Sunday, March 29, 2015

Blackmail is not working: Ukraine can do without the Russian market

In early March 2015, European Commissioner for Trade Cecilia Malmström, after a meeting with Minister of Economic Development of Russia Alexei Ulyukaev, declared her readiness to restore the tripartite talks between Brussels, Kyiv and Moscow, and again try to find the "flexible application of the Agreement on free trade zone between Ukraine and EU".

According to sources, Ukrainian and European sides reportedly agreed on the impossibility of further delay the implementation of a free trade area (FTA), but still allow for adjustments in this issue.

However, experience shows that concessions to Moscow in matters of implementation of the Association Agreement do give nothing to Kyiv.

It is known, September 12, 2014 in Brussels, was reached an agreement between representatives of Ukraine, the EU and Russia, according to which, in exchange for postponement of entry into force of the Agreement economic until 2016 the Russian Federation to refrain from restrictions on Ukrainian goods.

But customs statistics has not recorded any positive effects of such a "compromise." On the contrary, the export of Ukrainian goods to Russia in the first two months of 2015 ($ 0.6 billion) fell by almost three times compared with July-August 2014 ($ 1.7 billion), two months prior to the Brussels agreements and January - February 2014 ($ 1.6 billion).

From this point of view is given doubtful that in the case of the entry into force of the Association Agreement without delay and, consequently, the abolition of Moscow preferential tariffs for Ukrainian goods, the decline in our exports to Russia would be much larger.

Ukraine ousted from the Russian market due to the action of objective and subjective factors.

The objective are long-term strategy of import substitution and the recent devaluation of the ruble, which has reduced the purchasing power of Russian consumers, as well as disabling a number of enterprises in the Donbass in the fighting.
Subjective - continued undeclared trade war against Ukraine, despite allegedly made in Brussels in September 2014 "compromise", as well as the voluntary departure of a number of Ukrainian suppliers to the Russian market because of its unpredictability and unreliability.

According to the earlier forecast on current trends in bilateral trade, Russia's share in Ukrainian exports until the end of 2015 will drop to 10-12%. However, the reality exceeded these expectations, and Russia's share in the export of goods from Ukraine decreased to 10.1% in the first two months of this year.

 Postponement or adjustments in the implementation of the economic part of the Association Agreement are not able to change this long-term trend in the loss of domestic producers of the Russian market.

Minimum that is needed for this - it is unacceptable for Kiev or total surrender to Europeans as a complete rejection of the economic part of the Agreement and the beginning of the integration of Ukraine to Putin's Eurasian Union.

Any other concessions will not make the Russian Federation to stop discriminating against Ukrainian suppliers.

Thus, attempts to achieve another "compromise" issued only attempt to close their eyes to reality and then evade effective compensation package, which the EU today is really waiting for the Ukrainian economy.

At the same time, Moscow's attempts to blackmail the inertial Kiev and Brussels regime of access of Ukrainian goods to the Russian market after three and a half years of permanent trade war no longer have sufficient grounds. The share of exports in the Russian market our products (10.1%) while the comparable with the Turkish (7.7%), Chinese (7.4%) or the Egyptian (6.7%), but much less promising in terms of full-scale dependence from the political whims of the Kremlin.

Therefore, Ukraine, and partners in the European Union it is time to realize that the widespread stereotype, if the choice between the EU and Russia - it is a choice between values ​​and pragmatism or future and this has nothing to do with reality. Ukraine's dependence on trade and economic relations with Russia - this is not present and the past.

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