EU Grants Ukraine Market-Economy Status

KIEV, Ukraine -- The European Union agreed Thursday to recognize Ukraine as a free-market economy, a status this ex-Soviet republic sought in order to give it an economic and political foothold in the union it wants to join.

British Prime Minister Tony Blair (L) speaks as Ukrainian President Viktor Yushchenko listens during a news conference after the summit of Ukraine and the European Union in Kiev December 1, 2005

The prized status, which still must be formalized, presents a major victory for Ukraine's pro-western President Viktor Yushchenko, but also for Ukrainian businesses seeking to trade with Western Europe. Among other benefits from market-economy status, it allows Ukraine to defend itself against European accusations of illegally dumping products cheaply on the EU markets, which can result in costly punitive duties.

"The future of Ukraine is in Europe, and now we are building that future with concrete steps," European Commission President Jose Manuel Barroso said while announcing the move after a brief EU-Ukraine summit in the Ukrainian capital.

Yushchenko said the technical steps regarding market-economy status that still need to be completed would be made quickly.

British Prime Minister Tony Blair, whose country holds the rotating EU presidency, called Thursday's move a result of the reforms which Ukraine has pushed through since last year's Orange Revolution mass protests.

Yushchenko came to power pledging to nudge this poor nation of 47 million closer to the West, but had received largely a lukewarm reception from the enlargement-weary European Union.

"Today, we got a clear political decision regarding the granting of market-economy status to Ukraine. The changing of status causes a chain of changes in our relationship," Yushchenko said after the talks.

The summit was the ninth between the European Union and Ukraine, and Yushchenko called it the most successful. Lawmakers in Ukraine's fractious parliament, however, were divided Thursday over what had been achieved.

"It's just promise and enticements to involve Ukraine in chaos. Ukraine is not a country with a market economy and will not be able to be competitive," said Communist Party lawmaker Petro Tsybenko.

The European Union is already Ukraine's No. 1 trade partner, with 32 percent of Ukrainian exports going to EU countries, 31 percent to Russia and other former Soviet republics and 24 percent to Asia, said Tomas Fiala, managing director of the Kiev-based Dragon Capital investment house. In comparison, Ukraine's neighbor Poland, already an EU member, sends almost 80 percent of its exports to the EU.

"The potential for growth is very high — Ukraine just needs access," Fiala said. "It won't happen in a day but this is a very important step."

The EU-Ukraine summit also resulted in accords on cooperation in the fields of energy, aviation and satellite technology.

While the summit took place, several thousand people gathered Thursday in downtown Kiev to protest against the meetings and Ukraine's goal to join the EU and NATO.

Source: AP