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Trilateral DCFTA talks again – EU, Ukraine & Russia

November 4, 2015

It would be foolish to state a last role of the trade agreement dice occurs on 9th and 10th November in Brussels when the Kremlin will probably once again try and convince the European Union and Ukraine to delay the 1st January 2016 DCFTA coming fully into force.  That opportunity to role the dice continues until 1st January 2016 – and possibly beyond – perhaps with seemingly completely unrelated dice (especially if The Kremlin believes its dice are loaded).

The two day meeting in Brussels next week takes the form of trade experts, meaning no major announcements of policy changes or implementation delay – for major announcements are always reserved for senior politicians.   Heaven forbid experts and mere functionaries make major announcements!

As such, any confirmation of implementation on 1st January (for those who need reassuring), or the highly unlikely announcement of a further suspension, will come when European Commissioner for Trade Cecilia Malmstrom visits Ukraine on 12th and 13th November – two days after the meeting of trade experts.

Every man and his dog has long predicted that when the agreement with the EU enters into full force on 1st January 2016, The Kremlin will introduce a more or less complete trade embargo upon Ukrainian goods – a perverse, in some cases self-harming form of reciprocity perhaps, the act of a spurned lover maybe, the misguided notion of a nation that wants unconditional love and respect based upon its own terms, rather than affording those same sensibilities and terms to those around it.

A large scale trade embargo toward Ukraine is all but assured by a Kremlin that perhaps still believes it can beat, threaten and coerce the current Ukrainian direction out of it – when instead with every such act, it simply beats that choice further in.

The question therefore, is how long will any such Kremlin instigated embargo upon Ukrainian goods last?  The answer will be in years – but how many?

A glance at the 1990’s would suggest that as a petulant and truculent Kremlin embargoed almost all trade with the eastern European and Baltic States as they swiftly stepped out from under The Kremlin shadow, they rapidly redirected their trade flows.  Naturally a free trade agreement with the EU, let alone the deep and comprehensive one that comes into force, means that Ukraine will have little option but to make the most of that opportunity (and other opportunities outside of Europe).  Those certain Ukrainian businessmen that pre-war in The Donbas who would have tried to slow such a process due to their trade interests with Russia, having seen them dramatically effected by Kremlin sponsored events in the east, will also be forced to look to other markets during the (likely) forthcoming embargo years.

During the early 2000’s, similar Kremlin embargoes on Moldova and Georgia forced trade reorientation with Europe (and others) too.

The end result being that when The Kremlin relaxed and/or removed its imposed embargoes, pre-embargo trade levels never returned – with any of the nations involved.

Considering the scale of Kremlin aggression toward Ukraine, and The Rubicon being crossed for far too many Ukrainians in this generation to return to a normalised relationship with The Kremlin, neither Russia or Ukraine should be expecting a return to historical pre-war trade levels for several decades from when soon to be implemented embargoes are eventually lifted in the years ahead.

Some may opine that in fact, a Kremlin induced embargo will force Ukraine to implement the DCFTA per the sequenced 10 year implementation framework that it would otherwise undoubtedly have been somewhat more glacial in completing.

wto

It would seem highly likely that the WTO will be engaged in refereeing Ukrainian-Russian trade spats for many years to come too.

Nevertheless, the Kremlin has a trump card – and it is a trump card it doesn’t have to play, for it is a card that continually plays itself.  That trump card is the majority of the Ukrainian political class.  Its continued fecklessness and dysfunctionality is always worth a side-bet when it comes to snatching defeat from the jaws of victory.

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