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Ukraine’s EU Association Is a One Way Street

Europe wants Ukraine as a market for its products. It has no intention of accepting competition from Ukrainian producers

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This post first appeared on Russia Insider


The author was a Deputy Prime Minister of the Ukrainian government deposed by the Maidan putsch


A scandal is brewing in Ukraine. Yuriy Kosyuk, billionaire owner of ‘Mironovskiy Breadproducts’ agricultural holding, is officially criticizing the free trade agreement between Ukraine and the EU – the main pillar of government propaganda. According to the oligarch, who is loyal to the new authorities and supported Maidan, restrictions on the export of Ukrainian goods make it just as unprofitable for domestic manufacturers as before. 

And Yuri Kosyuk is not alone. Ukrainian entrepreneurs and ordinary citizens are sounding more cautious, Maidan activists and increasingly and critical of the Yatsenyuk government’s reckless Euro integration. 

The reasons are evident. A year and a half after signing the EU Association Agreement that opened the free trade area, promises to replace the Russian market with a larger European one have failed. In fact, trade is free only in one direction – toward Ukraine. 

Quotas are imposed on most food groups, which are Ukraine’s most important export products.  ‘Mironovskiy Breadproducts’ alone produces 700,000 tons of chicken a year, exporting 250,000 tons. Europe imposed a 16,000 ton quota for all of Ukraine. As of January 8th, the  import quota for Ukraine’s most important product – corn – at 400,000 tons, was met in a week. 

Why are the quotas so low? The answer is obvious: Europe is protecting its manufacturers and producers. And the high tariff on quota-free products makes exporting senseless, while the European side uses its advantages to the full. 

Since January 1st, European products have begun to displace Ukrainian products on the Ukrainian market. According to some reports, custom duties will be slashed to zero this year,  at best reduced gradually over several years. For instance, duty on European automobiles will be reduced to zero from the current 10% over 10 years. Moreover, Ukraine cancelled the 5-10% import tariff that was part of emergency measures to stabilize the economic situation in 2015. Ukraine does not have any quotas on the import of European products. 

It’s easy to see how things will end up when low-priced European products appear on Ukrainian shelves. But there’s nothing the business community can do. The Ukrainian economy will face all the hardships we warned about in the fall of 2013, when, obsessed with mythical ‘Euro Prospects’ Ukrainian businessmen didn’t want to listen. They should have.

 



Source: Izvestia
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