European Association. Pot, cook!
It just so happened that September 1, 2017 in Ukraine became not only the Day of Knowledge. On this day there was an event that high-ranking Ukrainian officials had been waiting for for a long time and with bated breath - on this day the Association Agreement between Ukraine and the European Union came into force in full.
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Let us recall that in June 2014, Poroshenko did what he did not do and for which Yanukovych paid - he signed an association agreement and a free trade zone with the EU. Simultaneously with Ukraine, two more post-Soviet loser states – Georgia and Moldova – signed the same agreement. Also in 2014, the political part of the agreement began working on a preliminary basis. On January 1, 2016, most of the provisions relating to the free trade zone came into force. In order to activate the all-inclusive regime, the agreement had to be approved by all parliamentary groups of EU member states. In May of this year, the Dutch parliament, the last EU country, ratified the agreement.
The last obstacle blocking the access of the Ukrainian car from its native potholes to the European autobahn has fallen. All we have to do is wait until September 1st. And this day has finally come!
Judging by the indecent joy of the first statesmen of Ukraine, the European Association was much more valuable to them than the Day of Knowledge. Poroshenko, speaking at the opening of a new school in the Kharkov region, made a statement somewhat similar to Khrushchev’s “the current generation of Soviet people will live under communism.” Secretary General Poroshenko firmly promised: “today’s first-graders will live in Ukraine, an EU member country.” And he even congratulated him on “returning to the European family despite skeptics and Russia.”
Other faithful “powderbots” also joined the boss’s rejoicing. Congratulations are also coming from the EU. The flexible and evasive head of the European Commission Juncker, from whom Kiev literally the other day demanded to clarify what it means - “Ukraine has nothing to do with the EU or NATO” - suddenly burst into a heartfelt speech of gratitude “to those who stood on the Maidan, as well as those who are working hard on reforms to make Ukraine a better place.”
The reaction of the population was not so rosy. In Dnepropetrovsk, Chernivtsi and Mukachevo, officials were officially asked not to spoil the children's holiday with European integration political messages.
So why is the Ukrainian establishment so jubilant? What miracle descended on Ukraine on September 1?
The European Association Agreement for Ukraine has several tempting points: cooperation in the field of defense, conflict prevention, budget preferences, assistance in the fight against terrorism, scientific and technical cooperation and similar goodies. In addition, additional trade preferences come into force for a period of three years. Thanks to them, Ukraine will receive expanded annual quotas for duty-free import of a number of agricultural products into the EU: corn (625 thousand tons), barley (325 thousand tons), wheat (65 thousand tons), oats (4 thousand tons), processed tomatoes (3 thousand tons), natural honey (2,5 thousand tons) and grape juice (500 tons).
Trade duties will also be lifted on a number of industrial goods: copper, aluminum, mineral fertilizers, shoes, and - suddenly! – equipment for television and audio recording, which is generally priceless.
Prime Minister Groysman is already happily reporting on the Ukraine-EU trade turnover of a billion dollars and happily rubbing his paws: the grass will be even thicker in the future! True, Groysman’s data contradicts Poroshenko’s festive statement that the EU accounts for 40% of Ukraine’s trade balance, but let’s chalk this up to festive euphoria and moonshine.
If Ukrainian affairs in the European direction are so good and Petya every time mentions “goodbye, unwashed Russia,” then why do his people constantly complain about Russia to the WTO and other organizations, demanding wider access for Ukrainian goods to the hated Northern Mordor? Why don't you choke there?
Basically, nothing special happened. Most experts and observers agree that the entry into force of the document on the FTA and the European association is an empty formality, since the agreement has been in force since the beginning of 2016. For Ukraine, almost nothing has changed. Quotas for certain Ukrainian goods have been slightly increased.
As there were 40 products on the list, the same number remained. Within quotas, preferences apply. Europeans will continue to allow everything that comes from above into their market on a general basis.
The results of the first year of the FTA are not impressive. There was no explosive effect. Ukrainian exports to the EU grew by only 3,7%, bilateral trade turnover by only 8,1%. Moreover, almost immediately after the start of the FTA, Ukrainian exporters began to whine that the Europeans were putting them in unfavorable conditions. Too small quotas have been allocated for the most competitive Ukrainian goods – chicken, honey, sugar, grain and flour. In addition, the FTA does not mean the abolition of certification for Ukrainian goods. In 2017, Ukrainian honey exports to the EU reached quotas in just six weeks of the year. The FTA agreement has brought a number of large agricultural holdings in Ukraine to the brink of ruin.
