20 September 2013
Ukraine – EU Relations: A Preview of the Eastern Partnership Summit
When the European Union convenes its Eastern Partnership Summit on November 28-29, 2013 in Vilnius, Lithuania, its primary goal will be to “forge new, deeper contractual relations between the EU and partner countries.” Despite this broad goal, the highlight of the November summit is its potential to significantly bolster Ukraine’s European integration with the ratification of an Association Agreement (AA) and the establishment of a Deep and Comprehensive Free Trade Area (DCFTA).
An Association Agreement is a treaty between the EU and a non-EU member state that creates a foundation for increased political, economic and cultural cooperation. More specifically, an AA includes provisions such as Most Favored Nation trade treatment and commitments regarding democracy and human rights. These AA pacts also often include a free-trade agreement, or in Ukraine’s case a DCFTA, which the Eastern Partnership hopes to establish among its member countries and the EU.
In December 2011, Ukraine and the EU finalized an AA (including a DCFTA) and initialed the agreement on March 30, 2012. However, political and human rights concerns raised by EU member states prevented the EU from ratifying the agreement.
In a May 2013 press release, the European Commission stated that the EC will be ready to move ahead with an Association Agreement at the November summit if Ukraine has made sufficient progress in certain key areas, including: progress on “elections (in response to the October 28, 2012 parliamentary elections), selective justice (the imprisonment of Yulia Tymoshenko), and overall reforms as set out in the Association Agenda (government reforms).” The release went on to say that, “the EU has underlined that it will only sign if Ukraine creates the necessary political circumstances.”
In response to the EU’s concerns, in March the Ukrainian government adopted a “Plan on Priority Measures for the European Integration of Ukraine for 2013,” a series of actions designed to prepare Ukraine for the implementation of an Association Agreement. More recently, on September 3, Ukrainian President Viktor Yanukovych also reiterated the importance of an AA to the Ukrainian parliament by saying that, “success at the Vilnius summit must be prepared. Documents, vital for our further advancement towards Europe, must be approved.”
Since the initial framework for broadening cooperation was established with a Partnership and Cooperation Agreement (PCA) in 1994 and the creation of the European Good Neighbor Policy, the EU has been actively trying to expand its cooperation with Ukraine through a series of phases and measures. Finalizing an Association Agreement therefore represents another milestone in Ukraine’s process of integration with the EU. The motive behind this extensive European effort is twofold: first, the EU wants to expand its markets by increasing trade and access to Ukrainian goods and consumers; and, second, the EU, as Lithuania's President Dalia Grybauskaitee said in July, wants “to stop the drift toward the Customs Union.”
Russia has remained extremely critical of Ukraine’s pursuit of an Association Agreement with the EU and has made no secret of its preference for Ukraine to join the Customs Union instead. President Putin recently threatened “protective measures” against Ukraine after increasing customs controls on Ukrainian exports in an effort to deter Ukraine from further integrating with the EU. Sergei Glazyev, a Kremlin economic advisor, recently offered Ukraine $11-$12 billion per year in lower gas prices and reduced trade barriers in exchange for Ukraine’s participation in the Customs Union. These measures add a practical dimension to First Deputy Prime Minister Igor Shuvalov’s comments in August that Ukraine cannot participate in both the EU and the Customs Union.
Ukraine’s Future: Customs Union or EU?
Despite President Yanukovych’s assurances that “all requirements put forward by the EU will be met,” it remains very uncertain whether an AA will be finalized in November. If not, Ukraine could conceivably sign a free-trade agreement with the EU apart from an AA instead.
Ukraine has also expressed interest in taking a dual approach in its trade policy by increasing European cooperation while simultaneously seeking agreements with the Customs Union. This balancing act of working with both the EU and the Customs Union without pledging full membership to either body temporarily allows Ukraine to increase its “geo-political and geo-economic role,” according to Ukrainian Foreign Minister Nikolai Kozhara.
However, this balance was recognized as temporary by President Yanukovych on August 30, when he said that Ukraine will eventually decide by popular vote which body to join: “When the decision will be made to join either the EU or the Customs Union, then there will be no avoiding the referendum for us.”
A May 2013 poll by the Razumkov Center and Democratic Initiatives Fund showed that 42% of Ukrainians support joining the EU, while 31% support entering the Customs Union.
The Vilnius Summit in late November will be one of the most important markers for economic and political development in Ukraine in advance of the next presidential election in 2015.