BY
The 21st December saw the final opportunity for The Kremlin to further
obstruct, delay and undermine the ratified DCFTA between Ukraine and the EU
pass without managing to achieve a single goal.
The ratified EU-Ukrainian DCFTA will come into effect from 1st January
2016 with no concessions or further delays – and rightly so. The Kremlin
having managed to delay it by 12 months already, it has failed to delay it once
more – let alone scupper it.
Thus with effect from 1st January 2016, what amounts to a trade embargo
upon Ukrainian goods by The Kremlin simultaneously comes into force with the
market opening DCFTA with the EU as far as Ukraine is concerned.
As stated
in previous entries, the net effect will be to push Ukraine more swiftly toward European
integration and develop other markets. A Ukrainian-Turkey FTA seems an
assured outcome with both soon to be subject to self-harming Kremlin sanctions
– “The question therefore,
is how long will any such Kremlin instigated embargo upon Ukrainian goods last?
The answer will be in years – but how many?
A glance at the 1990’s would suggest that as a
petulant and truculent Kremlin embargoed almost all trade with the eastern
European and Baltic States as they swiftly stepped out from under The Kremlin
shadow, they rapidly redirected their trade flows. Naturally a free trade
agreement with the EU, let alone the deep and comprehensive one that comes into
force, means that Ukraine will have little option but to make the most of that
opportunity (and other opportunities outside of Europe). Those certain
Ukrainian businessmen that pre-war in The Donbas who would have tried to slow
such a process due to their trade interests with Russia, having seen them
dramatically effected by Kremlin sponsored events in the east, will also be
forced to look to other markets during the (likely) forthcoming embargo years.
During the early 2000’s, similar Kremlin embargoes on
Moldova and Georgia forced trade reorientation with Europe (and others) too.
The end result being that when The Kremlin relaxed
and/or removed its imposed embargoes, pre-embargo trade levels never returned –
with any of the nations involved.”
The failure of the last minute talks was of course anticipated by
everybody.
Nobody expected any progress or breakthroughs. The EU and Ukraine
had made it perfectly clear that under no circumstances would the DCFTA
implementation be further delayed. The Kremlin had
already authorised what will
amount to a trade embargo with Ukraine with effect from 1st January 2016.
Ukraine had unilaterally in January 2015 adopted EU standards as its
benchmark, and on 16th December issued a Decree abandoning the Russian/Soviet GOST standard system, coming fully into force in
2018.
Against such a backdrop there would either be a sensible negotiation
regarding country of origin certification and other technical issues to
facilitate trade – or there would be a Kremlin diplomatic tragicomedy put
forward that simply could not be taken seriously (and in fact would be
laughable).
It so came to pass that, unsurprisingly, the later diplomatic
tragicomedy was presented to the EU and Ukraine by The Kremlin, and the meeting
was described as “surreal” by
Ukrainian FM Klimkin.
So what were The Kremlin demands of the EU and Ukraine presented?
The Kremlin wanted Ukraine to maintain acceptance of Russian GOST
industrial standards for another 10 years – even within the sectors where
Russia and Ukraine have absolutely no trade.
As this would lead to unfair competition in the Ukrainian market between
goods produced according to EU standards and goods produced according to
Russian standards, it was simply a non-starter considering all the
aforementioned ratified legal instruments and Decrees already in existence.
The Kremlin insisted that Ukraine, as a matter of principle, recognise
Russia’s SPS rules for Russian food exports, which had Ukraine done so would
prevent Ukraine applying the DCFTA in this regard. As a matter of
complete farce, The Kremlin further demanded that Ukraine implement the Russian
bans and restrictions on certain animal products and plants vis-à-vis the EU.
In short, this would mean that Ukraine would have to apply the Russian food
embargo against the EU.
Regarding customs, The Kremlin requested that the EU provide extensive
data on prices and customs valuation information to Russia for each and every
single transaction on goods exported to Ukraine. An absolute no-go for the EU
as it would be in complete contradiction with the EU privacy legislation and
the protection of confidential business information. Furthermore, this would
not provide The Kremlin assurances about the origin of the goods imported by
Russia, one of the consistent points of opposition raised by The Kremlin and
used as the premise for what will be a Ukrainian goods embargo.
