By Kelsey Fraser, Editorial Assistant
The recent signing of association agreements between the European Union and the nations of Ukraine, Moldova, and Georgia signal a serious commitment by these former Soviet bloc countries to become more politically and economically aligned with the west.
All three of the agreements include the Deep and Comprehensive Free Trade Agreements (DCFTA) which will open up markets for most goods and services. In order to facilitate sustainable growth, the EU will provide frameworks for improving the current trade situation, modernizing the agricultural sector and providing guidance for better regulation of the financial sector in these countries.
The association agreements have already been ratified by the national parliaments of Moldova and Georgia, while Ukraine is expected to ratify the agreement by October 2014. The agreements require ratification by each of the 28 EU states and the European Parliament before coming into force.
The Association agreements extend across a range of policy areas, with provisions that will impact aspects of political, economic, and social life in these countries. While gradually integrating these three nations into the internal market, the European Union will provide aid to work on strengthening the rule of law, implementing crucial judicial reforms, fighting the impact of both small scale and government level corruption, ensuring respect for human rights, and reinforcing democratic institutions. These agreements could be first step in the long journey toward provisional membership in the European Union.
Georgia’s Prime Minister,Irakli Garibashvili, who signed the association agreement in Brussels on June 27, stated, “Unofficially we applied for EU membership today; -- officially, it depends on the progress that we will make, but I can guarantee you that we will do our best to meet all of the requirements of the European Union”. EU membership, however, remains a distant possibility given that EU Commission President-Elect Jean-Claude Juncker has said there will be no further EU expansion in the next five years, echoing the widespread aversion in the EU towards extending membership to additional countries.
Georgia, Moldova, and Ukraine are among the poorest countries in Europe, and despite predictions for an increase in GDP as a result of the DCFTA, there is a great deal of reform that will be needed before they are viable candidates for EU membership. The agreements come with a number of rules-based provisions and cooperation measures, some of which have specific compliance timelines .These reforms won’t be easy, and although the public in these nations have widely celebrated the move towards the west, it is likely that these same populations will feel the negative impact of reform before experiencing the long-term benefits. These short term costs include adapting to EU product standards which will require investment and time, thus hurting many businesses in the process.
The desire of the new Association countries to align more closely with Europe has ruffled the Kremlin which continues to consider these states a part of Russia’s sphere of influence. While all three nations have established free trade zones with Russia, none has signed up with Russia’s Eurasian Union, and Russia has threatened to cancel existing bilateral agreements.
The Russians are using trade measures as a method of retaliation and claim that these measures are necessary to protect its economy. From the Ukraine, Russian bans include dairy products, juices, most grain imports, canned fish and meats, and Roshen chocolate which is owned and produced by Ukrainian President Petro Poroshenko. In addition to a previous ban on Moldovan wine, Moldovan fruits were banned following the signing of the agreements on June 27. Georgian wines have been banned from Russian shelves in the past, returning in 2013 after a seven year ban. All three countries are heavily dependent on Russian gas, where prices could be hiked with disastrous consequences. It is expected that Georgia, Moldova, and Ukraine will look to the European Union for aid as these restrictions take a toll on their economies.
Sources:
http://europa.eu/rapid/press-release_MEMO-14-430_en.htm
http://eeas.europa.eu/georgia/pdf/quick_guide_eu_ge_aa_en.pdf
http://www.civil.ge/eng/article.php?id=27417
http://eeas.europa.eu/moldova/pdf/quick_guide_eu_md_aa_en.pdf
