The target is free trade with the EU
In early November, Yalta will host the Ukraine-EU summit, where it is planned to sign, among other things, protocols on mutual access to goods and services markets as part of Ukraine’s efforts to join the WTO. Preparations are already underway for this high-profile forum that could shape the future of the Ukrainian economy. Under President Leonid Kuchma’s instructions, the Cabinet is to draw up by August 15 a joint Ukraine-European Union action plan to establish a Ukraine-EU free trade zone. Among the proposed measures is a schedule to bring Ukrainian law into line with that of Europe. The Ministry of Foreign Affairs was told to step up its efforts in EU member states, the European Parliament, European Commission, and the EU Council’s General Secretariat to explain the top objectives of Ukraine’s European integration, including a free trade zone and the European agreement, and round up support for these projects.
Will all this be easy? The point is that the idea of a single economic space of Russia, Ukraine, Belarus, and Kazakhstan is to be complemented with more active efforts on the front of European integration. The Europeans have always been surprised at Ukraine’s somewhat ambiguous aspirations for integration. Three weeks ago, Ukrainian Prime Minister Viktor Yanukovych maintained there were all the necessary conditions for establishing a single economic space within the CIS framework. “It is an objective economic imperative that a CIS common market be formed,” he said. Moreover, the Ukrainian head of government pointed out that there was “quite a sufficient number of normative instruments and member states, as well as the political will of these states” to form a common CIS market. As the Ukrainian premier said, the September CIS summit in Yalta can positively sum up the decade-long process of economic integration. In his opinion, the formation of a full-scale free trade zone should be a top priority for deepening cooperation. Mr. Yanukovych also announced that Kyiv would host a regular meeting of the four countries’ top-level commission the next week.
It is on the eve of this event that Ukraine again showed its pro- European sentiments, evincing interest in free trade with the EU. It is not ruled out that this step may have been taken to prod three other countries that reportedly strive to form a single space (in which free trade is the real yardstick) into finally making some decisions. It is thus too early to predict the reaction of Europeans who can thus be included without their consent in the Russia-Ukraine-Belarus-Kazakhstan free trade zone.
Meanwhile, all the countries considered as prospective EU members have already signed free trade agreements with the Union. A similar deal was made last fall with... Chile. In addition, the EU is also doing (and will likely soon finish) this kind of work as part of the so-called Euro- Mediterranean Partnership (the Barcelona Process). Each of these agreements is self-sufficient: it does not repeat the previous one and takes into account the economic specifics of a given country. For example, these treaties only mention trade in goods with respect to EU candidate members. Moreover, the agreements appear asymmetrical: the EU immediately opens its market, while its partners do this gradually, except in the case of the most sensitive items. On the other hand, Turkey has signed a customs union with the EU, a higher form of integration than free trade. Yet, even here there is an exception: farm produce and metal (with active discussion now being held now to expand the freedom of the latter).
Sources close to the Ukrainian Foreign Ministry told The Day that Ukraine would also like to impart asymmetrical features in the first stage of its free trade with the EU. The extent to which this process will be adequate will depend in many respects on the negotiating skill of Ukraine’s Ministry of the Economy, diplomats believe: the transition period may be three years for some goods and as many as seven for others.
Ukraine will also have to adjust its economic law to the EU in order to bring the nation’s economic environment closer to the European one in such fields as government (budget) aid, the competitive environment, standardization, and certification of products. Experts believe that otherwise Ukraine will not reap the benefit it desires from free trade with the EU.
The draft European Agreement (also known as associate agreement), also high on the list of the President’s instructions, no longer contains recommendations, in contrast to the partnership and cooperation agreement now in force. Its provisions are binding on both sides. The agreement calls for an entirely different format and scope of technical aid, which meets the status of an EU candidate member, and new (for Ukraine) mechanisms that bring investment into focus. The EU considers the countries that have signed this kind of agreement as its prospective members. Therefore, the October EU summit presided over by Italy’s eccentric Prime Minister Silvio Berlusconi, a friend of Ukraine, could become an important milestone on our road to the EU. The only question is whether Ukraine itself is prepared for this, whether it will manage to overcome its proverbial ambiguity in respect to the European and Eurasian economic spaces, and adequately protect the interests of its businessmen far from always capable of competing with their European partners on an equal basis.
