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Moscow-led trade bloc warns against Ukraine-EU pact
August 23, 2013, 5:17 pm

Putin said [Presidential Press and Information Office]

Putin said the EU-Ukraine liberalization pact would be squeezing Ukrainian-made goods from the local market [Presidential Press and Information Office]

In what has been a long brewing geopolitical tussle, Russian President Vladimir Putin has asserted that the Moscow-led Customs Union of Russia, Belarus and Kazakhstan will be forced to take protective measures if Ukraine proceeds with an impending trade liberalization agreement with the European Union.

“If our neighbors resort to a substantial liberalization of their customs regime with the EU, goods that are not bad in terms of quality and price would inevitably gush to the Ukrainian market, but they would be squeezing out Ukrainian-made goods from the Ukrainian market,” Putin said at the meeting on socioeconomic development in Rostov Region that borders Ukraine.

The meeting was attended by federal ministers, regional leadership and CEOs of major enterprises.

Russia has raised fears over cheaper EU goods squeezing out Ukrainian-made goods from the Ukrainian market and pushing them to the markets of the Customs Union.

The Customs Union bloc could implement protective measures, as they claim it would be hard to identify the origins of the exports.

The issue is expected to be discussed next week once the Ukrainian delegation arrives in Moscow for consultations.

Last week, Russia tightened customs procedures on Ukrainian cargo, making the checks time-consuming and what Ukrainian officials described as “paralyzing”.

Russian presidential advisor Sergei Glazyev was quoted by Ria Novosti as saying that the new customs restrictions had been implemented because of the possibility of the EU and Ukraine signing an EU–Ukraine Association Agreement and establishing a Deep and Comprehensive Free Trade Area (DCFTA) at a summit due in Vilnius in November.

If Kiev signs an association agreement with the EU, it will make the country’s accession to the Customs Union bloc impossible.

John Clancy, the EU trade spokesperson had on Tuesday slammed Russia’s decision to tighten customs procedures for Ukraine questioning “the grounds for Russia to restrict Ukrainian exports”.

Earlier this year, Russia’s Prime Minister Dmitry Medvedev ruled out the possibility of Ukraine joining the bloc as an observer state in the so-called “3+1” format.

Our Ukrainian friends like to speak about a 3+1 format and things like that. There will be no 3+1 format. It’s either all or nothing, but then it will be observer status or something else,” Medvedev said.

The two post-Soviet states have been embroiled in trade disputes since some time now, with some serious disagreements over gas supply.


Daria Chernyshova in Moscow with inputs from Agencies for The BRICS Post