Vice minister says EU's enlargement will cost Ukraine millions in lost trade (10/19/03)

Vice minister says EU's enlargement will cost Ukraine millions in lost trade

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Ukraine's chief expert on European Union enlargement said on October 14 that the country could lose up to half a billion dollars in trade revenues - or 10 percent of its overall trade turnover - in 2004-2005 after 10 additional countries are accepted into the EU next year.

Oleksander Chalyi, first vice minister of foreign affairs for European Union relations, told foreign correspondents that much of the loss would come as a result of European standards and certifications that Ukraine would not be able to meet. Thus, Ukraine could not continue to sell its products in Poland and the other nine neighboring countries scheduled to enter the EU beginning in May 2004. Ukraine had developed strong economic ties with most of the 10 countries, including neighbors Slovakia and Romania, with Poland being one of its top trade partners.

Mr. Chalyi said Kyiv would like to see some sort of compensation effort to take various forms in order to help overcome "enlargement shock."

"Today we sell 800,000 tons of metal products [to the 10 countries]. We will lose that market completely," explained Mr. Chalyi, who placed that loss alone at 260 million euros (about $350 million).

Mr. Chalyi said that Ukraine would lose an additional 10 million euros in agricultural exports, as well as 50 million euros to 60 million euros in restrictions on exports that the European Union has placed on Ukraine because it doesn't meet many of Europe's extensive anti-dumping regulations. He also noted the loss of the free trade zone with the Baltic countries, which he identified as worth an additional 70 million euros.

Mr. Chalyi said the EU-Ukraine treaty on friendship and cooperation provided for compensation on the consequences of EU enlargement in the first year and that Kyiv would seek relief on that basis.

He expected that the EU would agree to the relaxation of a limited number of tariffs, but more importantly would offer aid in the form of simplified visa regimes for certain segments of Ukraine's population, training and roundtables for small and medium businesses, student exchange programs and support in helping Ukraine meet EU certification standards.

He explained that he would like to see simplified visa regimes for students, businesspeople and professionals in the cultural fields. He added that businessmen - especially those whose customers and markets were located in the 10 countries entering the EU next year - need to receive training on how to trade in the EU, as well as assurances that they would not be excluded from European markets.

"If we do not achieve this, we will not, as a practical matter, be able to begin Euro-integration," Mr. Chalyi noted.

Mr. Chalyi said that the EU and Ukraine must soon begin negotiations on access to Europe's agricultural sector, as well, which he called "among the most discriminatory in the world."

The Ukrainian diplomat noted, however, that Ukraine must also begin an intensive lobbying campaign in the European Union to have Ukrainian products accepted there.

"We need a lobbying effort as never before for our goods. We need to express our interest and desire to become part of that market. We will need to fight professionally to find our place in it," said Mr. Chalyi.

The Ukrainian diplomat called for dialogue and negotiations on specific products and markets. He said it was time to move to a new, more mature stage in relations with the EU, which he called "a transition from Euro-romanticism to Euro-pragmatism."

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