Free trade area: a little bit of optimism

Time has shown that moving toward Europe and joining the EU is Ukraine’s best choice for a national project. Actually, nobody disagrees. Yet despite being part of Europe historically and geographically, our way there has been slow and painful (and now it is topped by Europe’s economic woes). But Ukraine sees the light at the end of the tunnel more and more clearly.

First, the parties agreed upon the objective of our movement. So far it is not membership in the EU but an association agreement, a kind of a prelude (usually short but sometimes not) to it. Second, it’s a visa-free entrance for citizens of Ukraine to EU countries. And third, it is a free trade area between Ukraine and the EU. The latter provides unprecedented prospects for Ukraine, as it allows us to enter a huge, civilized market. At the same time, we must open our market as well, providing free access to European goods and services. Ukraine will benefit from it, since European knowledge and technologies will change the face of our country. Thus, society has seen promising signals regarding its European prospects.

On February 8 the director of the EU Department of the Ministry of Foreign Affairs Vasyl Filipchuk stated: “The Ministry of Foreign Affairs does everything possible to reach this agreement. For us it is the contents of the agreement are the most important.” “We are doing everything we can to protect our national interests, as quickly as possible” the diplomat continued.

But to “protect quickly” is somehow suspicious. What do they mean? The negotiations are held not with an enemy. As Filipchuk explained, at present the negotiations on the free trade area between Ukraine and the EU have been ongoing. “I think by the end of this week one will be able to outline the timeframe more clearly. In any case, the signing is not a question of years but of months,” the diplomat radiated confidence, but then became more reserved: “If we manage to defend our national interests during this round, only the list of the most complex issues will remain, which will later be addressed at the political level.”

“And already after this, I believe, one can start the technical work on preparing the agreement for signing.” “Negotiations are about balance. There are our interests, there are EU interests,” added the departmental director, pointing out that Ukraine undertook much more obligations when establishing the free trade area than other countries. According to him, Ukraine “wants to find a compromise” between the wishes of the EU to protect their market, for example, in terms of agricultural products, and the importance of agriculture for Ukraine. Filipchuk hopes that in the negotiating process a “mutually advantageous balance” of interests of Ukraine and the EU will be found. “The prognosis for 2011 is positive,” he sums up.

However, at the end of January there was a more cautious message. The director of the British company CTA Economic & Export Analysts Ltd Chris Cosgrove predicted at the seminar in Lviv: “Many people say the work on this agreement will be concluded this year. But I think this will happen in 2012.” “According to experts’ estimates, signing the agreement should result in welfare growth for the entire population of Ukraine by five percent in the long-term, and regarding salaries, they should grow by four to five percent,” the analyst informed.

According to him, most export-import tariffs will be canceled right after signing the agreement, but in fact the process will last for over 10 years. For Ukraine, Cosgrove supposes, it is important that its business will have access to the world’s biggest market.

All in all, it’s true that Ukraine is much more interested in its participation in the free trade area than the EU is, and wishes it were granted access to it by 2012. Ukraine’s Prime Minister Mykola Azarov declared this during a meeting with the European Commissioner for Enlargement and European Neighborhood Policy Stefan Fule and even suggested signing the agreement in two phases, leaving unsolved issues for later.

“From European sources I know,” says the director of the Center for Political Studies Penta Volodymyr Fesenko, “there is an opportunity to finish the negotiating process this year and perhaps even to sign the agreement by the end of the year. Everything depends on whether problems will be settled.” “There is a struggle over contents, overcoming controversies. That is why the negotiating process is still not in the homestretch. But it is close to it,” the expert points out. Fesenko stresses that according to official information, Ukraine and the EU coordinated trade liberalization for 95 percent of issues (Azarov assessed the level of readiness as 90 percent), in line with the international standards for free trade areas established by the World Trade Organization. “This already gives a possibility to reach the end zone,” supposes the political expert. At the same time, he points out that very complex issues are still left in the negotiating process. In Fesenko’s opinion, the prime minister’s statement about stage-by-stage signing of the agreement shows that our government wishes to sign the agreement this year, even if only in its partial format.

Establishing the Coordination Center for executing the action plan on the EU visa regime liberalization also demonstrates Europe’s sympathy and Ukraine’s diligence.

But so far it is absolutely unclear how Europe will react to the government’s decision to eliminate the post of first deputy minister of the Cabinet of Ministers — in charge of anti-corruption policy. It will hardly be unnoticed or considered as “saving public finances.”