The parliaments of Ukraine and the European Union ratified a landmark political and free trade deal on September 16.
“(Ukrainians) died for a place for Ukraine in Europe. Starting from World War II, no other nation has ever paid as high a price for the right to be European,” Ukrainian President Petro Poroshenko said as the European Parliament and Verkhovna Rada voted simultaneously.
The EU-Ukraine Deep and Comprehensive Free Trade Area (known simply as the “Association Agreement”) paves the way for a deeper political relationship between the EU and Ukraine and grants the country tariff-free access to the bloc’s giant market once the trade component is fully implemented. A consensus reached last week between the EU, Ukraine and Russia agreed to postpone this aspect of the deal until the end of 2015.
The reason for the delay is largely due to the fact that after years of systemic corruption and civil unrest, the struggling Ukrainian economy is far from being competitive at the moment. Some experts feared that had Ukraine suddenly been inundated with EU goods, the country could possibly collapse completely. Until the agreement comes into force, the EU will provide Ukraine with preferential terms in order to ensure that the EU market remains open to Ukrainian goods.
The postponement also gives Moscow and Kiev an opportunity to resolve various outstanding trade “concerns” over the deal. Russia – which also has a free trade arrangement with Ukraine – has called for extensive revision of the new agreement’s trade component in order to protect its own economy from being flooded with EU goods.
EU Trade Commissioner Karel De Gucht said the agreement “establishes a bond between Ukraine and the EU that will be very difficult, if not completely impossible, to undo.”
The deal still has to be ratified by all 28 EU member states to enter into force. Six countries have already done so, De Gucht said.