REGIONAL COOPERATION AND ECONOMIC INTEGRATION

PART I:
3. Creation of a free trade zone with the EU
Year by year trade turnover between the EU and Ukraine and a flow of foreign direct
investments from the EU to Ukraine keep rising. Since April 2007 active measures have
been taken as for creation of a legal basis for Ukraine-EU enhanced cooperation. Significant
progress in negotiations on the economic and sector parts of the Agreement on association
have been reached. Inter alia, a project of a set of provisions on several sector questions
has been worked out.
After solution of the issue of export tariffs with the EU (16 January 2008) the Protocol on
Ukraine’s accession to the WTO was signed. In these circumstances official negotiations
on the creation of an enhanced and comprehensive EU-Ukraine free trade zone was
officially set up on 18 February 2008 pending the visit of the member of the EC on trade
P. Mendelson to Ukraine. Provision on the FTZ shall specify the legal basis for a free
movement of goods, services, capital and partially labor force between Ukraine and the EU
as well as regulatory adjustment aimed at stage by stage integration of Ukraine’s economy
into the EU common market. The first round of negotiations on creation of the FTZ took
place on 23-25 April 2008 in Brussels.
Setting up of a dialogue on foreign trade statistics, clarification and cancellation of reasons
for discrepancies in statistical data remains an up-to-date issue. Building-up a negative
trade balance of Ukraine with the EU has also stressed the importance of settlement of a
complex of questions concerning access of Ukrainian goods to the EU market.
From the point of the geo-economic development of Ukraine the problem of the FTZ
with the EU is of great importance. The key element of the enhanced agreement should
become the chapter on the FTZ. Discussions on creation of the FTZ have been held since
1999 when the research made by the EC found it unpractical due to the low economic
development of Ukraine.
Given first of all the political interests, the EU is not ready to offer Ukraine a prospect of
membership. There are no real signals as for that when Ukraine will obtain a prospect of
membership. However, the EU cannot leave it out of its integration processes. A FTZ is a
standard instrument of cooperation with the third countries.
Negotiations on abolishing customs tariffs between Ukraine and the EU shall be based on
the agreements within the WTO. And after admission of Ukraine to the WTO one can talk
about implementation of the FTZ.
Adjustment to the EU standards and norms will make it possible to cancel the barriers in
the short-run perspective and to increase access to the markets of the EU in a middle term.
But in this case a classic FTZ shall make a limited positive impact on Ukraine’s economy.
In 2004 a group of independent experts worked out a new form of economic and trade
cooperation between Ukraine and the EU through “enhanced free trade” (or free trade
zone +). As opposed to the classical free trade zone, the one with “+” means not only the
abolishment of customs duties, but also liberalization of trade in services and adjustment
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