Ukraine's Path to Europe Depends on Trade

Kyiv will have to wait for significant breakthroughs in its journey to accession.

Ukraine's Path to Europe Depends on Trade

Kyiv will have to wait for significant breakthroughs in its journey to accession.

Wednesday, 8 March, 2023

Any hopes Ukraine had nurtured that political expediency would ensure an accelerated advancement toward EU membership were dashed at the EU-Ukraine summit in early February.

But although the meeting failed to produce expected breakthroughs such a transition to formal accession negotiations, experts calculate that Ukraine’s path to Europe may be smoother when it comes to trade regulations.

Ukraine was granted candidate status in June 2022, following Russia’s full-scale invasion in February. Both then and now, Brussels perceived this status as an advance for Kyiv. The EU wanting to see Ukraine as a member was a key message to a country at war, that, among other things, protects its European path.

Ukraine was optimistic; in September 2022, Prime Minister Denys Shmygal said that “we have a clear plan and vision that it is quite realistic to have all the work done in two years”.

Ursula von der Leyen, president of the European Commission, was much less specific in her address to the EU-Ukraine summit on February 3.

“Only one year ago no one could have imagined how fast Ukraine could move towards the EU, but now you are a candidate to joining our union,” Ursula von der Leyen, president of the European Commission, said during the. “I know that millions of Ukrainians are working hard for that goal. Ukraine will advance on its European path.”

On the eve of the summit, the EU published a detailed analytical report on the level of adaptation of Ukrainian legislation to European formats. The result turned out to be much worse than Kyiv’s expectations, despite the fact that the country had eight years of implementation of the Association Agreement, where a significant part of the homework met the preparations for joining the EU.

The European Pravda outlet analysed the Ukrainian criteria for the adaptation of national legislation. According to the European Commission, Ukraine showed great success only compared to Moldova, which received candidate status at the same time as Kyiv, and Georgia, which will receive it only after a number of conditions are met. Even so, Ukraine is barely ahead of Georgia at 69 against 67 points, in an assessment formed by adding up five-point ratings of convergence with EU standards in 33 areas. Moldova’s success is estimated at 55 points.

However, Ukraine is significantly inferior here to all other EU candidate countries. The Western Balkans are estimated at the level of 84.5 points for Albania to 99.5 for Montenegro. Moreover, European Pravda noted, these countries had a better rating than Ukraine has now even immediately after receiving candidate status.

Unfortunately, Ukraine has not been particularly successful in fulfilling the regulations of the association agreement – on average, we completed about half of our homework,” Liubov Akulenko, executive director of the Ukrainian Centre for European Policy, told IWPR. “Therefore, a not very high assessment of the level of our preparation should not be surprising.”

He attributed this lag to the lack of political stimulus for Ukraine, given that for a long time the EU was not ready to give Kyiv even membership prospects. This made it challenging to adopt the appropriate laws.

Ukraine obtaining candidate status had changed this situation, providing a powerful incentive for the adoption of the necessary reforms, including painful and unpopular ones.

Nonetheless, the current low assessment of Ukrainian legislation's convergence with the European statutes has become a real challenge for Kyiv.

A spokesperson for Olha Stefanishyna, deputy prime minister for European and Euro-Atlantic integration, noted that adapting Ukrainian legislation had become a priority.

We have now been given the task of ensuring a significant improvement in criteria, and we are now analysing the estimates of the European Commission and preparing proposals together with the ministries,” the press officer noted.

All European integration bills will be classified as urgent, which means that their consideration by Ukraine's parliament, the Verkhovna Rada, will take priority.

Kyiv needs to show visible success in this process by the autumn of this year when the European Commission will be considering the fulfilment of the conditions for starting formal accession negotiations.

The authorities are afraid that if this issue is postponed to next year, we will end up with a rotation of members of the European Commission and this will postpone the start of negotiations as much as to 2025,” Akulenko said. “In turn, the overall success in approaching the EU regulations should create a good background and will be able to help us if there are any comments on the fulfilment of the conditions.”

She declined to predict whether would will be able to start accession negotiations as early as this year, but added that this stimulus has already led to the fact that the Ukrainian authorities have finally got their hands on reforms that have not been a priority for many years.

Other issues influencing the rapprochement between Ukraine and the EU in the coming years remain in the shadows against the background of talks about the timing of Ukraine's accession to the EU.

According to Veronika Movchan, research director at the Institute for Economic Research and Policy Consulting, the one-year extension of the cancellation of duties and quotas for Ukrainian imports to the EU was the most important promise made by the European Commission leadership.

“Given that the association agreement already provided us with low duties, the issue of fundamental importance for us was the abolition of tariff quotas, which significantly limited our exports to the EU,” Movchan said.

This cancellation for a one-year period was announced by the EU in May 2022 in order to support the Ukrainian economy during the war. However, keeping this promise will not be easy.

“The opening of the European market for Ukrainian agricultural producers hit businesses from Eastern Europe, firstly, Polish farmers,” Movchan continued. “Therefore, now the European Commission has yet to find a compromise with Poland, for example, by increasing their subsidies.”

Another significant issue is the extension of the permit for free freight trucking, and the solution to this issue also requires finding a compromise with Poland.

Mutual recognition of certificates, trust services and Ukraine's accession to European roaming are among other issues discussed by Kyiv and Brussels. Although they simplify life for business – and for Ukrainian citizens forced to leave the country during the war - the economic impact of these steps will not be immediate.

Ukraine should do its best to convince the EU to extend the quota-free regime not for a year, but on a permanent basis, or at least for five years,” Movchan continued. “This will give confidence to investors, and then we will be able to see an influx of European investment even before the end of the war. And even more so, it will be important for the restoration of the Ukrainian economy after the war.

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