Ukraine and the European Neighbourhood Policy: Ensuring the Free Movement of Goods and Services. CEPS Working Documents No. 240, 1 March 2006

The negotiation of a regional trade agreement between the EU and Ukraine is the next significant step towards Ukraine’s deeper integration with the West. Drawing on analyses of official and independent analytical materials and statistical data, this paper explores the form such an arrangement should take – namely, which of the existing models would be an appropriate model for EU-Ukraine trade relations: a Free Trade Agreement, a Customs Union or something along the lines of the European Economic Area Agreement. The author, Olga Shumylo is a researcher at the International Centre for Policy Studies in Kyiv

In their row over gas prices, Russia has no reason to make concessions to Ukraine. There is little to suggest that an end to the conflict is in sight.

Relations between Russia and Ukraine are at a new low after serious gas shortages in Europe this winter. Olga Shumylo-Tapiola argues that the interests of Ukrainian oligarchs will continue to put pressure on the government to demand lower prices, a demand that Russia is unlikely to acquiesce to. The only long term solution is for Ukraine to do more to reduce its dependence on Russian natural gas

The Prospect of Deep Free Trade between the European Union and Ukraine. CEPS Paperbacks. April 2006

This study examines the feasibility, content and likely economic impact of a free trade agreement between the EU and Ukraine. A simple and shallow free trade agreement, adding only the elimination of tariffs on trade in goods to the conditions for WTO accession, is the most easily feasible option, but would yield only modest benefits for Ukraine and less still for the EU. By contrast, a deep free trade agreement (or ‘FTA+’) with the EU, while posing more difficult issues of feasibility, could be a centrepiece of an economic strategy leading Ukraine into rapid growth. An FTA+ with the EU would entail an extensive, yet still selective, alignment of Ukraine’s external and internal market laws and standards with those of the EU. Politically, this step would be consistent with Ukraine’s ‘European choice’. The country has little or no chance of becoming a prosperous economy and society without openness and integration into the European and global economy, alongside compliance with normal standards of advanced economic governance at home. Not being a natural resource-based economy, Ukraine has no choice but to develop a competitive and diversified economy centred primarily on industrial and service sectors. This point is underlined by the increase in the price of imported energy since the start of 2006. Nevertheless, there is evidence suggesting that the combination of economic openness, convergence on modern European and international standards of economic regulation and corporate governance and proximity to EU markets could lead to a sustainable high growth path for Ukraine. The country’s economic paradigm could change drastically, with a re-branding of its reputation and with its industry entering into the European and global supply chain. Such a strategy would also be of value to the EU economy in meeting the challenges of globalisation and Asian competition