Ukraine Joined the Free Trade Area. What next? / News / News agency Inforos
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Ukraine Joined the Free Trade Area. What next?

The Verkhovna Rada at a special session has ratified the Free Trade Area Agreement

Ukraine Joined the Free Trade Area. What next?
Context:

The Verkhovna Rada at its special session addressed the ratification of the Agreement on Free Trade Area (FTA) in the CIS, as urged by President Viktor Yanukovych. And it did offhand.

A natural question arises: but why have the Ukrainians prepared so long – this document has been waiting since autumn 2011, hasn't it? There may be several versions. The main is an "attack" of structures and personalities from the EU on the Ukrainian authorities that began before the Euro-2012 trying to impose their not perfect regulations to Ukraine. Not having received the desired response, the Europeans have frozen relations, thus turning Ukraine backwards Brussels, and, accordingly, towards the CIS. The other aspect is the parliamentary election campaign that began on the day of ratification, and so the authorities with a clear conscience marked with a tick the "Done!" column.

It may be worth recalling what it is about. Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Ukraine and Uzbekistan have signed an agreement on free trade area developed by the Russian Ministry of Economic Development. But it was ratified only in Belarus, Russia and now in Ukraine. The agreement provides to minimize exclusions from the range of products subject to import duties, succeeded by their subsequent phased cancellation. The agreement replaces more than 100 bilateral documents regulating the free trade regime in the Commonwealth. But, as said by Igor Burakovsky, Director of the Institute for Economic Research, the CIS FTA nuance is that Russia has withdrawn its energy carriers from the list of goods, and it will continue to apply bilateral agreements thereon.

Today, almost all countries have from 2 to 20 such agreements. Their attraction is that they do not mean any supranational structures and do not create conditions for political conflicts. Expert Burakovsky believes that the reason for the delay in ratification by all signatories may be that the FTA is only a favorable condition for the economic entities activity and does not automatically lead to an increase in trade flows.

Previously, hoping to sign an Association Agreement with the EU, Ukraine refused to ratify the document, given the statement by Ambassador Jose Manuel Pinto Teixeira, Head of the Delegation of the European Union to Ukraine, that alliance with the CIS and the EU at the same time is not possible. And since now the prospect of cooperation with Europe is very hazy for Ukraine, Yanukovych's and Rada's decision seems logical.

Here is an opinion of Vasyl Yurchyshyn, director of economic programs, Razumkov Center: "It seems to me that this is a political move. The parliament activation on the language issue, integration aspirations towards Russia, the restoration of economic ties with the former Soviet states - all these are links of the same political chain, a desire to report on the work done before the election. The document, signed by Azarov in October 2011, has a large asymmetry, and certainly not in our favor. Besides, it has a lot of reservations, and in general it is very non-transparent."

Indeed, if one takes, for example, cl. 8, it clearly states that a draft of this agreement does not require any public discussion. "We are talking about one of the most important international instruments, but hereby the people are completely eliminated from the discussion," Yurchishin continues. - Nonsense! Moreover, it states that the document is to be adopted as a whole, i.e. parliamentarians too are unable to make changes to it – to either accept it or not. True, our premier has recently said he is going to correct it – it is not clear why this has not been done so far. For example, the timber trade-related issues have a reference to the Russian Federation law - that point is more than strange for an international treaty."

Of course Ukraine needs such free trade agreements. And the more they are, the better. Actually, the Ukrainian borders are already open to imports, the only question is that its goods could legally enter the international markets.

Unlike Teixeira, Ukrainian expert Yurchishin believes that the ratification of this agreement will not burn bridges with the EU: "There are countries that enter several free-trade areas, which means a trend towards liberalization in this direction in whole. As of the Customs Union (CU) – it does impose a number of restrictions on its members. But, from my point of view, it would be much better if the agreement was ratified after Russia joins the World Trade Organization (WTO). Unfortunately, Ukraine did not participate in the working group considering the issue of Russia's accession to the WTO - then we would have known what obligations it has assumed, which could help us in resolving bilateral disputes."

So can the ratification of the agreement on free trade area be regarded as a first step towards Ukraine's joining the CU? Probably, yes - if you choose this direction, you should probably move on. However, there are other opinions. For example, the people's deputy, economist Ksenia Lyapina (the NUNS faction) believes that both the agreement and its ratification are "pure publicity move intended for those Ukrainians who are dreaming themselves in a renewed form of the USSR."

"In addition, Yanukovych wants to let Putin know that he is taking some steps toward rapprochement with Russia," she noted in comments to us. - As an oppositionist, I would normally say that the implementation of the FTA agreement will affect us negatively, but it is not so - it will have no economic repercussions. For the CIS is a very abstract formation that has no single customs area, and therefore the FTA is something ephemeral too that neither repeal nor replace bilateral agreements."

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