Archive for November 17th, 2010

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Free Trade Agreement negotiations stall again….but does it matter?

November 17, 2010

Well dear readers, the latest round of negotiations between the EU and Ukraine have progressed slightly, however no agreement or rather compromise has been found in the sector of agriculture as yet.

Thus more talks are needed.

Meanwhile, as November 22 apporaches it remains to be seen if the anticipated Visa-free roadmap with the EU will be delivered after the debarkle of the local elections.

On a positive note, the IMF is happy with Ukraine and has agreed the next loan tranche whilst pointing out that the pension system still needs amending…..namely qualification age needs to go up…….and the banks that were bailed out by the State either closed, merged or sold to relieve pressure on the State purse.

The controvertial Tax Code is still fighting its way through 4000 amendments in the parliament but is likely to get through very soon much to the annoyance of the non-tax paying public.

However, returning to the EU, and forgetting what may or may not happen on 22 November in relation to visa-free travel plans, let us return to the FTA……and ultimately the EU.

Ukraine is now in an unusual position of negotiating with a structure that has for the 16th consecutive year, failed to have its accounts signed off by the auditors who cite over 33% of fraudulent or at the very least poor accounting for money.

Its budget negotiations for 2011 have broken down and therefore the mechanism defaults to the 2010 budget as member states cannot agree with MEPs.  Hardly a crisis of course when there is a mechanism that defaults to the previous budget (and in such austere times across Europe some governments will not be too upset by this).

There are now deep division between the “federalists” and the “non-federalists” which have manifested themselves in calls to be able to raise an EU tax directly on citizens of each nation……something that will forever be vetoed (one hopes).

You then have the Eurozone economic nightmare where some of the 16 member states need the European Central Bank to act one way and the others a different way to assist their economies.  I see no way the Eurozone can continue for more than a few more years in its current guise……not that I could see how it could work from its inception to be honest (but I am not exactly an economic guru).

If the Eurozone breaks up within the next decade, and I am fairly sure it will despite the best efforts to hold it together, then the EU will not continue in its current form as there will inevitabley be bad blood between the members of the Eurozone.

Maybe the EU will be completely scrapped and some other entity will come to replace it, keeping some members in and keeping out others……or maybe not, as the free movement of trade, goods and people is in theory the right thing for economic growth and stability.  Unfortunately so much political BS has been dumped on top of the original idea that maybe it is necessary to return to basics and first principle on which the EU was founded.

However, Ukraine now finds itself negotiating with an entity that is in a severe state of flux on many fronts internally and that it is hard to see existing “as is” for more than a decade (at my most liberal).  For the past 5 years, when Tymoshenko and Yushenko were in charge of the nation and at loggerheads, the EU did not rush with Ukraine as there was no stability.

Now Ukraine moves towards stability and finds the EU in a state of flux instead.  Whilst of course the citizens of Ukraine will hope that the Visa-free travel roadmap is given (and no doubt the EU will still exist in the 2 or 3 years it takes Ukraine to get such travel), trade and business is a much longer term issue with an entity that is not likely to remain the same as what Ukraine is currently negotiating with.

Therefore does it really matter that the negotiations have stalled again, this time over agriculture?

Whatever happens, if Ukraine should ever apply to join the EU, if it applies in the next 5 years, the entity is applies to join will not be the same as the entity that would eventually admit it to the club.

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