Ukraine Seals Economic Trade Deal With EU

Jun 27, 2014

Ukraine’s new president, Petro Poroshenko, has signed a historic trade and economic agreement with the European Union. This comes just seven months after former leader Viktor Yanukovych rejected a trade deal with the EU, sparking protests that toppled his government.

The new pact will allow businesses in Ukraine, Moldova and Georgia to trade in the European Union without tariffs or restrictions. Goods from the EU will also be sold more cheaply in Ukraine, Moldova and Georgia. The move has reportedly angered Russia and came ahead of talks between Russian, Ukraine and EU representatives.

Here & Now’s Robin Young speaks with Michael Regan, editor-at-large at Bloomberg News, about what this means for Ukraine, Russia, and the rest of the world.


  • Michael Regan, editor-at-large at Bloomberg News. He tweets @Reganonymous.
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From NPR and WBUR Boston, I'm Robin Young. It's HERE AND NOW. And do you remember that uprising in Ukraine just last November that deposed the Russian-backed president and led ultimately to an insurgency in the east and Russia annexing the Crimean peninsula? Well, that chain of events sparked by the then Ukraine president backing out of a deal to sign a trade agreement with the EU. Worth noting today as Ukraine's new president, Petro Poroshenko, did sign the deal, calling it maybe the most important day for Ukraine since its independence from the Soviet Union in 1991.

Michael Regan is editor-at-large for Bloomberg News. He joins us now. And Michael, this is quite something. I mean, people died over this agreement. It is a big deal. Moldova and Georgia signed it, too. Basically what does the deal say?

MICHAEL REGAN: Well, like you said, it's basically the same deal that former President Yanukovych refused to sign last year and really started the whole crisis in Ukraine. And what it does in a nutshell, it allows Ukrainian goods to be exported into the European Union without tariffs or with very low tariffs. And in return, Ukraine promises to sort of beef up its standards and get its safety and consumer standards more in line with the EU. And that will take some time, obviously, but this gets the ball rolling on that and really, you know, allows for much closer ties between Ukraine and the EU.

YOUNG: Well, and the European Commission experts estimate that the deal will increase Ukraine's national income by about $1.6 billion a year, so that flow of trade from Ukraine to the EU is going to benefit Ukraine. But also, goods and services from the EU can be sold more easily in Ukraine.

REGAN: That's right. And it's really, you know - Ukraine's - as far as percentages go, Ukraine's a bigger market for European goods than Europe is for Ukraine's goods. The flow of goods going into Ukraine from the EU was about twice as much as going out - at about $33 billion last year.

So it's obvious why Europe would want to integrate Ukraine in these other countries. It's just a bigger market for their goods. And, you know, it allows for a larger, more diverse set of trading partners throughout the European Union.

YOUNG: Well, Russian leaders are not happy. The Deputy Foreign Minister reportedly said signing will lead to serious consequences. What might they be, and how is Russia going to be affected by this?

REGAN: Well, Russia has stated their biggest concern is that the Russian market will sort of be flooded with cheap, European goods through Ukraine and Moldova and Georgia, you know, that they'll sort of be smuggled into Russia and undermine Russian producers. Obviously, also Russia is just concerned about its dwindling influence in the region.

You know, their ambition is to have a big strong Eurasian Union to sort of counter the competitiveness of the European Union. And they, you know, Belarus and Kazakhstan have already signed up. And, you know, the ambition was to have a lot of the former Soviet Republic States such as Ukraine come on board. So it's sort of a smack to their ego in that sense.

But also, you know, as far as retaliation, you know, obviously the big elephant in the room is natural gas. Russia and Ukraine have had many disputes over natural gas exports from Russia into Ukraine in the past. So to me, it's very interesting that Europe is sort of flexing its muscle at this time of year, you know, rather than wait until the fall or winter when, you know, Russia would have a very big hammer to, you know, fight back with.

YOUNG: Well, and Ukraine said that they hope that soon this deal might lead to the country actually being a full-fledged member of the EU. But in the meantime, the trickle-down - people are saying just it will modernize the country. It'll adopt European standards. There will be less corruption.

REGAN: Right, that's part of the goal. That's part of the, sort of the strings attached to this deal that Ukraine really needs to crack down on stuff like that, and really improve its standards across the trade.

YOUNG: Michael Regan, editor at large for Bloomberg News, as Ukraine signs that deal with the EU that caused so much upset just a few months ago. Michael, thank you so much.

REGAN: Thank you, Robin.

YOUNG: You're listening to HERE AND NOW. Transcript provided by NPR, Copyright NPR.