Ukraine: Ukraine withdraws from free trade agreement with the EU
November 29, 2013
On 19 November, just 10 days before an association agreement between Ukraine and the European Union was to be signed, the government of President Viktor Yanukovich announced that it would suspend talks on the agreement and instead recuperate trade ties with Russia. The Deep and Comprehensive Free Trade Agreement (DCFTA) was seen by most analysts as a turning point in Ukraine's history because it implied a shift toward the European Union and a reduction in the country's dependence on Russia.
Yanukovich claimed that Ukraine's current economic structure would not yet be able to handle the elimination of trade barriers with the EU and that financial aid from the IMF would not be not enough to cover the risks of opening up trade barriers. However, on 29 November, a representative of the government said that regarding the future of the negotiations, "the next opportunity will be the EU-Ukraine summit, which is scheduled for early March 2014."
According to most political analysis, pressures from Moscow played a major role in Ukraine's decision. Russia is keen to include Ukraine in its Customs Union along with Armenia, Belarus and Kazakhstan. Recently, Gazprom (Russia's national gas company) requested payment from Naftogaz Ukrainy (Ukraine's national gas company) for unpaid gas bills and threatened to cut energy supplies. This adds to the trade sanctions that were recently imposed, for instance those blocking Ukrainian chocolate exports from entering the entire Customs Union of Russia, an incident known as the "chocolate war".
The government's announcement that it would withdraw from the treaty triggered massive protests by opposition groups. Protesters who called for the president to be ousted faced strong repression from the police and the army. On 3 December, Parliament did not pass a no-confidence vote in Prime Minister Mykola Azarov's government. Nevertheless, Yanukovich faces a precarious situation: the rapidly-increasing political opposition is strongly pressuring him to reach out to the European Union again, although European leaders previously reacted coolly to a request for new talks. Moreover, Russia continues to threaten the country with economic sanctions, thus blocking the way for renegotiating the terms of the treaty.