New perspectives for EU-Ukraine relations in the pipeline?

Michael Emerson, Veronika Movchan

Op-ed No. 3/2021

The official records of annual meetings of the EU-Ukraine Association Council, the last one having been held on 11 February, are normally less than exciting reading, with lengthy accounts of work in progress and many well-worn political statements. 

 

This last one, coupled to a joint initiative of the three associated states of Eastern Europe, is hinting that something more important may be in the works.

 

Three points may be pulled out of the official Joint Press Release.

One is the announced intention of the two parties to take forward between now and the next Ukraine-EU Summit in the summer of 2021 a comprehensive review of the Association Agreement, taking the opportunity to do this in Article 481 of the Agreement. Each side will prepare its input into the review. This at least provides a time path to prepare possibly fundamental questions for consideration at the presidential level.

 

A second item was the ‘welcome’ given to Ukraine’s ambition to approximate its policies and legislation with the EU’s Green Deal, marked by a dedicated ‘kick-off meeting’ between Commission Vice-President Timmermans and Prime Minister Shmyhal. The Press Release lists the topics of mutual interest – energy efficiency, hydrogen, coal regions in transition, industry alliances and climate governance architecture – suggesting what to expect in the forthcoming roadmap. 

 

A third item was the agreement to start consultation on a review of possible further trade liberalisation for goods under the DCFTA. Nothing is said about the agenda for these consultations, but independent observers such as ourselves can spot a number of topics.

 

  • There is scope for further liberalisation of trade in agri-food produce, by raising the level of tariff-free quotas for various products. To scrap them entirely would be just fine for Ukraine, as a global agricultural superpower. For the same reason the EU will be cautious, but step-by-step progress along these lines should emerge. To the extent that the EU opens up, Ukraine could reciprocate through also raising the level of its tariff-free quotas,  or reduction/ removal of its remaining agri-food tariffs. 

 

  • To facilitate the expansion of trade in goods it is now imperative to make a comprehensive EU-Ukraine road haulage agreement giving an adequate number of licenses for Ukrainian trucks to carry trade between the two parties. The actual situation is a scandalous contradiction of the most basic objectives of the DCFTA. Protectionist interests in this sector in the EU have secured maintenance of an archaic system of bilateral licenses. Incredibly, this in practice means that a Ukrainian trucker who wants to deliver something in Portugal has to get separate licenses to go through Poland, Germany, France, Spain and Portugal – a bureaucratic nightmare. As of today, Poland has cut the number of licenses for Ukraine, such that there is already a logistic bottleneck on trade expansion. The obvious resolution of this sad state of affairs would be for the Commission to be mandated by member states to negotiate with Ukraine a system of EU-wide licenses, to be issued in sufficient numbers to assure frictionless logistics for trade expansion with the EU. We understand that the issue is being raised by Ukraine, but we are not aware of any sign yet that the EU is prepared to move. Ukraine for its part needs absolutely to catch up on its obligations under the Agreement to approximate EU road transport directives. Ukraine currently lags seriously behind in the time schedules, and a clear move to make up these delays is indispensable for the EU to be expected to agree to the initiative proposed.

 

  • There is also the case of motorcars, for which Ukraine insisted on exceptionally long transitional protective measures, for up to 15 years. The EU is gradually eliminating its import tariffs over seven years, while Ukraine - over seven to ten years. However, the country can apply safeguard measures reinstalling the 10-percent import tariff for another five years if certain criteria are fulfilled. Currently, the safeguards are not applied, but the uncertainty remains. It would be good for these arrangements to be reconsidered. Ukraine has been already developing a cluster for production of automotive spare parts in Western and Central Ukraine by attracting foreign, primarily the EU investors, but definitely there is a space for expansion.    

 

A far wider agenda of topics is raised in a Joint Letter by the foreign ministers of Ukraine, Georgia and Moldova addressed on 1 February 2021 to the EU and its member states, calling for “new cooperation horizons” for enhanced political dialogue, greater economic and sectoral integration with the EU. The letter and an accompanying ‘non-paper’ go into much more precise detail, signalling that the purpose goes well beyond diplomatic niceties. For example, the letter calls for an agenda of dialogue between the European Commission and the three associated states together for enhanced cooperation beyond the present DCFTA framework in new thematic areas… “such as transport, energy, digital transformation, green economy, justice and home affairs, strategic communications, health care”. It goes on to call for enhanced security and defence cooperation with special focus on countering hybrid threats, strengthening cyber resilience, citing the EU Hybrid Fusion Cell and Cyber Security Agency. 

 

In conclusion, the Joint Letter appeals for “building a new, strategic, long-term vision” on which to base the future of the relationship with the EU.  

 

Our reading of all this is clear:

 

  • If translated into action the above ideas and proposals would substantially upgrade the process of European integration of Ukraine as also the two other associated states.

 

  • However in addition Ukraine and the EU are triggering into action a review of the existing Association Agreement and DCFTA, so for Ukraine the procedural framework for negotiating new initiatives has already been put into place. 

  • For the EU this is an open opportunity to construct a strategic success for its foreign and security policy, which struggles in so many other theatres of operation to be effective.

 

  • Last and certainly not least, this put the responsibility squarely on the shoulders of Ukraine’s leadership to be credible and consistent in pursuit of these many desirable objectives. The Zelensky administration has so far revealed a mixed record on this account, some admirable initiatives, some big disappointments. The EU will be observing if Ukraine is serious about all this or not.

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