Russia could lose over 100 bln rubles from EU-Ukraine association – Putin
The Association Agreement signed between the European Union (EU) and Ukraine could cost Russia billions and force it to introduce protective measures, said Russian President Vladimir Putin.
"Due to Ukraine adopting zero duties on EU imports (which is to take effect almost immediately after the ratification of the agreement and will affect 98% of the goods nomenclature), it is obvious that there will be a significant increase in European goods' supplies to the Ukrainian market. We understand our European partners who have effectively and have already mastered the Ukrainian market well. They want to grab everything that is still left there and oust all the others. Furthermore, the less competitive Ukrainian products will be ousted from the Ukrainian market. Where to? Primarily to Russia. And to the other Customs Union (CU) countries, but primarily to ours. Nor should one discount the risk of unlawful re-export of EU products disguised as Ukrainian goods to the CU market," Putin said at a meeting between the CU heads of state and Ukraine's president in the presence of representatives from the European Commission.
Technical regulation and ways to determine the country of origin of the goods are very important, Putin said. "No one has ever talked to us about this. In fact, virtually no one has ever spoken to us about all the problems I have just mentioned," said the Russian president.
At some stage Russia was simply denied a discussion of these issues and told that "this is none of your business," he said. "We do not discuss our relations with, say, Canada, with you nor do we meddle in your relations with China. But let us not forget that China and Canada are still very far away, while economic relations between Ukraine and Russia are a different matter altogether," said the Russian head of state.
Russia is not the ultimate partner for the EU countries and so it would be right to openly discuss these problems, but none of this is happening, he said.
"We are very hopeful that today's meeting will be frank and substantive," the president said.
By most conservative estimates, total damage to Russian economy alone could amount to 100 billion rubles, hitting whole sectors of the Russian industry and agriculture with all the consequences for economic-growth and employment rates. Losses will also be experienced by both Belarus and Kazakhstan, Putin added.
"In this situation, Russia cannot remain idle, of course. We will simply be compelled - I want to stress that - compelled to take retaliatory measures. To protect our market," said the head of state.
All this will be done in full accordance with the CIS free trade area agreement and the WTO (World Trade Organization) rules. The said conditions will exclude preferences for imports from Ukraine.
"I will note that we neither want, nor are going to discriminate against anyone and will not do so. I just want to make it clear to everyone: we will simply be compelled to introduce a standard trade regime for Ukraine, the same that is being used in trade between us and the European Union," the Russian president said.
Such a regime is called the Most Favored Nation, Putin said. "Sounds beautiful, and effectively, it is. But only without any preferences which today are provided in the framework of the CIS free trade," he added.
Russia will closely study how Ukraine applies the phytosanitary norms under its association agreement with the EU, and will introduce similar norms, if need be, Putin said, adding that today regulation in this sphere is very flexible.
"As regards the industry, one of the most crucial components here is, of course, like I said already, to determine the country of origin of the goods," Putin said.
Russia is very suspicious that European goods could be imported via Ukraine, he said.