Brussels, 15/09/2014 (Agence Europe) - On Friday 12 September, European Commissioner for Trade Karel De Gucht, Russia's Minister for Economic Development Alexei Ulyukayev and Ukraine's Foreign Affairs Minister Pavlo Klimkin agreed in Brussels to postpone the provisional implementation of the free trade agreement between the EU and Ukraine until 31 December 2015.
In the meantime, Ukraine will continue to enjoy the trade preferences granted it by the EU since the end of April - preferences which were due to expire in October. The three parties will have 15 months to continue their consultations on how to respond to the concerns raised by Russia - which, according to French daily newspaper Le Monde, has reportedly asked for over 2,400 amendments to the draft agreement.
Russia fears the arrival on its market - via Ukraine - of products manufactured in the EU, to the detriment of Russia's national production. Furthermore, Russia does not believe that Ukraine can benefit from preferential trade conditions both with Russia and with the EU.
The “process” agreed on Friday “needs to be part and parcel of a comprehensive peace process in Ukraine, respecting the right of Ukraine to decide on its destiny as well as the territorial integrity of Ukraine”, says the joint ministerial statement published on Friday evening.
On the basis of this compromise, Russia and Ukraine confirmed that they will continue to apply the preferential tariff scheme stemming from the free trade agreement of the Community of Independent States (Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Uzbekistan) - by which Ukraine benefits from preferential customs duties granted to it by these countries.
The free trade area is the main economic measure provided for in the association agreement between the EU and Ukraine that was signed in June. Until now, the Commission had always guaranteed that this free trade area would be created “swiftly”, even if provisionally, while awaiting its ratification by the two parties. The Ukrainian Parliament (the Rada) is due to ratify the free trade agreement on Tuesday 16 September, and the European Parliament is due to decide on the association agreement the following day.
The EU-Ukraine free trade agreement aims in particular at removing the majority of customs duties between the two economise - tariff liberalisation for 82.3% of Ukrainian agricultural products, preferences for 83.4% of Ukrainian exports of processed agricultural products, and tariff removal on 94.7% of Ukrainian industrial products.
The tariff preferences scheme that has been granted Ukraine by the EU since the spring - a scheme that compromises implementing some arrangements of the agreement - offers Ukraine large European customs duty reductions on its exports (reductions which the Commission believes will result in savings of €500 million per year). Establishment of the free trade area would, for its part, reportedly bring €1.5 billion per year in gains for the Ukrainian economy. (EH)