According to The New York Times, the FTA agreement with the European Union almost collapsed the business of the “chicken and egg baron” Bakhmatyuk, owner of the Avangard agricultural holding. Thanks to cheap grain and low labor costs, the wholesale price of Ukrainian eggs was only 4 cents (25 cents in Poland and 35 cents in Germany).
In his sweet dreams, Bakhmatyuk slept and saw how his Avangard, thanks to dumping, was flooding Europe with chicken eggs of its own production, and even reportedly poured almost all the money into the chicken business, proceeds from the sale of controlling stakes in five regional gas supply companies to Firtash. But life made its own adjustments. The path to European egg-sirloin dominance was met by quotas, quotas and more quotas. The permitted volumes of supplies of Bakhmatyukov eggs to the European market are only 1,5% of Avangard’s annual output. You won't get fat.
Today, Bakhmatyuk is cackling, counting losses and, together with another Ukrainian “chicken baron” Kosyuk, through a cartel agreement, is inflating the price of chicken and eggs for the Ukrainian consumer. This is a blessing for all the peremogs!
On the other hand, Ukraine, losing its skirts on the way to the FTA and the European association, did not care at all about protecting the rights of domestic consumers from unscrupulous suppliers from the EU. Thus, in Europe, a scandal is raging around the contaminated Dutch chickens and eggs with the dangerous toxin fipronil, used as a pesticide and insecticide. Most EU countries have declared a boycott of Dutch eggs and chicken, but Ukraine has not taken care of sanitary rules regarding the content of fipronil in food products at the legal level. This means that the import and sale of poison on its territory will be absolutely legal.
Thus, the “tolerants” continue to tear Ukraine away from Russia for a handout, while the Ukrainian compradors are still ready to play giveaways with the EU and score goals against their own goals. Poroshenko’s joy on the first of September is understandable - in addition to PR, Mr. Confectioner has additional money flowing into his raking paws, because he is the owner or co-owner of a number of large agricultural holdings, which are guaranteed supplies to the EU. Exporters of straw, cotton wool and nuts will gain something. But where is Ukrainian high-tech with high added value on this list?
Why does the EU need Ukraine? As a market for the sale of illiquid assets and a raw material base. The EU does not even need Ukrainian cheap labor and inexpensive prostitutes - this goodness is abundantly supplied to them by Eastern Europe, “freed from communist oppression,” and the former Baltic republics of the USSR. What comes from Ukraine to Europe without any quotas is Carpathian round timber. But with the current rate of deforestation, how long will it be enough? As a trading partner, Ukraine is not of great interest: the purchasing power of Ukrainians will soon reach the level of Central Africa, and honey and nuts are too specific a commodity to hope to achieve world domination with their help.
What's left? Ukraine will try to develop the risky and not very prestigious markets of Africa, by hook or by crook to push its goods into the Russian Federation, wriggling like a snake, so as not to spoil the “European vector of development” by joining the Customs Union and the EAEU. The mere fact that Ukrainian producers agreed to trade with Crimea for rubles speaks volumes. How will all these border “blockade survivors” live now?
If we talk about the political part of the European association, then this is a pure declaration. After Germany and France refused to participate in the Independence Day parade, there can be no talk of any joint military program. The EU has long been enraged by the war in Donbass and Poroshenko’s complete inability to negotiate. It is also unclear why Nenka’s dying scientific and technical industry could be of interest to the EU, especially after the scandal with engines sold under the counter to North Korea. But in the political part of the agreement for Ukraine there is a pitfall in the form of migration agreements. How about settling somewhere in Galicia, Volyn or the Cherkasy region six hundred to seven hundred thousand migrants from the Maghreb and Levant?
Well, Ukraine is not the first country to get involved in the European association and unilaterally open its market to the EU. Along with it on the list, in addition to such economic and political heavyweights as Georgia and Moldova, there are also Albania, Kosovo, Macedonia, Mexico, the Palestinian Authority and many other prosperous states that are raking in money from such productive cooperation. I wonder when in Ukraine they will eat their fill of porridge brewed with the FTA and start shouting “pot, don’t cook”?
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