The Kremlin also presented demands in other areas that are entirely
unconnected and completely estranged of the DCFTA.
By way of a few examples, The Kremlin claimed that Ukraine would have to
adopt the EU’s energy legislation because of the DCFTA – which is absurd.
The text of the DCFTA only reiterates Ukrainian commitments already
undertaken within the Energy Community Treaty framework. An entirely
separate legal instrument to which Ukraine has adhered since 2011.
Bizarrely, even though Ukraine has adhered to its ECT commitments since
2011, The Kremlin now insists, some 4 years later, that Ukraine in doing so
(and thus in separating itself from the Russian system), threatens the entire
functioning of the energy system (which has been unaffected since 2011 when the
“separation” actually occurred).
Technically speaking it is absolute and utter flapdoodle, balderdash and
codswallop, and various degrees of complete oratory arse! It is
technically unfounded (and has no connection with the DCFTA, which does not
prescribe any rules or recommendations in this respect). Technically and
practically, the electricity connection, and thus trade, is possible regardless
of which grid synchronisation is chosen.
By way of example, the Baltic States are synchronised with the Russian
electricity grid while the UK or the Nordic States are not synchronised with
the grid of Continental Europe. Nevertheless all of these countries are still
connected with the EU electricity market.
In another degree of diplomatic lunacy, The Kremlin wanted to include
investment issues in the trilateral negotiations/talks/gobbledygook.
There are no investment provisions within the DCFTA, and therefore
Kremlin requests for higher investment protection for Russian companies in
Ukraine are well outside the scope of these any DCFTA discussions.
Russian investors and their investments are subject to the bilateral
investment treaty between Russia and Ukraine. It has absolutely nothing
to do with the EU nor any EU Member State.
The upshot of the tragicomedy presented by The Kremlin at the last
chance (because the festive season prevents any further meetings prior to the
DCFTA entering into force on 1st January) to find some form of agreement and/or
consensus, is that during 2016, the already radically reduced Ukrainian trade
with Russia will probably decrease by another $900 million – which is not a
figure that will undermine Ukraine even in its current economic circumstances.
The EU may be an incoherent foreign policy actor, an abject defence
failure, a bureaucratic behemoth – but it is a truly significant global trade
player. (Arguably the only other claim it has as a significant global
player is in “aid”.)
The question therefore to be asked, if knowing that presenting such
complete nonsense could never be accepted either by the EU nor Ukraine, why do
so?
The answer is clearly that The Kremlin had nothing to offer either side,
had no intention of making any concessions despite the self-harm failing to do
so will cause, was sat at the negotiating table in bad-faith once again, and had
already accepted there was no longer any way to undo or further prevent the
EU-Ukraine DCFTA fully entering into force. So why not?
Thus with tragicomedy diplomacy over the DCFTA having produced the
results that such diplomacy delivers – tragicomedy outcomes – why not turn the
final negotiation/discussion session into a farce? For The Kremlin the
only outcome ever acceptable to to prevent the agreement entering into force –
and it has failed.
Domestically however, The Kremlin can inform its audience that up until
the very last moment it tried to avoid the loss of Ukrainian produce in the
Russian consumer marketplace and avoid implementing (another) embargo on a
neighbouring State (albeit one full of fascists and not US arse-licking Turks
this time).
(Ukraine can presumably look forward to Visa-free travel with the EU at
some point within 2016 – and thus upon the same date that enters into force and
in true Kremlin reciprocity style, we will probably witness the reintroduction
of Visas for Ukrainians entering Russia.)
Nevertheless, regardless of the merits or otherwise of the EU-Ukraine
DCFTA, and no matter what gibberish presented by The Kremlin, it is somewhat
reassuring to witness no concessions offered to the Kremlin at the last moment.
There can be no room for a third party veto on any bilaterally ratified
legal instruments.
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