The conservative US-based Heritage Foundation has clearly explained why Ukraine should favor entering into a Deep and Comprehensive Free Trade Agreement with the European Union, rather than a Customs Union with Russia, Belarus and Kazakhstan.
Some facts are too startling to ignore: Alignment with the EU gives Ukraine access to a $14 trillion market and 500 million consumers with higher purchasing power than the customs union grouping with 170 million consumers and only a $2 trillion market.
But there are other differences highlighted in the report written by the Heritage Foundation’s James Roberts and the U.S.-Ukraine Business Council’s Andriy Tsintsiruk.
While the Kremlin-led customs union would give Ukraine lower energy prices from Russia and more deeply integrate the nation with the former Soviet republics, it will also mean: fewer Western investments and technology transfers, increased dependence on Russian natural gas, lower incentives for energy reform, lower changes for global integration, lower level of transparency and predictability in trade and no access to the World Trade Organization’s dispute settlement system.
On the other hand, an EU free-trade deal would: help modernize Ukraine’s economy, provide an external framework for economic reforms, give the nation access to higher technology and managerial skills, lead to higher levels of foreign direct investment, help stimulate diversification of the economy from raw materials, lead to increased global exports, improve transparency and predictability in trade, and give the nation access to the WTO’s dispute settlement system.
In other words, coupled with a reversal of the democratic regression under way since Yanukovych took power, the EU free-trade deal would get the nation moving in the right direction again.
