Unofficial translation from Ukrainian

We entered the year which will certainly decide the fate of the AA between Ukraine and the EU. Both the supporters of European integration of Ukraine and its opponents await this decision. This is indeed the moment of truth, a civilizational choice, which will determine the vector of Ukraine’s development for the next decade.

Not surprisingly that this issue has been debated at all levels: in kitchens and in the highest political offices. There are different opinions, professional, and quite controversial, politically motivated. Overall, it is a good thing, a sign that foreign policy discourse in Ukraine is as active as domestic political life.

However, the active discussion in itself is not necessarily a guarantee of "informed decision." We should distinguish emotion and information, myths and facts. This article deals with the myths which we should ignore while making decisions.

Myth One: There is nothing special in the EU-Ukraine AA, since the EU has concluded similar agreements, for example, with Chile, Morocco and Mexico.

Back in the day, the EU has really signed agreements of associative type with several [non-European] countries. However, the agreement with Ukraine would be unprecedented in terms of ambition and depth even in the contractual practice of the EU. The main difference is that it will lay the foundation for political association and economic integration between the EU and Ukraine and will make the modernization of state based on European model our legal obligation.

A classic FTA between the EU and the above mentioned countries cover only trade in goods. Instead, the FTA with Ukraine will be "deep and comprehensive", that is it will include liberalization of trade not only in goods but also services, liberalization of capital movement and to a certain extent, movement of labor force.

Unlike a conventional FTA, it will also condition a comprehensive adaptation of European regulatory legislation in the areas of transport, energy, services, agriculture and so on by Ukraine. It will unify a significant share of legal frameworks of the two parties, eliminate non-tariff (technical) barriers in trade and provide enhanced access to the EU Single Market for Ukrainian exporters and vice versa: European exporters will gain access to the Ukrainian market.

It is also important that the EU-Ukraine AA will be based on the recognition of Ukraine's European identity. This spirit of kinship and geographical proximity plays not the least role in a gradual deep integration in key sectors, since in a number of practical areas such as energy security or transportation capabilities, the capacities of non-European countries are much more limited compared to the potential offered to Ukraine.

Myth Two: The EU-Ukraine AA does not have a clear European perspective, and therefore does not move Ukraine closer to EU membership.

Despite the fact that there is no clear reference to the prospect of membership in the agreement, the scope and obligations of the parties by far exceeds European Association Agreements of 1990ies, and in some aspects - the Western Balkan Agreements on Stabilization and Association of 2000.

A successful implementation of the AA will mean compliance with membership criteria, therefore, improving the quality of life, modernization of all spheres of state and society, improving competitiveness of Ukrainian producers and more. This is the goal of European integration and not EU membership per se. The agreement will allow us to reach a level of development, where further progress towards EU membership becomes a matter of political expediency.

Myth Three: Failure to sign the Association Agreement indicates a crisis in relations between the EU and Ukraine.

This myth constantly changes. For a long time there was an assumption that not signing the Agreement at the EU-Ukraine Summit in December 2011 was the failure of Kyiv in relations with Brussels. Then, throughout 2012, despite the incompleteness of technical procedures, there were assumptions on political motives, because of which the EU doesn’t sign the Agreement with Ukraine.

However, the rate and volume of technical work on preparation of the Agreement, including the translation of multi-pages text into 23 official languages of the EU, show that the signing of the document in 2011 - 2012 could not be even considered as an option.

Only in 2013 the signing of the Agreement is real. The prospects of signing will be discussed at the next EU-Ukraine Summit in Brussels on February 25.

Myth Four: The Association Agreement and DCFTA will destroy whole sectors of the Ukrainian economy.

Despite the crisis, the European Union continues to be one of the most successful economic and political projects. We talk about business conditions, significant investment potential, high technology and competitive products from the European manufacturers. Europe was advancing to reach its current position for decades.

Thanks to the DCFTA Ukrainian manufacturers will be able to win a place in the "wealthy" European market, find its niche and promote high-quality Ukrainian products at the European market – at a good price. Domestic consumers, in turn, will have access to high-quality European goods in Ukraine at lower prices.

Of course, it will be a struggle for economic survival, perhaps even natural selection for particular segments of the economy, but this is a struggle, where citizens of Ukraine, our economy and ultimately the state will be the winners. The most sensitive sectors of our economy will have certain transitional periods and favorable adaptation conditions that will prevent shocking dislocations.

The early years of adaptation to deep and comprehensive free trade area will be difficult. This is not surprising, because the systemic transformation always leads to short-term losses. However, the fact of the AA signing will significantly increase the investment attractiveness and FDI inflows, which will help to offset the current trade deficit with the EU.

Myth Five: The AA with the EU will hurt Ukraine's relations with Russia.

