Top Ukrainian trade officials set out on Tuesday competing visions for Ukraine, indicating the Kyiv leadership may be considering joining a customs union with Russia rather than a free trade zone with the European Union.
The former Soviet republic and the EU are in talks on a free trade agreement which diplomats have said could be signed this year.
But the sides have yet to agree on the most sensitive issues such as trade in agricultural goods.
Russia, on the other hand, has repeatedly pressed Ukraine to join its customs union with Belarus and Kazakhstan which are also ex-Soviet states.
“Ukraine’s membership in the customs union would rule out a free trade deal with any third party,” Deputy Economy Minister Valery Pyatnytsky, Ukraine’s top negotiator on the EU deal, told the official newspaper Uryadoviy Kurier in an interview.
“The customs union can make deals with third parties (as a whole) but its individual members cannot. So if we are joining the customs union we must stop the talks with the EU.”
Ukraine’s main negotiator with the Russia-led bloc, government envoy Valery Muntyan, argued against promoting trade ties with the EU over those with Russia.
In an interview with Kommersant Ukraina, a business daily, he said: “In 2010, EU member countries accounted for 29.6 percent of Ukraine’s foreign trade,” he said.
“But trade with CIS nations accounted for an even larger portion, 40.2 percent.”
“In my opinion, we must make a decision on joining the customs union in the first half of this year and this decision will be made by the country’s political leadership.”
President Viktor Yanukovich, elected just over a year ago, shifted Ukraine back towards Russia in several key areas of foreign policy while at the same time setting European integration as a priority.
TRADE CONDITIONS
Muntyan said Kyiv had put forward several conditions for joining the Russian bloc which included a 50 percent cut in the price of Russian natural gas — a move that would cost Russia $4.5 billion a year.
Ukraine, which depends heavily on Russian energy supplies, also wants Russia to drop export duties on oil and oil products worth $3.5 billion a year, he said.
Asked if Russia had agreed to those terms, Muntyan said: “There is agreement in principle. But it is too early to talk about agreeing to particular compensation mechanisms, the talks are going on.”
The EU has offered Ukraine no one-off bonus for signing a free trade deal.
Senior Ukrainian officials including Yanukovich have expressed unhappiness with Brussels’ tough stance and the fact that the EU is not offering Ukraine the status of potential member.
