What is the EU-Ukraine Association Agreement?

16th September 2014, Comments 0 comments

The Ukrainian and European parliaments ratified a historic association agreement on Tuesday, a wide-ranging accord that Kiev sees as a symbol of its break from old master Russia.

It was the rejection of the same deal by Kremlin-backed president Viktor Yanukovych in November that triggered pro-EU protests in Kiev and eventually led to his downfall in February.

WHAT IS AN EU ASSOCIATION AGREEMENT?

The association accord offers increased political and economic ties with the 28-member European Union, including free trade deals.

Ukrainian President Petro Poroshenko said Tuesday it was a "first important step" to EU membership -- although any country hoping to actually join the bloc must formally apply and then go through a lengthy accession process.

Association agreements are part of the EU's Eastern Partnership policy, and were designed originally to also include Armenia, Azerbaijan and Belarus, countries that changed tack under Russian pressure.

The policy was introduced by Poland and Sweden in 2009, shortly after many of the former Communist states of central Europe joined the EU, so as also to offer their neighbours further to the east closer ties.

Inevitably, it has turned into a tug of war, with Russian President Vladimir Putin pulling out all the stops to prevent not only Ukraine but also Georgia and Moldova from signing up, even at the cost of damaging sanctions.

WHAT ARE THE BENEFITS?

The EU says the accords offer a cooperative framework covering a mixture of economic and political areas such as energy, visas and foreign policy. It says they favour the independence of the judiciary and boost civil society through the rule of law and eradicating corruption.

The free trade aspect of the agreement is on hold after the EU and Ukraine last week unexpectedly agreed to delay it until the end of December 2015 under pressure from Russia.

But it would give Ukraine improved access to the EU's single market, the biggest in the world with some 500 million consumers.

For Ukraine, that could boost exports by one billion euros ($1.35 billion), helping its steel, textile and food product industries, and decreasing its reliance on the Russian market, an EU study showed.

Ukraine's struggling economy as a whole could grow by an additional one percentage point, a major boon for a government seeking to put its chaotic finances on an even keel, the study said.

For the EU, the rewards will be more long-term and depend on how successful the accords are.

WHAT IS THE PRICE?

In return for EU help and largesse, Ukraine would have to take on a tough agenda of reform, potentially requiring change which will have profound political and social repercussions.

Russia has warned that Ukraine's transition to EU trade standards would cost Kiev 165 billion euros ($213 billion) -- a figure far outstripping its 2013 gross domestic product.

Last week, the EU tried to cushion the blow by immediately lifting most tariffs on Ukrainian products and offering Kiev a 1.6-billion-euro economic assistance package.

EU ties with Russia are at a historic low, driven especially by events in Ukraine, a strategically placed country of 45 million of people.

Yanukovych ditched the association accord at the last moment in November under intense Russian pressure only to be ousted by pro-EU protests in February.

The new government in Kiev then took up the accord, which was signed in June by President Petro Poroshenko, as Putin annexed the Crimea and backed a military intervention in the east of the country.

WHY DELAY TRADE PACTS?

Moscow has warned that it will take counter-measures to limit the damage to its own economic interests, singling out a possible influx of now cheaper EU-made goods via Ukraine.

The EU, in an effort to calm some Russia's concerns, held political level talks with the Kremlin, which ended with last week's delay announcement.

Brussels argues that the association accords will benefit Russia because they will boost its neighbours' economies, drawing in more of its exports.

At the same time, the accord means Ukraine cannot join Putin's vaunted Eurasian Customs Union, designed to bring back together the former Soviet Union states.

About a quarter of Ukraine's exports go eastward to Russia -- the same as in the opposite direction to the 28 EU member states.


© 2014 AFP

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