Bohdan Sokolovskyi
It is necessary to point out once again that it is very easy to evaluate other people’s actions, but it is extremely difficult to make the decision oneself. These lines should be read exactly with such an approach.
So, it has recently been reported from Brussels that the entry into force of the Free Trade Area (FTA) between Ukraine and the EU is postponed till December 31, 2015. That is, the beginning of a full implementation of the Association Agreement between Ukraine and the EU is delayed until the beginning of 2016. At this, no one informs whether the delay will be over at the end of 2015, or will be prolonged. It all depends on us, on the EU and… on the Russian Federation. Unfortunately! However, the EU will leave Ukrainian goods’ free access to European markets till the same December 31, 2015. At this, the access of European goods to the Ukrainian market is limited. At the same time, the Association Agreement with the EU has already been ratified in the Parliament of Ukraine and in the European Parliament.
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Note. Free trade area is the type of international integration, where member countries eliminate tariffs, import quotas, and preferences on most goods and services traded between the member countries. For each member country retains the right to self-determination and an independent trade regime with respect to third countries. In most cases, the conditions of a free trade area applies to all products other than agricultural products. List of the main FTA: |
About various estimates (sometimes very emotional!) of the above-mentioned actual action, it has already been reported, particularly in the media. Now, when passions have subsided a bit, it is worth to try once more coolly and is available for public to analyze, about what Ukraine agreed in the trilateral format with the EU and the Russian Federation? And where does that get us? And what do we lose — if we lose?
On the one hand, it’s nice that the EU “lets” Ukrainian goods to their markets without any restrictions, and we restrict the access of European goods to our market. This way we are protecting our market. Here we should not forget that at European markets there is free competition. This means that Ukrainian products sold there are competitive. Consequently, in the EU markets, Ukrainian producers partially compensate for the losses necessarily occurring during military operations of the Russian Federation at our territory. But if you look closely at the structure of exports, you can see that to the EU markets from the markets of Russia will be reoriented the products that are already there – competitive, in which are interested European consumers. We are not taking about the products that were sold successfully only on the Russian market, and which now have fallen there under certain restrictions. Such products are uncompetitive, having no sale in Europe and even no hope for sale in the future. For example, machinery or electronics. After all, now it is difficult to imagine that in European countries there was a demand, for example, for Ukrainian cars against the background of Mercedeses, BMWs, Peugeots and Skodas.
On the other hand, it is not clear what to do with those, absolutely non-competitive at the European markets, products produced by technologically lagging behind, energetically costly enterprises. It never had and never will have sales in Europe. In the past, these products had a demand in Russia. Now they are not welcome. Most likely, the owners of these businesses will be looking for markets for products of their businesses somewhere in “third” countries, but won’t rush to use new technologies. For example, in Africa, our machines, KrAZes, and so on somehow could be sold at a lower price than the price of, let’s say, of ABB or Mersedes. When all the European markets will be closed for our “privatizers”, — well, to begin with, it, firstly, is not going to happen today, and, secondly, for them it will be comparatively not the catastrophic loss, occurring as a result of the bankruptcy of inefficient enterprises. After all, the owners have taken care of their “modest” life somewhere in Geneva, London or Abu Dhabi. They will not worry about the fact that Ukrainian workers will lose their jobs and, accordingly, the only source of income: this is supposedly their own (workers’) problems. Needless to say, such enterprises in Ukraine are the majority. They are inheritance of the Soviet Union. The question of their upgrading or repurposing is as old as the hills. But neither their owners nor workers have been offered any real incentives since Day One of our country’s existence.
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| I. R. Yuhnovsky |
Consequently, both, competitive and lagging behind enterprises will be implementing the EU’s rules and regulations (whether AA (Association Agreement) works with or without the FTA) to their products. At least, for the world markets, since the whole world gradually comes to these demands. In particular, African markets do. So, to these requirements have to get adapted both, competitive (particularly at European markets), and lagging behind enterprises. And who cannot get adapted, will leave the market altogether. Of course, they all are interested in access to the domestic Ukrainian market, as it is the main one and determines their future and existence in general. While foreign markets for the most part only provide revenue to owners of enterprises. In order to enter foreign markets, one needs a good foothold at the domestic one. Therefore, an Association Agreement with the EU is normally signed together with the FTA, which is a powerful incentive for the modernization (reform) of our country, first of all of the economy, because, inter alia, it makes it compete at the domestic market, which should be open to high-quality European products. If the access of European goods to the domestic market is limited, there will be no motivation for introduction of new production technologies, reforming of the economy as a whole, pushing off of low-quality (primarily Chinese) goods and so on. One way or another, but many of the current woes stem from the fact that at one time, at the dawn of independence of Ukraine, in particular, the economy of the USSR had not been restructured to the needs of an independent state. After all, let’s face it, the structure of the economy of Ukraine is not much different from the structure of the economy of the USSR, created for the needs of the Soviet Union, and not of a separate state of Ukraine. And all this — despite the fact that (thanks God) the USSR fell apart more than 23 years ago! Just to be fair, we should mention that the idea of complete restructuring, primarily of the economy of our state, was fathered in 1992 by the then MP I. R. Yuhnovsky. At that time he was actively supported by the late V. M. Chornovol, S. I. Hmara, V. P. Chernyak, L. D. Kuchma (until he became President in 1994) and many other political leaders. Unfortunately, over all these years of Ukraine’s independence, restructuring has not been carried out. Now it is called not “restructuring” but “a reform”. And whoever carries it out, will remain forever as great and outstanding a figure in the history of the state of Ukraine, as for Poland, for example, was L. Balcerowicz. But at this he/she should forget about his/her political career.
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| L. Balcerowicz |
Therefore, our strategic task is systemic reforming. In the first place — of the state’s economy. We, after all, like all European nations, must ensure meeting public demands with the help of this economy (read — Ukrainian jobs) and, in particular, substantially limit the supply of cheap, such as Chinese and Russian (and similar) products. Like President de Gaulle did in France after the Second World War. The rest is a tactic.
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| De Gaulle |
Will the delay of the FTA with the EU help achieve Ukraine’s strategic goal — the reform of the system, in particular, of the economy? Definitely — NOT!
And the tactical one? It will help working Ukrainians to preserve jobs, and owners of technologically lagging behind enterprises – to get rich in the absence of motivation for modernization. And they both subconsciously approve of the postponement. Though the working Ukrainians welcome global reforming. After all, it is clear: the more we delay the reform, the more painful it will be for the majority.
Therefore, from the available information, we cannot draw an unambiguous conclusion about how Ukraine (at least in its current borders) and its future in general will be influenced by the delay of the FTA with the EU. Especially in terms of external pressure, in particular, Moscow’s. Definitely, we can only say that now is meant conservation of the situation in which we, Ukrainians, have been living for almost 400 years now.
