October 24, 2014
EU to offer Ukraine trade benefits to boost economy
The European Commission has agreed to give nearly 500 million euros ($685 million) worth of trade benefits to Ukraine, which had been teetering towards default even before pro-Western unrest in Kiev revived Cold War tensions.
The Commission plans to remove duties on a wide range of agricultural goods, textiles and other imports in an effort to support the Ukrainian economy, which is heavily dependent on Russian energy supplies and running critically short of foreign currency to meet debts or finance imports.
"The European Commission is committed and ready to support Ukraine to stabilise its economic and financial situation," Commission President Jose Manuel Barroso said. "This proposal is a concrete, tangible measure of EU support to Ukraine."
Ukraine's interim leaders established a new National Guard today and appealed to the United States and Britain for assistance against what they called Russian aggression in Crimea.
European Trade Commissioner Karel De Gucht said the new trade benefits would be in force until at least Nov. 1 this year, by which time the European Union expects to have signed a full free-trade agreement with a new government in Ukraine.
While the bilateral trade relationship is relatively small at 38.3 billion euros in 2012, the European Union is Ukraine's top trading partner, representing about a third of the country's total trade, slightly more than with Russia.
The offer is not without risks for Brussels.
Russia could close its borders to Ukrainian imports to pressure Kiev, or take the European Union to the World Trade Organisation on the grounds that Brussels is being unfairly generous to a trading partner outside of a trade agreement.
Moscow wants to maintain influence in Ukraine and is also offering Kiev membership of its own customs union with Belarus and Kazakhstan, an area that Ukraine could not be a part of if it joined the EU's pact because Belarus and Kazakhstan are not members of the World Trade Organisation.
Once member states and the European Parliament have given their approval, the EU decision will remove duties on agricultural products, processed foods, textiles and industrial goods, saving Ukrainian businesses 487 million euros a year.
In total, it will mean preferences being granted to more than 80 percent of Ukraine's exports, giving the country of 46 million people nearly full and open access to the European Union's market of 500 million consumers.
Ukraine will not have to provide extra access to EU exports in return until both sides sign a free-trade deal.