As neighbors join EU, Ukraine discusses free trade with Moscow (12/15/02)

As neighbors join EU, Ukraine discusses free trade with Moscow

by Conor Humphries
Special to The Ukrainian Weekly

KYIV - As Ukraine's neighbors Hungary, Poland and Slovakia held final negotiations ahead of formal invitations to join Europe's dominant economic bloc, the European Union, Ukraine's prime minister was in Moscow on December 9 discussing the possibility of a free trade agreement with Russia.

After a meeting in the Russian capital, the Russian and Ukrainian prime ministers, Mikhail Kasianov and Viktor Yanukovych, stated that the two countries should work out an agreement on a free trade zone in time for a February meeting of an inter-governmental commission on economic cooperation.

Back in Kyiv, European Integration Minister Oleksander Chalyi was quick to play down the implications of the moves toward joining the Russian-led Eurasian Economic Union - seen by many as incompatible with Ukraine's stated aim of following its neighbors into the European Union and its free trade area.

"We are proceeding exclusively on the basis that the form of collaboration would be that of observer or of another form that would not negate our strategic course towards European integration," Mr. Chalyi told the Ukrainski Novyny news service.

European officials have clearly stated that Ukraine's membership in the Eurasian Economic Union - a body that encompasses Kazakstan, Belarus, Kyrgyzstan and Tajikistan, as well as its dominant member, Russia - would not help its European integration aspirations since the free trade agreement would be incompatible with Ukrainian membership in the European free trade area, the cornerstone of the EU.

The existing free trade agreement between Ukraine and Russia, which was signed in 1994, makes provisions for excluding several important goods from preferential taxation, but Russian-Ukrainian trade relations have been strained for several years. Recently the Russian government has raised the customs duties on confectionery products and restricted the exports of Ukrainian pipes, among other goods.

Meanwhile, as final negotiations continued in Brussels on the terms of the expansion that will bring the EU to Ukraine's borders in 2004, European Commission President Romano Prodi proposed that the European Union should offer its neighbors access to its markets and other incentives, rather than full membership.

Membership in the union, which will be officially offered to three of Ukraine's neighbors at a summit ending on December 12, will force Poland to join Slovakia and Hungary in introducing visa regimes by the end of 2003, stifling small-scale cross-border trade.

Membership in the union will also mean that European trade decisions - such as the EU's recent introduction of an unfavorable trade quota on Ukrainian grain and anti-dumping measures against Ukrainian pipes - would apply to Ukraine, too. This would leave Ukraine with a huge disadvantage as powers such as the United States, the European Union and Russia pursue the interests of their voters on the world scale.

In a speech Mr. Prodi spelled out his vision for the European Union's neighbors, with possible access to Europe's internal markets rather than full membership being offered in the foreseeable future.

Mr. Prodi had recently compared Ukraine's chances of joining the European Union with those of Morocco in an interview with the Dutch newspaper de Volkskrant.

He described a "ring of friends" surrounding the union and its closest European neighbors, which could be offered improved direct investment and limited or even unlimited access to the internal free trade market in exchange for reforms promoting stability and security.

"The goal of accession is certainly the most powerful stimulus for reform we can think of. But why should a less ambitious goal not have some effect?" he suggested during his speech.

He stepped back, however, from his earlier rebuff, stating that the door to membership would remain open to countries such as Ukraine in the long term.

"We have to be prepared to offer more than partnership and less than membership without precluding the latter," he noted.

| Home Page |