Ukraine is postponing ratification of the Association Agreement with the EU referring to the losses of the budget

The Presidential Administration plans to defer the submission of a package of documents for the ratification of Association Agreement with the EU for another month. Over this period of time the PA hopes to save UAH 280 mn. However, the possible sacking of the Verkhovna Rada by the president makes the prospects of the process of ratification of the agreement more obscure.

Month of empty expectations

A few days ago the VR Committee on European Integration held a meeting during which the MPs discussed the delay in the process of ratification of the AA with Europe by the Ukrainian parliament, which Ukraine signed on June 27. Having signed the same document with the EU both Georgia and Moldova conducted the corresponding procedures in their parliaments, while Ukrainian MPs still have not had the chance. «The issue of ratification of the AA is not on the agenda of the Verkhovna Rada for this plenary session, or the next one scheduled for August 12-16. This is not good as there is a risk that the president will sack the parliament and then the issue of ratification of the agreement with the EU will be up in the air,» said Chair of the VR committee Hryhoriy Nemyrya (Batkivshchyna) at yesterday’s meeting. He said parliament members cancelled the summer recess of the parliament in order to debate the issues of European integration. «The first month has passed and no decisions have been made and there is nothing to debate,» said Nemyrya.

Director of the Ministry of Foreign Affairs on EU Issues Vsevolod Chentsov stated at the meeting that the ministry received an approved package of documents from the government, though it has not yet submitted it to the president for introduction to the parliament. Chentsov said a number of clauses in the AA call for development and approval of certain procedures required for implementation of the clauses in practice and the corresponding issues are being revised.

But the main reason for the delay in the submission of documents to the VR is, most likely, the financial risks for the Ukrainian budget, which may fall short of proceeds due to the reduction in import duties on European products and economic sanctions imposed by Russia after the ratification of the agreement by the VR. «Today, there is a choice between inadequate or more or less adequate scenarios,» says Chentsov.

Noteworthy is that the effect of the temporary application of the agreement on the Free Trade Zone depends on its ratification in the Ukrainian parliament. The EU has unilaterally imposed a preferential regime for Ukrainian export, while a positive vote of Ukrainian MPs is sufficient for the FTZ to begin functioning.

Money for the military

According to calculations of the Presidential Administration, Ukraine’s losses from ratification of the Association Agreement with the EU and the FTZ taking effect will be around UAH 280 bn per month. For this reason, the PA decided to drag out the ratification of the agreement to the end of this summer. «On the one hand, today the requirement of immediate ratification is up in the air. On the other hand, Ukraine stands to lose the UAH 500 mn if the agreement is immediately ratified. This money can help finance the army, which it desperately needs,» said Assistant Head of the Presidential Administration Valeriy Chaliy, who is responsible for administration of foreign policy, stated at a meeting of the VR committee. Chaliy said the PA consulted with businessmen as a result of which a decision was made to not rush into ratification of the agreement. «I don’t see any risk of losing the agreement if we do not immediately sign it, though I do see the risk of losing half a billion hryvnia,» Chaliy underscored. He says the PA hopes to ratify the Association Agreement with the EU by September. However, the date of submission of the documents to the VR has not been disclosed.

Member of the Ukrainian delegation in the talks with the EU in 2007-2010 Vadym Tryukhan says the final deadline is the end of August. He says at the moment the European Union opened its markets for Ukraine unilaterally and this regime will be effective until November 1. If by the end of the year Ukraine does not ratify the agreement, then there will be a gap between the opening of EU markets and the application of the free trade zone.

Former Head of the Presidential Secretariat Oleh Rybachuk sees another problem in Ukraine’s deferring the process of ratification. «While we drag out the ratification process, a number of EU countries will change their positions on the issue of cooperation with Ukraine,» he said. Rybachuk gave as an example Ukraine’s dragging out the application on joining the plan of action in preparing for membership in NATO. As a result, at the December NATO summit in Brussels the decision on Ukraine joining the plan of action for membership was negative.