What is free trade and with whom should we undertake it? These questions still remain unanswered in Ukraine, though it is clear that our country, which possesses powerful industries and generous lands, would like to trade with the entire world. For this Ukraine joined the World Trade Organization and negotiates with both hands, that is, with the East and the West.
Unfortunately, there are not many specific agreements so far. One of the few tangible achievements was the agreement about free trade between Ukraine and the European Free Trade Association (EFTA) signed less than a month ago in Reykjavik. There were also three bilateral agreements with Iceland, Norway, and Switzerland.
So far the real progress in terms of free trade has been achieved by the West. But the situation can change very fast. A new bulk agreement with seven or six CIS countries is fast approaching Ukraine. The obligation to trade with them was largely annulled in the middle of the 1990s within the framework of bilateral relations. But numerous exceptions annoying exporters remained. “The new free trade agreement will consolidate and develop corresponding obligations and will replace the old bilateral agreements,” has recently stated the director of the trade negotiations department at the Ministry of Economic Development of the Russian Federation Maksim Medvedkov.
Actually, the free trade agreement within the CIS remains unknown not only for ordinary citizens of these countries, but also for their governments. The only ones to know about it are the presidents of Russia, Ukraine, Belarus, Azerbaijan, Armenia, and Kazakhstan, who recently agreed in Yalta to continue working on the new agreement and consider it during the regular sitting of the Council of the heads of state of the CIS countries.
At the beginning of July the first vice prime minister of Ukraine Andrii Kliuyev, during the 46th sitting of the CIS Economic Council, spoke about the activation of the non-existent common market of the commonwealth and its transformation in the medium term into a free trade zone without exceptions and limits. He stated that Ukraine supports the initiative of the Russian Federation about completing the new agreement’s draft by the end of 2010. Kliuyev even called the elaboration of the new version of this agreement a priority for the CIS. Meanwhile, Ukraine appears to be simultaneously and quite seriously negotiating a free trade zone with the European Union, and will likely reach an agreement only in 2011, as the minister of economy of Ukraine Vasyl Tsushko noted, while signing the corresponding agreements was planned for 2010. The politician seems not to be in a hurry, and someone else is to be blamed, as always. According to Tsushko, “our partners are not ready for the pace Ukrainians took. The reason is not in us — our partners are struck dumb.”
The actual participants of the talks are, allegedly, full of optimism. The head of the Ukrainian delegation, the deputy minister of economy Valerii Pyatnytsky, stated after the end of the 12th round of the negotiations: “We’re entering a phase when a lot of things are agreed on the fundamental level, and technical work is left. I can’t say that in this round we came close to an end, but in each section we reached the moment when we can see the whole picture, and this can happen before long, especially in some areas.” Was the progress so considerable that the head of the Ukrainian delegation could go on vacation (The Day was informed about it in Pyatnytsky’s office)?
What is going on? Is it true that Ukraine prefers free trade with the CIS countries to trade with Europe? The president of pro-governmental All-Ukrainian Union of Economists Oleksandr Kendiukhov provided an exhaustive comment on the subject: “Ukraine joined the WTO, but no particular positive result is seen so far. And this demonstrates that Ukraine’s path leads first to the CIS free trade zone, and then to free trade with Europe. I think that such a sequence is to our advantage. If we do not aim for the raw material model Europe expects of us, but at a highly-profitable manufacturing one, then we have nothing to do, considering today’s technological base in Europe. Within the next five years our final products should target only the CIS market, and not Europe. If new high-tech export-oriented enterprises are built in Ukraine (during independence no one built them), then creating a free trade zone with post-industrial economies will be a way out for our country,. But today it will give nothing for Ukraine.”
