Ukraine and the European Union began implementing the Deep and Comprehensive Free Trade Area (DCFTA) on January 1st, 2016. The deal aims to reduce tariffs on trade between both countries, and signals a closer move toward the European Union by Ukraine.
Despite tensions in recent years and a civil conflict that has divided Ukraine into pro-EU and pro-Russian sides, the European Union and government of Ukraine pressed ahead with the DCFTA. Ukraine is currently in a customs union with Russia, Belarus and Kazakhstan, which the Russian Presidential advisor Segei Glazyev stated could be revoked if and when the DCFTA is implemented.
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The DCFTA was signed on June 27th 2014, and the EU and Ukraine are important trading partners, with EU exports to Ukraine making up €17 billion and Ukraine imports €14 billion, according to 2014 trading data. Most of this trade includes transport equipment, chemicals, and finished goods.
Ukraine and the EU seek deeper trade links
Whilst not granting full access to the common market, as Norway and Iceland have, the DCFTA aims to gradually reduce trade barriers between the EU bloc and Ukraine in several key areas. The EU hopes to give access to the internal market to small businesses in Ukraine. A quantifiable goal stated by the European Commission is to eliminate 99.1% of Ukrainian import and export tariffs, with the EU eliminating 98.1% of the same tariffs.
A perpetually sensitive area is agriculture. The DCFTA gives 10 years of special quotas for cereals, pork, beef, and poultry, with the goal of allowing producers time to react to an expanded market whilst giving consumers more choice in goods.
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The DCFTA also offers EU companies reduced trader barriers to the potential 45 million customers in Ukraine.
According to the European Commission, Ukrainian agricultural exporters could save €487 million annually in tariffs, which could be a boon for a country known as the “breadbasket of Europe”.
While Russia has raised concerns about deeper integration between Ukraine and Europe, a statement by the Eastern Partnership Civil Society Forum claims that Russia has little to fear from the DCFTA.
Image credit: Evgeny Feldman [CC BY-SA 3.0], via Wikimedia Commons