EU’s Dithering on Trade Pact Buys Time for Ukraine to Reconsider

May 30, 2013
Anthony T. Salvia
Director, American Institute in Ukraine

The EU said last February 25th that it would grant Ukraine an Association Agreement including a “deep and comprehensive” free trade deal if Kiev met a series of demands – above all a satisfactory resolution of the Timoshenko affair – by the end of May 2013.

May has come and gone and Julia continues to languish in the jail; Yanukovich is still shuttling between Brussels and Moscow in search of the best possible deal; and the European Commission on May 15th gave the green light to moving ahead with “the required preparatory arrangements [for signing the Association Agreement] without pre-empting any decision.”

In other words, Ukraine has been granted an indefinite extension to comply with Brussels’ demands for judicial and legal reforms – not least the dropping of charges against Mrs. Timoshenko, which the EU says it continues to consider a pre-condition for signing the agreement.

As Kiev turned a deaf ear to Brussels once, it is not clear why Brussels should expect a different result later in the year.

Yanukovich may well calculate that if Brussels let the May deadline pass it is because signature of the Association Agreement is more important to it than the fate of Mrs. Timoshenko. He may be right judging by this comment of the United Kingdom’s ambassador to Ukraine, Simon Smith: “I do not believe that the EU foreign ministers are looking for reasons to say no to Ukraine. I think that, quite the contrary, they are trying to find reasons to say yes.”

Recent remarks by Mrs. Timoshenko may give the good reason to say yes: she reportedly urged US Ambassador John Tefft, and EU Ambassador Jan Tombinski, in a recent face-to-face meeting, to sign the Association Agreement with Kiev even if she remains in prison.

Perhaps she calculates that a Ukraine that has signed an Association Agreement with Europe is more likely to let her go free; if so, she could well prove sadly mistaken. In any case, her remarks constitute a political gift to Yanukovich who would not mind entering the election campaign with a signed Association Agreement in hand, Julia still in jail, and Europe having acceded to his values, rather than vice versa.

Ambassador Smith went on to say: “But in order to say yes [to signing the Association Agreement with Ukraine], they [the EU’s foreign ministers] need to see decisive action and tangible progress.”

But that is what Brussels said in February before backing off in the face of Kiev’s intransigence. Why should anyone believe Brussels means it now?

Could it be that Brussels’ evident desperation to keep the door to agreement open reflects what is really at stake in this drama – the chance to deal a sharp blow to Moscow?

Shortly before she left office, former US Secretary of State Hillary Clinton implied (ludicrously) that the Eurasian Customs Union was an effort to revive the USSR, although it is not clear what dictatorship of the proletariat, official atheism, and the leading role of the party have to do with it. Mrs. Clinton pledged to “figure out effective ways to slow down or prevent it.”

As the EU is ever attentive to Washington’s geo-strategic aims (it has just lifted its arms embargo against the Syrian “opposition” at Washington’s insistence and contrary to its own interests), it is not far-fetched to see the Association Agreement as one of Mrs. Clinton’s “effective ways” to thwart, provoke and ultimately bring down Russia.

Kiev needs to act in its own interests; it should beware of Europeans bearing Association Agreements. There is little for Kiev in acceding to terms that unilaterally benefit “Europe,” stick it with the task of adapting its laws to a raft of EU “regulations, directives, decisions, recommendations and communications,” all while by-passing the Verkhovna Rada (so much for democratic values), and commit it, according to Title II of the Agreement, to “gradual convergence on foreign and security matters with the aim of Ukraine’s ever deeper involvement in the European security area” (in other words, support radical Islam in Syria as the US, UK and the EU are now doing?)

What does Ukraine get out of any of this? Even if trade barriers do come down in the West (a dubious supposition as the Association Agreement is an exercise not in free trade but in managed trade; many European sectors, such as agriculture will remain heavily protected), there is no evidence Europeans are keen to buy significant amounts of Ukrainian goods and services.

Moreover, such trade barriers as come down in the West will be more than offset in the East by the blanket levying of tariffs on Ukrainian goods that will take effect as soon as the Association Agreement is signed and ratified. And the eastern market – Eurasia – is the one market in which Ukraine can and does sell large volumes of goods and services. It is a market of 170 million consumers with pent-up demand for practically everything, and unlike Europe, it is actually growing.

It is good that Europe is willing to be flexible about its deadline. Ukraine should use this break in the action to align its foreign and domestic policies more closely with its national interests and the welfare of its people.