Thursday

24th May 2018

EU says No to Russia on rewriting Ukraine pact

  • Ukrainian freight train: The trade part of the treaty is to apply from 2016 (Photo: Jay Springett)

EU countries are planning to tell Russia it has no say on changing the Ukraine trade treaty despite its demands to rewrite the text.

The joint declaration, by the EU Council and European Commission, is to say the trade pact: “is a bilateral [EU-Ukraine] agreement and any adaptations to it can only be made at the request of one of the parties and with the agreement of the other”.

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It notes Ukraine should “continue the process of envisaged reforms and economic modernisation” related to Titles III, V, VI, and VII of the pact.

It also says Ukraine should go ahead with “adequate preparation for the implementation of Title IV”.

Titles III, V, VI, and VII spell out reforms in the areas of justice and security, economic affairs, financial and anti-fraud matters, and institution-building.

Title IV deals with trade and the mutual lifting of tariffs on EU and Ukrainian exports.

The EU declaration is to be published in Brussels on Monday (29 September) by ministers at a general affairs council.

Ministers will the same day adopt a legal act saying the bulk of the treaty is to be implemented “without delay”, but that Title IV is to be implemented on 1 January 2016.

EU countries are also planning to extend “autonomous trade measures” - low or zero-rate tariffs for exports of most Ukrainian goods to Europe - from November until January 2016. But the legal text is not yet ready for adoption.

The delay of Title IV is in line with an EU-Russia-Ukraine deal on 12 September.

It comes after Russia threatened to impose trade sanctions on Ukraine on grounds it will be flooded by cheap EU goods re-exported from its neighbour.

The declaration on the “bilateral” mechanism for altering the treaty comes after Russia also demanded a role in altering the content of the text in the run-up to 2016.

Russian trade minister Alexey Ulyukaev said in a letter to trade commissioner Karl De Gucht on 15 September the EU-Ukraine-Russia “Trilateral Group” should have a “mandate ... allowing for legally binding formulas to remove the concerns of the Russian side”.

With the EU urging Ukraine to press ahead with Title IV preparations, Ulyukaev warned “full or partial implementation” of the treaty by Ukraine before 2016 will see Russia “adjust … the preferential regime” on Ukraine imports.

Russian president Vladimir Putin made the same point in a letter to EU commission chief Jose Manuel Barroso this week.

What if 1,000 people freeze?

Monday’s EU declaration notes that Russia can have no say on the content of the treaty because of “the right of Ukraine to decide on its destiny”.

EU sources did not exclude that Ukraine president Petro Poroshenko could come under pressure from Russia to initiate changes even if he does not want to, however.

The Russia-Ukraine ceasefire is, for the most part, holding.

But EU-mediated talks on Russia’s decision to halt gas supplies to Ukraine might not yield an accord before the winter.

“If 1,000 people freeze to death in their homes, then Poroshenko will certainly feel the pressure to make further concessions”, one EU diplomat told this website.

Another EU source said there is a chance Putin will use Ukraine’s implementation of Title V economic reforms or its Title IV preparations to impose trade sanctions anyway.

“One cannot predict what his mind will produce”, the source said.

“Even the extension of the EU’s autonomous trade measures could be seen as a threat by Russia because it's a chance for Ukraine to find new [non-Russian] markets for its goods. Ukraine exports to the EU already went up by 25 percent in the past few months since the measures were put in place”.

Sanctions roll-back

EU countries’ ambassadors will next Tuesday also discuss if the ceasefire merits a roll-back of EU economic sanctions on Russia.

The review was requested by anti-sanctions states including Bulgaria, Hungary, and Slovakia. But the roll-back would require a consensus by the EU 28.

“Russian soldiers are still on Ukrainian territory and Ukraine still has no control over its eastern border with Russia so there is no appetite to make such a move, not just in Lithuania, but also in big member states, such as Germany”, an EU source said.

Russia threatens EU states with gas cut-offs

Russian energy minister Novak has warned that EU states which re-export gas to Ukraine will face cut-offs, with Hungary already stopping its reverse flow.

Ukraine wary of EU's Russia gas deal

The EU is keen for Ukraine to accept a winter deal on Russian gas, but Ukraine is wary of the terms and of broader EU-Russia energy ties.

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