Brussels, 18/02/2008 (Agence Europe) - EU Trade Commissioner Peter Mandelson and Ukrainian President Victor Yushchenko opened negotiations on a bilateral free trade agreement (FTA) between the EU and Ukraine. Prior to the talks, Ukraine was given the go-ahead to join the WTO on 5 February. While Yushchenko hopes to conclude the agreement by the start of 2009, Mandelson expects “tough” negotiations.
“This is an important day for both Ukraine and the EU,” Mandelson said at the ceremony marking the opening of the talks. “The process we are about to begin is not just about trade and investment flows. It is a mark of Ukraine's continuing political and economic integration into the global economy, and deep partnership with the EU. … What we will be working on over the months to come is an agreement that should bring the Ukrainian and EU economies as closely into line with each other as possible. A lot of barriers to closer economic ties are now 'behind the border' in our rules and regulations. … We need to search for both convergence and transparency; a more open economy based on firm and clear rules, and enforcement of these, and conformity with international standards and expectations. Bringing about change will take political will and ambition in our negotiations, which inevitable will be tough and vigorous. I believe, however, that a balanced and ambitious agreement is within our reach,” he said.
On the basis of the raft of measures liberalising the Ukrainian economy agreed during the WTO accession process, the EU and Ukraine will negotiate a wide-ranging free trade agreement with four main objectives: convergence of regulatory standards; improving access to investment in both directions; reducing the cost of Community exports for Ukrainian companies and consumers; improving access to the Community market for Ukrainian exporters. The EU-Ukraine EFA, at the heart of the European Neighbourhood Policy, will form a key part of the future EU-Ukraine Enhanced Partnership Agreement, which will cover every area of bilateral relations. In an interview with Reuters on Sunday 17 February, Mandelson said he was expecting “tough” talks which could be protracted. Known formerly as Europe's bread basket, Ukraine is a major cereal exporter and has also developed a strong steel industry. These two sectors are likely to be the main sticking points in the bilateral discussions. Mandelson said, however, that there was “no huge overlap” in agricultural products from Ukraine and the EU. He felt too that economic pressure caused by adjustments to the Ukrainian economy could be alleviated by transition periods and the abolition of tariff regimes. In addition, Ukraine's accession to the WTO (due to take place officially within the next six months) will help the steel sector by giving Kiev the right to challenge anti-dumping rulings and Community steel import quotas. Without predicting exactly how long the talks might take, Mandelson opined that they could last anything from one year (which is Yushchenko's hope) and five years, as forecast by Deputy Prime Minister Hryhory Nemyrya, who is expecting “Herculean” negotiations.
Ukraine is the Communities 25th largest export market and the EU is Ukraine's largest trading partner, after Russia. Trade between the EU and Ukraine has been growing for several years and, in 2006, amounted to €26 billion. Early figures for 2007 confirm the upward trend. Ukrainian exports to the EU are mainly metals and steel, hydrocarbons, machinery, agricultural products and chemical products. Community exports to Ukraine are largely machinery, chemical products, and transport equipment. The EU is Ukraine's largest foreign investor: in 2006, its direct investments in the country were worth €5.5 billion. (E.H.)