the official powers of Russia and the EU are claiming the same. For example, the European Commission chairman Jose Manuel Barroso stated that he considered Ukraine to be the part of the European nation’s family, without forgetting to mention the benefits of easier access to the EU market, with the capacity of 500 million potential consumers of Ukrainian goods, which could be lost in case of Ukraine’s joining the Customs Union, the same as the hopes for the mass attraction of foreign investments. In his turn, the President of RF Dmitriy Medvedev states about the raise of the custom duties’ rates and of increase of competition between Russian and Ukrainian economies, saying that by opening of the Ukrainian market for the EU goods, Ukraine subsequently would feel the uncompetitiveness of its commodity producers and would try to enter the CIS countries’ markets. We are already the competitors in the agriculture and metallurgy, but where there used to be cooperation (air-, shipbuilding, MIC), Russia will set up the parallel production and in the long run there will be even tougher competition.

Attempts to find the compromise formula ‘3+1’ i.e. without joining the CU, through the conclusion of the separate sectoral agreements, or separate free trade areas failed. However, it seems that the choice is already made and flirting with the CU only accelerated the negotiation process with Europe. Tired of ultimatums, Ukrainian authorities have strongly stated that the policy of European integration remained unchanged, and with its neighbors the country would communicate according to the WTO’s principles. Ukraine and the EU have settled the issues of the export of Ukrainian agricultural products, production of certain goods of protected titles (with the exception of 7 titles of alcohol), import of used cars. Until the end of the year the FTA agreement may be signed, it is confidently claimed by both sides.

At the same time on the 19th May in Minsk the updated agreement on free trade with the CIS countries (including the members of CU) prepared to replace the outdated treaty of 1994, failed to be signed. Project developed in accordance with the rules and regulations of WTO is expected to be signed in October.