Thursday, October 02, 2014

EU Slaps Down Putin Bid To Revise Ukraine Trade Deal

BRUSSELS, Belgium -- The EU has delivered a sharp personal rebuff to Russian President Vladimir Putin, flatly rejecting his attempts to revise Brussels’ landmark trade accord with Ukraine.


José Manuel Barroso

The so-called Association Agreement between the EU and Kiev has sparked outrage in Moscow and has been one of the underlying causes of this year’s conflict in Ukraine.

Russia regards the accord as the EU’s main weapon in a bid to wrench Kiev out of Moscow’s sphere of economic and political influence. 

Shortly after the deal was ratified last month, Putin insisted that it should be reopened and that “a package of amendments” should be introduced.

But in a letter of response to Putin released on Wednesday, José Manuel Barroso, president of the European Commission, retorted that the accord with Ukraine was a “bilateral agreement”, in which Russia could not interfere.

“Any adaptations to it can only be made at the request of one of the parties and with the agreement of the other,” Mr Barroso wrote.

Mr Barroso also said that he had “strong concerns” about a Russian decree that proposed trade barriers on Ukraine if the deal were implemented.

In an attempt to prevent Russian economic retaliation against Kiev, the EU last month postponed the implementation of the trade deal from November this year to December 2015.

During this period, Ukraine will enjoy open access to EU markets, while its own markets remain protected.

Many commission officials and European parliamentarians fear that by allowing Russian threats to weigh on the deal the delay has created a dangerous precedent but they acknowledge that Ukraine’s frail economy is in no state to withstand a full trade war with Russia.

The delay also postpones the moment when Ukrainian businesses will be fully exposed to competition from European companies – which Ukrainian prime minister Arseniy Yatseniuk has called a “grace period”.

EU officials say they will use the 14 extra months to persuade their counterparts in Moscow that the Brussels-Kiev accord does not pose a threat to the Russian economy.

Moscow has sought assurances that the EU will not use Ukraine as a backdoor for dumping European products in the Russian market.

Russian officials also worry that any western orientation of Ukrainian industry would damage Russian supply chains and hinder trade with Russia.

EU trade officials say that they can address these concerns easily but express fears that Moscow is not really interested in the logic of the trade deal.

Instead, they say Russia’s opposition is political and that Moscow wants Ukraine to join its rival Eurasian trade union, which includes Belarus and Kazakhstan.

Source: FT

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