Since the beginning of my term of office in the European Parliament, the main field of my activity was supporting European direction of development in Ukraine. In the European Parliament Committee of International Trade, we have concentrated on supporting negotiations and preparing the evaluation of DCFTA between the European Union and Ukraine. From the very beginning, I have tried to show how important this agreement will be for Ukraine and the whole Eastern Partnership programme. It is of special significance to understand the weight of what DCFTA is today, when the negotiations on its shape are concluded and there are no objective reasons for hindering its coming into effect.
What is DCFTA about?
DCFTA is a part of an association agreement. It covers all the issues connected with economic relations between the European Union and Ukraine. It includes reduction of duty to zero. It regulates the matters of access to, e.g., Ukrainian transport services in the EU and duty on cars (automotive parts were an important issue in Ukraine-European Union relations). It regulates intellectual property issues, forbidding fake versions of products formerly patented in the EU. It includes protection of “geographic names,” which means that Ukrainian producers are obliged to dispense with the use of regional proprietary names, like cognac or Champaign.
The field that posed special difficulties in the negotiations was agriculture. Obviously, in the context of Ukrainian agrarian reform and the expected inflow of technologies and capital, this branch will be developing most dynamically. According to Food and Agriculture Organization of the UN, Ukraine is a country with the biggest potential for radical increase of food production in the world. No wonder that the Ukrainian government consistently tried to increase the export quota with the EU. In the way, however, stood limitations resulting from the Union’s agricultural policy, consisting in strict rationing of the access to the market. A compromise was reached in this matter. It includes the increase of Ukrainian grain export from 1.6 million tons a year to 2 million tons a year in the fifth year of the agreement being in effect. The Union also opened itself to the import of Ukrainian pork (40 thousand tons) and chickens (16 thousand tons).
The agreement also provides the framework of cooperation in the field of energy, strengthening Ukraine’s obligations to conduct uninterrupted transit of Russian gas to the west of Europe. Separate regulations concern effective arbitration mechanisms in case that one of the parties defaults on the conditions of the agreement. Besides, DCFTA creates an obligation on Ukrainian side to accept the norms of European law of economic regulations.
As a result, the agreement provides for target integration of Ukrainian economy into the Union’s. The EU is to receive free access to Ukrainian market, which in the conditions of a crisis is an important stimulus to developing production for export to our Eastern neighbour. Benefits for Ukraine are rather long-term. As a result of the improvement in investment sphere, we can expect an increase of foreign investments as well as capital and technology export. This will create new jobs and include Ukraine in the global network of production and distribution. On the other hand, because of adopting European standards, Ukrainian products will obtain access to the European market with no additional restrictions. The lowers costs of production will increase their competitiveness and cause economic attitude favouring export. An association agreement with Poland has similar consequences to our country. Today, after twenty years of European integration, Polish gross national product per capita is four times bigger than in Ukraine.
Though the trade agreement is the essence of the association agreement and its political regulations are not without any weight. Adopting this agreement means European support for adopting the Union’s standards concerning the functioning of a democratic state. It settles that Ukraine’s development will take place in accordance with the European pattern. Kiev and Brussels will then begin a process of Union’s norms export to the East, filling the post-Soviet states with European policy. To sum up, the ruling of the association agreement may in practice lead to full Europeanization of Ukraine, which may, like in Poland’s case, provide directions of how to meet the criteria of the EU membership.
Where are we heading and what for?
The consequences to the European Union are enormous. This situation means many things desired by Ukraine and beneficial to it: economic, social and political modernisation in the best sense of the word – better observance of civil rights and democratic standards. The positive influence of the agreement will not restrict itself to economy, but it will also be visible in the field of politics, the way it is conducted, the functioning of state, problems of superiority of law over political conflicts, democracy and civil rights. These are all key issues because of the need of drawing foreign capital and investments to Ukraine, that will be crucial for give drive to economic development, without which Ukraine will never get out of the crisis. This will make Ukraine a more affluent country with better economic development, ruling and increased effectiveness, which is important also to its citizens.
It will also extend Ukrainian influence upon stabilization process in Eastern Europe. Kiev’s role within the European Union’s policy towards the former republics of the Soviet Union – and the wider defined European neighbourhood, e.i. North Africa and Central Asia – would significantly increase.
Some remained unconvinced
Then why, despite evident benefits for both the Union and Ukraine, initialling the agreement according to schedule is still not certain? The EU member states have reasonable doubts how to treat Kiev authorities. So far, the government has been effectively pursuing goals at an international level, i.e. joining the European Energy Community (EEC) and concluding DCFTA negotiations. However, on the other hand, they are currently abandoning European standards through abusing regional elections rules or ordering politically motivated trial against opponents, such as Yulia Tymoshenko. The European Parliament did not approve a proposal, mainly backed by MEPs from German Christian democrats, of conditioning signing the agreement by the release of the former Ukrainian PM. Nevertheless, the governments of big Union countries, for example France and Germany, are supporting this proposition.
