Poroshenko completes Ukraine-EU Association Agreement

Ukrainian President Petro Poroshenko signed on June 27 the Deep and Comprehensive Free Trade Area in a Brussels ceremony, completing the Ukraine-EU Association Agreement. In late March, Prime Minister Arseniy Yatsenyuk signed the agreement’s political portion. Poroshenko called the signing the most important event since Ukraine gained independence in 1991 and “a moment of both historical and future importance,” he said. “It shows how dramatically things can change in a short time.” By signing the agreement, the Ukrainian government has taken an enormous commitment in terms of reforms, Poroshenko said. “But it is also a document of joint responsibility,” he said. “So in the spirit of political association, we also expect that the EU will do everything to support our sovereign choice and protect Ukraine’s independence and territorial integrity.” The governments of Georgia and Moldova also signed EU Association Agreements at the same signing ceremony.

The EU Association Agreements directly interfere with Russian interests and forces the government to reconsider the prospects of cooperation with them, said after the signing Sergei Glazev, an advisor to Russian President Vladimir Putin, as reported by the UNIAN news agency. “In the framework of the association agreements, Ukraine, Moldova and Georgia delegated a part of their sovereignty to the European Commission,” he said. “That means that they can’t become members of the Customs Union and Single Economic Space. That’s a substantial loss for us.” He estimated a 25 percent drop in trade turnover, while the agreement threatens the CIS free trade zone and cooperation in high-tech spheres.

Glazev proposed in a June 30 statement that the Ukrainian government adopt of a federal structure in order to enable its southeastern regions to avoid the EU Association Agreement, as reported by the UNIAN news agency. The EU should allow a part of Ukraine the legal ability to join the Customs Union instead, Glazev said, citing the example of Greenland, which is an autonomous part of EU member Denmark, but doesn’t belong to the EU.

Zenon Zawada: Indeed the president is correct in stating the completion of the Ukraine-EU Association Agreement is the most important event since Ukrainian independence. Its political portion will have a bigger effect on Ukraine than its free trade portion. Indeed only a handful of Ukrainian companies stand to benefit from the free trade area in the short-term. It will be mainly the farming sector that will have the EU market open for grains. Yet even before the deal, this sector had no trouble with exports. New markets will open for cheese producers, which have yet to start supplying their products to the EU. They are already suffering from trade restrictions imposed by Russia.

Ukraine’s metal and mining companies will gain little, if anything, from the agreement as they have already established trade relations with the EU. The agreement itself offers only general provisions for trade in this sector. Nevertheless, we expect its signing will prompt a metals trade war with Russia.

Economically, the free trade area has more importance in the mid to long term as it will enable Ukrainian producers to adopt modern EU safety, commercial and technological standards.

Politically, the Ukrainian government gains a road map to establish and ensure state institutions that operate based on rule of law and checks and balances. This road map will also help Ukraine establish state bodies that ensure the individual and human rights of Ukrainian citizens. Regulations in the judicial and financial sectors will make it safer for foreign companies to invest in Ukraine, which is what the country desperately needs.