You're reading: Experts: Ukraine’s accession to Customs Union to worsen long-term prospects for national economy

Ukraine's accession to the Customs Union of Russia, Belarus and Kazakhstan could bring short-term benefits, but it will worsen the long-term prospects for the national economy, according to experts interviewed by Interfax-Ukraine. 

“In the long term, accession to the Customs Union could worsen the prospects for the Ukrainian economy. Ukraine and Customs Union members are practically at the same level of technological development and, therefore, synergy effects from mutual investment and trade are very limited,” a senior analyst at the International Center for Policy Studies (ICPS), Ildar Gazizullin, said.

“Membership of the Customs Union could bring some benefit to a limited number of exporters who are facing the exceptions from the regime of free trade with these countries. Theoretically, it’s also possible to assume the cancelation of export duties on energy supplied by Russia to Ukraine. But the final effect from this measure depends on what pricing policy on the energy markets is pursued by Russia. Therefore, the benefits could be quite limited in time,” Director of the Institute for Economic Research and Policy Consulting Ihor Burakovsky said.

“A strategic objective of the Russian economy is to eliminate competition from former Soviet countries that have a similar range of products. This means that Russia will make every effort to squeeze competitive producers from the market, as is happening on the market for aircraft construction, shipbuilding and agriculture, and stimulate the transition of the economies of the partner countries to the commodity segment, increasing their dependence on Russian demand,” Director of the Da Vinci analytical group Anatoliy Baronin said.

He added that the Customs Union was part of the Eurasian integration project, which foresees an even deeper further integration, both economic and political.

As reported, Ukrainian President Viktor Yanukovych was planning to visit Russia on December 18 to discuss with his Russian counterpart the issues of drafting a mutually acceptable mechanism for cooperation between Ukraine and the Customs Union, but the visit was postponed.