On July 30 the Verkhovna Rada of Ukraine ratified the CIS free trade area agreement.260 cards of MPs voted in favor of such decision during the extraordinary session on Monday.

As a reminder, on October 18, 2011 in St. Petersburg, the Prime Ministers of CIS member states signed the agreement establishing a free trade area. The FTA agreement was signed by Russia, Ukraine, Belarus, Kazakhstan, Armenia, Tajikistan, Moldova and Kyrgyzstan. The contract was not signed by Azerbaijan, Turkmenistan and Uzbekistan. However, it was stated that these countries planned to join the agreement.

However, Ukraine raised some comments to the agreement, referring to the inequality of conditions within the imposition of trade restrictions by the Customs Union countries and other members of the Commonwealth. This spring Ukraine found out that the agreement rarified by Russia differs from the original. According to some reports, Russia included 50 additional commodity items, which fall within the withdrawals list. Such withdrawals mean import restrictions and limitations for specific items, which does not play into the hands of Ukraine.

However, the agreement is signed and ForUm has asked experts and MPs what it will mean for Ukraine.

Volodymyr Sidenko, leading specialist of the Institute on economy and planning of the National Academy of Science of Ukraine:

- The agreement contains several paragraphs, which are not very positive for Ukraine's economy. Namely, the matter concerns the export limitations for fuel and raw materials. According to this paragraph, export of these products requires additional agreements among FTA country-members. Russia has also withdrawn its main pipelines from the agreement, reserving the right to use to itself.  
In addition, another paragraph stipulates that if one of the FTA country-members concludes similar agreement with the third party and it will result in commodity inflow on the territory of the Customs Union, then any of the Customs Union members can apply standard duty rates against the 'violator'. It means that the agreement has many gaps, enabling interested parties to cheat.

Leonid Kozhara, MP (Party of Regions), deputy party chairman on international policy:

- The ratified agreement on the free trade area with CIS countries does not contradict the process of Ukraine's European integration.

There are findings of the European Commission for Ukraine on the fact that this free trade area does not contradict the FTA with Europe. What is the difference between the Customs Union and the free trade area? Free trade is an agreed import tariffs and quotas on certain groups of goods. Customs Union is an organization with the relevant authorities setting goals based on the interests of the whole Customs Union. Moreover, none of the free trade areas contradicts any other FTA. And the fact that this agreement has been ratified is a progressive step for Ukraine.

Previous FTA signed by Ukraine within the CIS was not based on the requirements of the World Trade Organization (WTO). Today, the customs tariffs of the WTO rules are approved in principle of the contract.

Ukraine's participation in this trade area provides the country with increased turnover by 30%. Today, the volume of trade in the former Soviet Union is great. Last year the volume of Ukrainian goods’ turnover amounted to 70 billion dollar. I see no negative aspects in signing the agreement.

Volodymyr Ohryzko, former foreign minister of Ukraine:

- Signing of this agreement poses no direct threat to the European integration. Both European and Ukrainian experts understand this. The matter does not concern joining the Customs Union. FTA is a lower level of integration.

On the other hand, there are no obvious benefits. It is not a free trade area in its full meaning. There are still restrictions and limitations. However, the agreement is beneficial for a number of Ukrainian enterprises, namely metal and agricultural producers.

The most important thing is that this agreement does not impede European integration. I wouldn't make any sensational statements on this matter. But if Ukraine signs FTA agreement with the EU it would more beneficial for us.

Valery Muntiyan, government's authorized representative on cooperation with Russia and CIS:

- The main principles and paragraphs of the FTA agreement within CIS were proposed by Ukraine. CIS has existed for 20 years, but only now we have reached the first and basic level of integration - free trade. The principle of the agreement provides for gradual abolishment of trade limitations, which in its turn will finally stop trade wars between the members. Moreover, the agreement is signed in accordance with the WTO norms, which means from now on we will cooperate in a civilized manner, not on the principle of 'who is stronger', as we used to.

For domestic economy, the agreement means annual growth of external trade by 30-35%. In addition, the CIS members will improve the cooperation in the industrial and heavy machinery sectors, including production and export of compressors, transformers, engines, etc.

If we make calculations for separate sectors, the additional annual growth for the agricultural complex will make 3.4-4%. For the food industry the figures will grow by 3-3.5%, for consumer goods industry - 3%, for mining and metals sector - 3-4%, for chemical industry - 4-5%, for engineering - 4.7%, for transport sector - 2.4%.

Oleksandr Paliy, PhD in political science, expert on foreign policy:

- The FTA agreement within CIS does not impede European integrations, as the very EU states. However, Russia has replaced a number of paragraphs and now the ratified document does not correspond to the original. In such a way, Russia has brought Ukraine closer to the Customs Union.

The final variant of the agreement stipulates for more restrictions and limitations in the free trade area. Though the EU declares that this agreement has no affect on the FTA agreement with the EU, the situation is not very pleasant for Ukraine's economy.

The Customs Union trades with the EU. Russia is carrying out European integration and at the same time tells the neighbors about how disadvantageous it is.


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