Monday

23rd Oct 2017

Opinion

Ukraine should join central Europe trade club

  • Visegrad states founded Cefta in 1992 (Photo: Marco Fieber)

Since 1 September, the Ukraine-EU Deep and Comprehensive Free Trade Agreement is in force. The debate about the next step of Ukraine's EU integration is in full swing.

Ukraine has declared it to be strategic national priority to apply for EU membership by 2020, but that is hardly realistic since EU member states are divided and enlargement is seen as challenging for elites and electorates in the EU.

  • Ukraine's aim to apply for EU membership by 2020 unrealistic (Photo: European Parliament)

For Ukraine, the right step now is to follow the successful track record of Central European countries in their EU integration.

Ukraine is currently in a similar situation as the six EU candidate and potential candidate countries from South Eastern Europe.

They have to wait in line, while reforming at home and convincing the EU of the benefits of extended membership. Progress on membership will depend on reforms and prosperity of the candidates.

If they jointly pursue reforms and progress in prosperity, they will accelerate the accession to the EU of all candidates as the Nordic, Baltic, Benelux, and the Visegrad countries have proven.

All European countries are entitled to apply for EU membership according to the European Treaty, and when they have fulfilled the Copenhagen criteria on democracy, rule of law, and market economic development, the EU can hardly turn them down. The question is how most effectively to accomplish that.

As strategic European integration gradually replaces the post-Maidan crisis, we recommend that Ukraine apply for membership of the Central European Free Trade Agreement (CEFTA) as the next stepping stone toward EU accession.

In 1992, Poland, Czechoslovakia and Hungary - the Visegrad countries - founded the CEFTA, which has functioned as a useful preparation for EU membership.

As countries have joined the EU, they have departed from CEFTA, while other countries with the ambition to join the EU have joined CEFTA. Slovenia, Romania, Bulgaria and Croatia all acceded to CEFTA and left when the successfully upgraded to full EU membership.

At present, CEFTA has seven members - Albania, Bosnia-Herzegovina, Kosovo, Macedonia, Moldova, Montenegro, and Serbia. They all joined in 2006-7.

Its headquarters is in Brussels among the European Commission buildings. Membership requires membership of the World Trade Organization (WTO), an Association Agreement with the EU, and a free trade agreement with the current CEFTA members.

It does facilitate trade among these countries and prepares them for EU accession.

Rather than trying to develop a new Eastern Partnership Free Trade Agreement (EPFTA), Ukraine should join CEFTA.

An EPFTA with Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine could not possibly work.

To begin with, Azerbaijan and Belarus are not even members of the WTO, and they are not likely to join for many years.

Second, Armenia and Azerbaijan are technically and sadly at war with one another.

Third, Armenia and Belarus are members of Russia's Eurasian Economic Union and would not be allowed to join.

EaP doesn't work

Face it! The Eastern Partnership does not work.

That leaves three countries that are members of the WTO and have Association Agreements with the EU, namely Georgia, Moldova, and Ukraine, of which Moldova is already a member of CEFTA.

Since Moldova is already a member, why should not Ukraine join as well? Moreover, CEFTA membership does not have to be approved by all EU member states.

The Western Balkans' endeavours to integrate their economies into a Regional Economic Area were agreed at the July Trieste summit.

Currently, discussions are going on about a customs union of the Balkan six.

Some in the Balkans might say Ukraine integration might be a burden for them, while some Ukrainians might argue that the small market size of the current CEFTA members renders CEFTA a less attractive group of poor relatives.

Furthermore the mutual knowledge of the Balkans and Ukraine is limited and both perceive each other as being poor and marginal.

However, combining the market, natural resources and technological capacity of Ukraine with the EU accession and impressive reform experience of the Balkans would strengthen all the countries involved.

Together they could build prosperity in South-Eastern and Eastern Europe, accelerating the EU accession for all members of CEFTA.

EPFTA would take years

Instead of considering setting up an EPFTA, which in the unlikely event that it would be formed, would take years to negotiate statutes, headquarters, and conventions Ukraine should join CEFTA, which is a highly successful free trade agreement with the splendid record of graduating eight former members into full EU member states.

Georgia should also be encouraged to join CEFTA. If other Eastern Partnership countries would fulfil the conditions for CEFTA membership, the organization will be open for them.

An enlarged CEFTA would improve all members economies and facilitate their EU accession, and it would hardly be politically controversial given that Moldova has already been a member for nine years.

Ukraine can fulfil all the conditions for CEFTA membership in 2018 to become a full member by January 2019. CEFTA can serve as the next essential building block for Western integration of Ukraine.

Anders Aslund is a senior fellow at the Atlantic Council, a think tank in Washington. Gunther Fehlinger is Chairman of Europeans for Tax Reform, an NGO in Brussels

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