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Article "Reality behind Ukraine-EU free trade"
18 January 2016 15:53

Trilateral Talks on EU-Ukraine DCFTA: Distinguishing between Myths and Reality

The EU remains committed and open to achieving practical solutions to Russia’s concerns on the implementation of the EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA). The trilateral EU-Ukraine-Russia consultation process at ministerial level was launched in July 2014. Up to end of 2015 13 trilateral meetings, including 4 at ministerial level, have taken place to this end.

At the same time, Russia, due to its unconstructive position, tries to freeze negotiation process promoting unsustainable myths to the international community.

Let us scrutiny some of them in brief.

Myth 1:  the EU wants to force Russia to change customs rules set in the Free Trade Agreement of the Commonwealth of Independent States (CIS-FTA). In fact, the European Commission simply said that Russia is free to change its CIS-FTA rules if it considers that they may lead to problems each time a CIS-FTA member signs a Free Trade Agreement (FTA) with another country. The EU's position is based on its belief that customs rules should be functional and respect the rule that FTAs do not lead to mutual exclusivity of involved partners.

Myth 2:  before changing CIS-FTA customs rules, Russia would first have to hold consultations with all other CIS-FTA countries. Russia claims it adheres to CIS-FTA rules and the resulting obligation of mutual consultations.  It disregards the same CIS-FTA rules, however, when it comes to unilaterally withdrawing trade preferences towards Moldova (July 2014) and Ukraine (December 2015). This is why the European Commission has proposed continuing the consultation process with Russia within expert working groups and after 1 January 2016 to be ready to react in case Russia's potential concerns materialise.

Myth 3:  the EU demands that all goods sold on the Ukrainian market should comply with European technical standards.  This excludes Russian products from the Ukrainian market. The reality is that the DCFTA foresees that only 27 Ukrainian sectorial technical regulations for industrial products should be aligned with EU regulations, such as those applying to toys, lifts, refrigerators etc.  So far, Ukraine has already brought 25 sectorial technical regulations for industrial products in line with EU regulations. It’s important to stress that no Russian company has yet complained that it faced difficulties in exporting its products to Ukraine due to technical regulations.  Until now, Russia has not provided figures on its exports to Ukraine in specific sectors where Ukraine has already aligned or is supposed to align its legislation with that of the EU.

Myth 4:  Russia's proposal to introduce a “transition period of no more than ten years for a limited number of trade sectors” is not a problem. This proposal may appear innocuous at first sight but it would mean prohibiting certain parts of the EU-Ukraine DCFTA from being applied for 10 years.  It is an example of Russia's misinterpretation of the European Commission's mandate “to elaborate practical solutions to Russian concerns linked to the implementation of the DCFTA”.

Myth 5:  Extensive data on prices and customs valuation for each and every single transaction on goods exported to Ukraine would be essential for Russia. The EU needs to provide it. In fact, this would not provide Russia with verifiable information about the origin of the goods imported by Russia from Ukraine.  In addition, it would be in contradiction of EU privacy legislation to protect the confidentiality of business information.

And finally, on 1 January 2016, the EU and Ukraine started applying the DCFTA which forms part of the Association Agreement signed in June 2014. The rest of the Association Agreement, containing political and co-operation provisions, has already been provisionally applied since November 2014. The application of the DCFTA of the EU-Ukraine Association Agreement constitutes a milestone in the bilateral relationship, as it will offer new economic benefits to both sides. With the entry into force of the DCFTA both sides ensured that markets for goods and services would be mutually opened on the basis of predictable and enforceable trade rules so that new opportunities will be created for the EU and Ukraine businesses, investors, consumers and citizens. By more closely aligning Ukraine’s regulations with EU legislation, the DCFTA will promote higher quality standards for products and will increase the levels of consumer and environmental protection. Economic cooperation and exchanges will also be enhanced, contributing to increased stability and prosperity for Ukraine. And, of course, it will inevitably contribute further promotion of economic relations between Ukraine and Cyprus on the ground of European legislation.

Newspaper "Cyprus Mail" dated 17.01.2016,

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