EU-UKRAINE Deep and Comprehensive Free-trade Area: New Opportunities for Europe

Ukraine has no plan B, but only a plan A foreseeing the Association Agreement with the European Union. After the declaration of independence from the Soviet Union, this is the second most important step for the country. Strategically speaking, several years have gone by since Ukraine chose to integrate with the EU.

These were the words of the Ukrainian Ambassador to Italy and member of the official delegation for the negotiation of the EU – Ukraine Association Agreement, Yevhen Perelygin – which were to be questioned only 48 hours later in the news coming from the Ukrainian press, editor’s note. He was attending the conference organized by the IAI on the free trade area between the European Union and Ukraine, together with the managing director of the Berlin Economics Institute.

According to Perelygin, this is a fundamental agreement for his country because it will lead to the adoption of European standards in both the economy and the life of Ukrainian citizens, who identify with European values and continue to believe in them. The expression the Ambassador used to indicate his country’s willingness to welcome European companies and their investment on its territory was, “ to build the European Union inside Ukraine”.

Ukraine’s commitment towards drawing closer to the EU is not recent; on the contrary, it dates back to the definition of its foreign policy in 1993 when Ukraine showed its interest in integrating for the first time. In 2007, the negotiation for the Association Agreement started.

If the Agreement is signed in Vilnius at the end of the month, as the ambassador seemed to hope, the elimination of tariff and non-tariff barriers will be a great boost to the economy of both sides and for Italy, too, because it is the third largest European investor in Ukraine.

As concerns the gas dispute with the Russian Federation, Ambassador Perelygin said he was sure that everything would be solved positively: Ukraine is the European country with the fourth largest shale gas deposits and it recently reached an agreement with Russia’s Gazprom to pay off its debts, and with the US’ Chevron for the exploitation of the Olesska field. In any case, the Ambassador believes that there should not be any hostility on the part of Russia as Ukraine does not intend to renounce its trade relationship with Moscow (approximately 50 percent of Ukrainian exports go eastward).

The managing director of the Berlin Economics Institute, Ricardo Giucci, concentrated his talk on the more technical aspects of the Agreement. Shedding light on the current problems of the Ukrainian economy – low foreign investment, and inefficient use of energy – the expert observed that signing the Association Agreement could have positive effects, in that it would favour modernization and trade intensification throughout the elimination of its principal obstacle: non- tariff barriers.

Moreover Giucci emphasized that if, on the one hand, Ukraine cannot afford to forego trade with Russia, on the other hand, it cannot enter into a Customs Union with Belarus and Kazakhstan either because this would mean becoming part of a protectionist club that would complicate trade with the EU.

IAI President, Ambassador Ferdinando Nelli Feroci, introduced the meeting recalling Europe’s commitment to the creation of a free trade area with Ukraine. The latter has repeatedly proved to be a good partner and has chalked up some amazing results. However, Nelli Feroci pointed out that the European Union must not be seen as an antagonist to the Russian Federation: on the contrary, the agreement with Ukraine creates the prerequisites for effective trilateral cooperation.