Trade Agreements: Ukraine

Department for Business, Innovation and Skills written question – answered at on 9 March 2015.

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Photo of Lord Hylton Lord Hylton Crossbench

To ask Her Majesty’s Government what is their view on Ukraine having free-trade agreements with both the European Union and Russia.

Photo of Lord Livingston of Parkhead Lord Livingston of Parkhead The Minister of State, Foreign and Commonwealth Office, The Minister of State, Department for Business, Innovation and Skills

We are a not opposed to Ukraine having a free trade agreement with the Russian Federation if it wishes to do so.

An Association Agreement between Ukraine and the European Union has been signed and ratified by both the Ukrainian and European parliaments. The Association Agreement establishes a Deep and Comprehensive Free Trade Area (DCFTA), which is due to come into force from 1st January 2016. Under the terms of the DCFTA, 98.1% of the value Ukrainian exports to the EU will become tariff-free. Additionally, Ukraine is required to take steps to modernise its trade relations by undertaking certain economic reforms and aligning a number of its industrial regulations and standards with those of the European Union.

Ukraine is also a signatory to the Commonwealth of Independent States Free Trade Area (CISFTA). Established in October 2011, this is a free trade area between Russia, Belarus, Moldova, Armenia, Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Ukraine. The EU-Ukraine DCFTA does not stop Ukraine from remaining within this free trade area.

Separately from the CISFTA, Russia has established the Eurasian Economic Union (EEU) with a number of its neighbours. Belarus, Kazakhstan, Armenia and Russia are currently members. The EEU unifies its members’ import tariffs, customs regimes and a number of industrial regulations and standards. Therefore it is not possible for Ukraine to be a party, simultaneously, to both the EU-Ukraine DCFTA, which eliminates tariffs on most goods to and from the EU, and the EEU, which would require Ukraine to apply the same tariff rates as applied by Russia and the other EEU members.

However, this does not prevent Ukraine from maintaining or entering into free trade agreements with other countries or blocs, including the EEU; it leaves Ukraine free to determine its own trade policy.

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