The potential benefits of membership in the Customs Union for Ukraine are quite limited
On February Donetsk hosted the international expert seminar “WTO and EU standards and their application to national economics development”. It was organized by the Legal Education Foundation with support of the European Program of the International Renaissance Foundation.
“Taking into account the existing FTA between Ukraine and Russia, Belarus and Kazakhstan, and the narrow focus of Customs Union on trade issues, the potential benefits of membership in the Customs Union for Ukraine are quite limited. Among the main benefits would be reduced prices for gas and oil,” Head of the Department of International Economics (Donetsk National University) Yuriy Makogon said.
“If these benefits will be provided, the Ukraine’s accession to the Customs Union with Russia, Belarus and Kazakhstan are possible without serious complications only under certain conditions. First, Russia, Belarus and Kazakhstan should join the WTO. Second, when they should identify barriers to trade with third countries at a level no higher than did the Ukraine on his accession to the WTO. Third, if Russia, Belarus and Kazakhstan will join the negotiations of Ukraine on free trade area (FTA) with the EU and, if Ukraine at that time will already have an FTA with the EU, the FTA will be established on terms agreed between the EU and the four countries,” he added.
“The consequences of Ukraine accession to the Customs Union with Russia, Belarus and Kazakhstan without the above mentioned conditions might, firstly, break existing contract with the WTO and start new WTO negotiations on new conditions. Secondly, the termination of negotiations with EU on free trade area and delaying them till the time when Russia, Belarus and Kazakhstan entry the WTO. As a result, according to our calculations, the total loss of budget can consists about U.S. $ 3.2 billion. In addition, there is a change in investment flows (outflows from 5 to 10 billion U.S. dollars), most foreign, especially European investors will lose interest in the Ukrainian economy, which will become factor in the degradation of domestic production and export collapse, especially in the EU, the balance of payments deficit will rapidly increase, and as a result the further devaluation of the hryvnia is expected,” expert said.
“I think it is possible “parallel” development of events in Ukraine because the WTO for the country is equivalent to obtaining a passport by citizen, and, like any country, Ukraine can be integrated into several vectors on the basis of the implementation of the “theory of concentrated circles.” Accession to the EU, the WTO membership, as well as other integration vectors with different intervals, the expert noted, ultimately, lead to new economic order, based on the construction which will be incorporated unified international legal space, creating an opportunity to develop more effective commercial as well as other aspects of foreign policy,” Professor of L.N. Gumilyov Eurasian National University Diane Madiyarova said.
“The project of expanding the area of integration into the Customs Union including Ukraine, introduced by me, opens the possibility of increasing the capacity of the group of countries, making them not only in a single growing market, but also a new player in the world, able to influence to the global markets,” she added.
Legal Education Foundation
(+38 062) 381 14 54
zkonst@donnu.edu.ua
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The Goal of the European Program is to promote Ukraine’s European integration by providing financial and expert support to relevant civil society initiatives.
