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Russia, Ukraine, EU to have second round of consultations on implementation of Kiev’s AA

September 12, 2014, 9:28 UTC+3 BRUSSELS

The meeting will focus on consequences from establishing a free trade zone between Ukraine and the EU for the Russian economy and for trade relations with Ukraine and European countries

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© ITAR-TASS/Zurab Dzhavakhadze

BRUSSELS, September 12. /ITAR-TASS/. Russia, Ukraine and the European Union will have a second round of ministerial consultations on implementation of the Association Agreement (AA) between Kiev and Brussels. The meeting, which will take place at the residence of the European Commission (EC), will feature Russia’s Minister of Economic Development Alexei Ulyukayev, Ukraine’s Foreign Minister Pavlo Klimkin and EU Trade Commissioner Karel De Gucht.

The meeting will focus on consequences from establishing a free trade zone between Ukraine and the EU for the Russian economy and for trade relations with Ukraine and European countries. The first meeting in the format took place in Brussels on July 11, where the participants launched expert consultations to eliminate existing disputes.

On Wednesday, September 10, at a meeting chaired by Russia’s President Vladimir Putin, Minister of Economic Development Alexei Ulyukaev said the Russian side had forwarded to the Ukrainian and European counterparts its draft document on implementation of the AA, which suggests introducing in the agreement the norms that could eliminate the risks causing Moscow’s concerns.

One of the suggestions is to use a temporary nil tariff for 144 positions in trade.

Moscow's concerns

The minister said Russia had outlined five blocks of problems it may face in connection with ratifying the agreement.

“The first one is liberalization of tariffs between Ukraine and the EU, which, we estimate, within already the first year will incur a damage of at least 100 billion rubles ($3.7 billion) as Russian goods will be pushed from the Ukrainian market,” the Russian minister said.

The second block, he said, includes technical regulations, the third — veterinary measures, the fourth — customs administration and the fifth — energy.

Apart from the refusing liberalization of the customs tariff, the Russian side suggests leaving for Ukrainian producers the option for choosing whether they adopt European standards or follow the Russian standards.

In veterinary and phyto-sanitary norms, Russia suggests having supplies under the existing certificates. In the customs administration, Russia insists on keeping the information exchange between customs services of Ukraine and of Russia. “Keeping forms and regulations for obtaining respective certificates,” the minister said.

On certain issues, Ukraine and EU have agreed with the reasons Russia presented, but they do not agree with the reasons for liberalization of the customs tariff, he said.

The counterparts talk about a necessary mechanism for monitoring and consultations, where annual ministerial meetings could discuss emerging problems, he said. But a mechanism of the kind is “not flexible at all,” Ulyukayev added.

Ukraine-EU Association Agreement

Ukraine and the EU signed the political block of agreement on association on March 21, the economic block - on June 27. Two weeks after Ukrainian legislators (Verkhovna Rada) ratify the agreement, it is bound to come into force in the regime of “temporary implementation”.

The European Commission has offered the formula to speed up the document without waiting for observing the entire democratic procedure of its ratifying by the EU’s 28 countries, which could require over a year. The major economic result would be prompt mutual opening of markets of the EU and Ukraine. Thus, Russia, which presently has a free trade regime with Ukraine as a part of the CIS, but which at the same time it is not planning to have free trade with the EU, fears an inflow of European goods, re-exported from Ukraine, which would not be liable for tax duties.

Those were the reasons for organization of the trilateral negotiations. However, Russia suggested launching the process back in 2013, but at that time the European Union refused categorically, claiming the consultations could prevent Kiev from signing the document.

As for Ukraine, with the open market, it risks losing a part of its industry, which would not be able to compete with European producers.

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