Customs Union incompatible with EU integration, EU source says

The Ukrainian government’s declared intentions to further integrate with the Customs Union, even on a partial basis, is incompatible with the Ukraine-EU Association Agreement planned for signing in 2013, Interfax reported on Dec. 25, citing an anonymous source in the European Commission. The Ukrainian government can’t conform its trade rules simultaneously to two sets of incompatible legislation, the source said. Joining the Customs Union won’t allow Ukraine to conduct and implement any independent bilateral trade policies, having surrendered its sovereignty to the Customs Union in the sphere of tariffs and other key trade issues, the source said. Even partial membership would pose problems for Ukraine setting tariffs and other trade policies, affecting the privileged trade relations created by the Deep and Comprehensive Free Trade Area agreement that was initialized this year.

Zenon Zawada: This report merely echoes the widely held view in Kyiv that there’s little long-term thinking involved in the administration of Ukrainian President Viktor Yanukovych in pursuing the Customs Union, even on a partial basis. Logically, the long-term economic benefits of Euro-integration should outweigh any short-term gains from securing cheaper natural gas from Russia. The president could also be looking for potential gains in popularity among Ukraine’s pro-Russian electorate by pursuing integration projects with Russia. Yet such gains would be far greater if he pursued legitimate economic development policies, such as rooting out corruption, relaxing taxation and trimming down Ukraine’s notorious bureaucracy. Meanwhile, the postponed visit of Yanukovych to Moscow, which was scheduled for last week, indicates that Ukraine’s establishment hasn’t decided on where to move.