{"id":111801,"date":"2017-03-07T11:13:13","date_gmt":"2017-03-07T11:13:13","guid":{"rendered":"http:\/\/ucmc.org.ua\/?p=1061"},"modified":"2017-03-07T11:31:22","modified_gmt":"2017-03-07T09:31:22","slug":"no-economic-bright-spot-tensions-eu-ukraine-russia","status":"publish","type":"post","link":"https:\/\/uacrisis.org\/en\/no-economic-bright-spot-tensions-eu-ukraine-russia","title":{"rendered":"No Economic Bright Spot in Tensions Between the EU, Ukraine and Russia"},"content":{"rendered":"

17 December 2015<\/p>\n

Author<\/strong><\/p>\n

Kataryna Wolczuk<\/a><\/p>\n

Associate Fellow, Russia and Eurasia Programme<\/p>\n

Author<\/strong><\/p>\n

Rilka Dragneva-LewersReader in Law, Development and Regional Integration, University of Birmingham<\/p>\n

Russia\u2019s suspension of its free trade agreement with Ukraine will further reduce its dependency on Russia but leave the EU\u2019s response to Moscow\u2019s geopolitical manoeuvrings in limbo.<\/em><\/p>\n

\"An
An employee walks through the scrap metal area at the Zaporizhstal steel plant in Ukraine on 14 October 2013. Photo via Getty Images.<\/figcaption><\/figure>\n

Yesterday, President Vladimir Putin ordered the abolition of Russia\u2019s free trade regime with Ukraine. He had been threatening to do so since 2011 as a response to the harm Russia claimed it would suffer from the implementation of Deep and Comprehensive Free Trade Agreement (DCFTA) between Ukraine and the EU. To avert this scenario, last year the EU and Ukraine agreed to suspend the DCFTA until December 2015 and initiate trilateral negotiations.<\/p>\n

In essence, Russia\u2019s objections to Ukraine\u2019s DCFTA are political rather than economic. The allegations of economic harm resulting from the DCFTA remain\u00a0poorly justified<\/a>\u00a0and spurious. Trade problems lend themselves to resolution through, for example, the application of the WTO\u2019s rules of origin requirements. Yet Russia showed no interest in applying such rules and now seems to be terminating Ukraine\u2019s participation in the the 2011 Commonwealth of Independent States (CIS) FTA in retaliation \u00a0for Ukraine\u2019s pursuit of an FTA with the EU.<\/p>\n

No solutions<\/strong><\/p>\n

Russia is essentially objecting to the EU\u2019s integration offer to the small group of willing post-Soviet countries (Ukraine, Georgia and Moldova) which it perceives as encroaching on its rightful territory. Russia\u2019s argument that Ukraine\u2019s CIS undertakings are violated by the Association Agreement is weak. Indeed, the DCFTA was specifically crafted to allow Ukraine to participate in multiple FTAs.<\/p>\n

The political rather than economic basis for Russia\u2019s concerns was exposed during negotiations, when far-reaching demands for a\u00a0radical revision of the DCFTA were tabled. Involving Russia in discussions on the EU-Ukraine bilateral agreement proved a serious miscalculation as it provided Russia with a platform from which to block progress. In the latest round of negotiations this month Ukrainian foreign minister, Pavlo Klimkin,\u00a0called<\/a>\u00a0the Russian proposals \u2018absurd\u2019. In turn, Alexei Ulyukayev, Russia\u2019s economy minister, continues to insist that the DCFTA was \u2018absolutely unacceptable\u2019 to Russia.The DCFTA will come into effect on 1 January 2016, the date on which Russia will raise tariffs for Ukraine\u2019s exports.<\/p>\n

Against this background, it is puzzling that some officials in the EU and Germany insist that the Kremlin\u2019s \u2018legitimate\u2019 concerns need to be taken on board. The German Ministry of Foreign Affairs, for example, has suggested revising food safety standards in the DCFTA to satisfy Russia, which wants Ukraine to retain what in part are outdated, lower standards. It is unlikely that flexibility on food safety standards will pacify Russia. From Moscow\u2019s view, trade arrangements are not a regulatory but geopolitical issue.<\/p>\n

The recent\u00a0proposal<\/a>\u00a0to engage in a dialogue with the Eurasian Economic Union, suggested by President of the European Commission Jean-Claude Juncker, comes as a misguided attempt to find another technical solution to what is essentially a problem of different values with Russia \u2013 crystalized in its objection to the right of the post-Soviet countries to pursue economic integration with the EU. The EU has yet to devise a comprehensive response to the normative challenge posed by Russia<\/p>\n

Implications for Ukraine<\/strong><\/p>\n

While the negotiations continued, trade volumes between Russia and Ukraine plummeted as a result of sanctions and embargoes. Ukraine\u2019s exports to Russia have more than halved since 2012. In response, Ukraine is diversifying trade flows even though the process is slow, painful and costly, particularly alongside the general economic decline and war with Russian-backed separatists in the east. Some sectors, such as the machine building industry (with its high exposure to the Russian market), have been hit particularly hard whereas others, such as food production, are adapting faster, especially with increased exports to China. In the last year, Ukraine\u2019s trade and energy dependency on Russia has declined dramatically, thereby reducing Russian leverage over Ukraine.<\/p>\n

The negotiations have failed to deliver a solution because Russia\u2019s objections are not about technical issues. Indeed the attempt by the EU to engage in such negotiations with Russia and the belief in the EU that technical solutions could overcome geopolitical contestation looks ever more misplaced.<\/p>\n

See more at: https:\/\/www.chathamhouse.org\/expert\/comment\/no-economic-bright-spot-tensions-between-eu-ukraine-and-russia#sthash.QQ3P3sJk.dpuf<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

17 December 2015 Author Kataryna Wolczuk Associate Fellow, Russia and Eurasia Programme Author Rilka Dragneva-LewersReader in Law, Development and Regional Integration, University of Birmingham Russia\u2019s suspension of its free trade agreement with Ukraine will further reduce its dependency on Russia but leave the EU\u2019s response to Moscow\u2019s geopolitical manoeuvrings in limbo. Yesterday, President Vladimir Putin […] More<\/a><\/p>\n","protected":false},"author":20,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[765,699],"tags":[],"section":[743],"form":[801],"yoast_head":"\nNo Economic Bright Spot in Tensions Between the EU, Ukraine and Russia | UACRISIS.ORG<\/title>\n<meta name=\"description\" content=\"17 December 2015 Author Kataryna Wolczuk Associate Fellow, Russia and Eurasia Programme Author Rilka Dragneva-LewersReader in Law, Development and | Uacrisis.org\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/uacrisis.org\/en\/no-economic-bright-spot-tensions-eu-ukraine-russia\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"No Economic Bright Spot in 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