EU-Ukraine Association Accord Ignites Russian Trade War on Kyiv

Written by | Friday, August 30th, 2013

After Russia failed to convince Ukraine not to sign a free trade deal and a broader association agreement with the European Union, it addressed a warning to Kyiv through what some observers are calling a trade war.
Actually, after all its pressures proved ineffective, Russia started to impose trade restrictions on Ukraine, tightening customs control, imposing checks on the quality of its goods and blocking imports of some products for alleged quality and safety concerns.
The measures, widely deemed as politically motivated, were criticized by the EU which made it clear that any outside pressure on Ukraine related to the projected Association Agreement is unacceptable.
Russia is opposed to the Agreement and rather wants Ukraine to become member of the Russian-sponsored Customs Union, which already musters Belarus and Kazakhstan. Brussels on its part deems adhering to the Customs Union and being tied to the EU with an association accord are incompatible.
Russia argues that the Agreement with the EU will be detrimental to Ukraine’s trade balance and to its foreign economic financial commitments, while membership to the Customs Union will enable it to get Russian loans and give Ukrainian goods access to its market.
According to a document reportedly drafted by the Kremlin and published on a Ukrainian website, “the eventual membership of Ukraine to the Customs Union would bring additional trade exchange to the volume of $9 billion, while the proposed EU-Ukraine free-trade agreement would worsen Kyiv’s trade balance by $1.5 billion.”
The document details Russia’s strategy to bring Ukraine back into its orbit and prevent it from signing the EU Accord, including backing a pro-Russian candidate to the Ukrainian presidential elections of 2015, neutralizing pro-European forces in Ukraine by supporting opinion makers who are favorable to Russia, and sanctioning pro-European Ukrainian oligarchs and civil servants, especially in the ministry of foreign affairs and the ministry of defense, who are considered by Russia as “agents for Euro-Atlantic influence.”
Despite Moscow’s threats, Ukrainian Prime Minister Mykola Azarov still hopes that there would be no trade war between his country and Russia and pledges to make every effort to resolve existing disputes.
The planned EU-Ukraine accord was discussed on Wednesday by an extraordinary meeting of the European Parliament Committee on Foreign Affairs.
MEPs who participated in the debate voiced backing to the association agreement and harshly criticized the Russian restrictions describing them as “an act of intimidation” to discourage Ukraine from concluding the accord. They underlined that these measures were contrary to the World Trade Organization rules and constitute an attack on Ukrainians.
Ukrainian opposition parties have expressed full support for the Agreement, which they described as the best tool to respond to the geopolitical challenge posed by Russia. They underlined that Ukraine’s future lays with Europe and vowed to press their government to take the necessary steps towards signing the agreement.
The EU-Ukraine Association agreement which also provides for a “Deep and Comprehensive Free Trade Agreement” (DCFTA), could be signed next November during the Eastern Partnership summit due to gather in Vilnius leaders of the EU and its eastern neighbors.
Would Russia accept the deal then or would it find it a really bitter pill to swallow? The game has not ended yet.

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