The reformation of Ukraine in accordance with the terms of the Association Agreement with the EU is in the best interests of all parties, including Russia: it is about growing confidence in Ukraine as an international partner and strengthening the rule of law and predictability as the basis for the confidence of all, including Russian, investors (and we know that there is a lot of Russian money in Ukraine).

Moreover, under the DCFTA Ukraine can become a vital trade link and economic bridge between Brussels and Moscow, and later a unique platform for the development of mutually beneficial relations between the EU and members of new integration projects at the post-Soviet area.

Myth Six: DCFTA with the EU will prevent the existence of the FTA with the CIS.

Formation of the FTA with the CIS, as opposed to joining the Customs Union of Russia, Belarus and Kazakhstan is not inconsistent with the deep and comprehensive free trade area between Ukraine and the EU. We should not forget that our partners in the CIS - Armenia and Moldova –also hold talks with the EU on association agreements, which will include deep and comprehensive FTA.

CIS countries are important trading partners of Ukraine. Unfortunately, today a large proportion of Ukrainian goods does not comply with the EU requirements, and therefore can be competitive only in the traditional markets available to Ukraine.

However, the possibility of a free trade area with the EU will gradually improve the quality and efficiency of Ukrainian production, increasing the share of products with high added value in Ukrainian export. Trade CIS-only can be a the status quo of the economic realities, but it does not stimulate change, while trade with the EU is an investment in the future.

Myth Seven: Accession to the Customs Union is more profitable for Ukraine than economic integration into the EU.

The DCFTA with the EU will provide access to a larger (500 million consumers in the EU versus 170 million in the Customs Union) and predictable market with a much higher purchasing power of consumers.

The DCFTA with the EU will contribute to improving the business climate in Ukraine, ensuring the transition from Soviet to European "rules of the game" in the Ukrainian domestic market. In other words, we talk about strengthening of the rule of law and guaranteeing equal opportunities for investors.

Economic integration with the EU is the path to modernization. Look at the progress the European countries of the former socialist camp made in the last 20 years. The vast majority of them are already members of the EU, while Russia's economy continues to be based on commodity-driven exports. Russia itself is in need of radical modernization, the proof of which is the launch of a special initiative with the EU under the telling title Partnership for Modernization.

Accession to the Customs Union may grant Ukraine only short-term dividends: a few billion dollars, about which Moscow says, are just a payment in exchange for the loss of sovereignty of Ukraine in the context of its own trade policy and rejection of integration into the EU.

However, the Association Agreement with the EU provides explicit legal and political guarantees of sovereignty, independence and territorial integrity of the Ukrainian state.

In conclusion, I would like to refer to a joint study of the German Advisory Group and the Ukrainian Institute for Economic Research and Policy Consulting, according to which the accession to the Customs Union will reduce the welfare of Ukraine by 0.5% in the medium term and by 3.7% in the long term, while the DCFTA with the EU will increase this indicator by 4.3% in the medium term and by 11.8% in the long term.

Let's think pragmatically: the European Union is a community with more than 50-year history, which proved its viability and effectiveness. EU states have traditionally taken high positions in various indices in terms of quality of life, life expectancy, pensions and welfare.

The European Union has a rich heritage of common standards in many areas such as food quality, health care, social protection, environment, road safety, business climate, opportunities for young people and so on. Most importantly, these standards are actually implemented, not only just declared.

Today, a choice of where to go is trying to be imposed on Ukraine - to the EU or the Customs Union. And, paradoxically, the most categorical statements come from the Customs Union.

All pros and cons of the European choice are clear. Achievements of the EU are obvious, as well as the challenges that it faces now. Instead, the pros and cons of the Customs Union are hypothetical, especially when we consider the hypothetical achievements of this Association. They all are in the future, in the plans and desires of its masterminds.

The choice between the EU and the CU is a choice between clear and hypothetical, between proven and risky. We are offered to forget about "the civilizational choice", about the political rhetoric of the two decades of Ukrainian independence, about the efforts made in the European direction and to make a U-turn in favor of a relatively new regional project, to which the Ukrainian society has many questions of political nature. You do not need to be a great politician to understand the riskiness of such maneuvers, especially for the state of such scale as Ukraine.

It is obvious that Ukraine should seek a compromise between the pro-European and pro-Russian foreign policy. But it is equally obvious that the price of this compromise should not be the rejection of European integration. There should be the Association with the EU as well as the European integration of Ukraine. If Russia as the leader of the Customs Union is guided not only by its own interests but also by the interests of its partners, it will help Ukraine to combine European integration on the one hand and the partnership with the Customs Union on the other hand. If any compromise is possible, then we may have to question whether this Union is really an alliance of equal partners.

We should stop thinking as if we were an object of the struggle for spheres of influence and make our conscious choice in favor of the European model of development.

Kostiantyn Yelisieiev, Represeentative of Ukraine to the EU

http://www.pravda.com.ua/articles/2013/01/9/6981110/