Personally, I believe that to impose conditions based on internal situation development in Ukraine is a mistake, for if some EU countries really want, according to their claims, more democracy, human rights, market economy and rule of law in Ukraine, the instrument to achieve these goals is the Association Agreement itself. In this document, Kiev is obliging itself to apply European standards. It contains defined arbitration procedures in case of not performing the agreement by either of the parties. It also provides instruments for better management of the country; therefore, the only logical action is to purse initiation of the agreement as fast as it is possible.
This is the way an association agreement is defined by experts and NGOs’ representatives whom I addressed at the end of August this year – I asked them what, and how much, influence upon the conclusion of the agreement should have their country’s internal situation. Recently, Yulia Tymohenko also has expressed her wholehearted support for the Agreement, despite a draconian verdict sentencing her to seven-year imprisonment. The former PM notices a greater chance for developing law-abidingness only through closer relations with the European Union.
A new approach towards the association
The myth surrounding the association agreement, and also the DCFTA, must be dispelled. In fact, this agreement is highly misunderstood by Poland and other EU member states as a carrot and stick approach the Union might employ towards its partners. In short, the EU is using the Agreement as an instrument of pressure, or rather motivation, towards Kiev authorities in order to persuade the president and centres of power to implement reforms and to adopt European standards immediately. It is neither a gift nor an award – it is an instrument to use. Today we must see Ukraine not as a country which meets the Copenhagen criteria, or adopted all European standards, but as a country heading in this direction, and the AA is the best instrument to achieve it. It would be good to implement it as soon as possible.
In order to meet expectations of the Ukrainian society, and given the EU interests, I have recommended setting a special interim implementation mode of the DCFTA within the period between its initialling and ratification dates, according to Article 218 (5) of the Treaty of Lisbon. This article states that the European Commission may address the European Council about authorizing a provisional application of the agreement undergoing EU ratification process before it enters into force. In practice, the Commission is interested in gaining informal support of the European Parliament – which either way is to ratify the agreement – on this issue. This concept, so far unofficially backed within the Commission, has a real chance for being applied.
The concept of an agreement interim application has been already explored in a context of negotiating a free trade agreement with South Korea. Right after the initiating, the European Commission was intending to submit such an application to the European Council. A strong opposition from the European Parliament prevented it in the end – the Parliament indicated necessity for, in a first stage, installing a defence mechanism in case the resolutions would not benefit European economy. Only after inserting protecting clauses, the European Commission applied for the agreement to enter into force.
The Association – interest of Ukraine and whole Europe
Is the example above somehow critical to the Ukrainian case? Yes, it is indeed fundamental, for it shows how significant the voice of the EP really is in this context. Per analogiam, if an application for an interim mode in Ukraine were a signal coming from the EP itself, it would mean a lot to the Commission. This is why it is so important that the European Parliament shows it is the one institution which sees the need of partnership with Ukraine, including this country’s modernization, and does everything it can to achieve it. The vote on this issue in the EU international trade commission is planned on November 15, while on the whole resolution on the association agreement – at the EP session at the beginning of December in Brussels.
If the attempt to enact this scenario succeeds, it will create a situation in which responsibility and initiative regarding initialling and implementing the agreement with Ukraine remains on the side of the EU member states. The final decision would have to be made by them within the Council of the EU. The Council may create obstacles. Even today representatives of Germany and France refer to Yulia Tymoshenko’s arrest, and claim that Kiev is not ready to sign this agreement, However, the ex-PM’s recent appeal for not considering her imprisonment and signing the agreement as fast as possible provides a new context of mutual relations – officially, it removes a pretext of the EU for not implementing the AA.
While listening to Chancellor Angela Merkel, who states that German parliament will have problems with the implementation due to development of the internal situation in Ukraine – Yulia Tymoshenko’s trial – it is easy to imagine what problems the Council may create in the sphere of implementation itself, as well as the sphere of submission procedures. All decisions on this issue in the Council require consensus. Thus everyone who wants Ukraine taking a European direction regarding development just now is looking at Berlin and Paris.
A lack of their approval would be against Europe’s interests – the EU would like to export their standards into the grey zone of the post-Soviet part of this continent. It would also threaten interests of both employers and employees working in companies waiting for an open Ukrainian market in a bigger scale. But foremost, it would not benefit Ukrainians who need a democratic state with a good management. Also Yulia Tymoshenko would lose – adapting European standards is a chance for justice for her and her followers. Today, after the former PM’s appeal, the only argument against implementation of the AA that remains comes from Russia: DCFTA between the EU and Ukraine is, in fact, making Ukraine joining a Customs Union created by the Russian Federation nearly impossible. This is why it is so important that European leaders do not invite speculations and right now, together with Tymoshenko, support implementation of the AA at the Kiev summit in December this year. And at the same time they must not cease demanding just treatment of opposition of President Viktor Yanukovych .
The title and headings by Eastbook.eu
About the author:
Paweł Zalewski: (born 1964) member of the European Parliament, Vice-Chairman of the EP International Trade Commission. He studied history and law at Warsaw University, and belonged to the Independent Student Association. In the years 1989-1991 he was an adviser to the Minister of National Education. Member of Parliament I,V and VI term of office, associated to groups of conservatives. Chairman of the Sejm Foreign Affairs of the fifth term of office, engaged in building positive EU-Ukrainian relations.