First Vice Prime Minister Klyuyev,
Honourable Members of the European Parliament,
Ladies and Gentlemen,
Twenty years ago Ukraine found independence and freedom. Few will disagree that this was a historical moment for Ukraine but also for Europe as a whole. Today - in 2011 - we are on the brink of another major moment in Ukraine's economic history: the conclusion of a milestone trade deal with Europe, more particularly a deep and comprehensive Free Trade Area as part of the Association Agreement.
It is a deal that would offer a blueprint for economic reforms - and it comes with a framework to help implement these reforms.
-A deal that will help spur new levels of trade, investment and growth.
-A deal that will open up new kinds of economic freedom for Ukrainians.
-A deal that will be key to integrating our economies, creating new opportunities for Ukrainian and European operators in all sectors of the economy.
In short, this agreement offers a pathway to Ukraine's future prosperity.
The EU has offered, wave after wave, support to its eastern neighbours to help them up the ladder to growth. In our experience, trade relations, and more specifically Free Trade Areas have been an instrument of choice in supporting our partners' growth, throughout the world.
This is because our free trade areas turned out to be major contributors to modernising economies and bringing in capital investment, especially from the EU.
The deep and comprehensive free trade area as part of the Association Agreement with Ukraine is the next wave of European support to our Eastern neighbours. The Eastern Partnership leaders met recently in Warsaw and reconfirmed their commitment to closer political association and economic integration. The Association Agreement with Ukraine, including the deep and comprehensive free trade area, could be the first of its kind under the European Neighbourhood Policy. This is why I am particularly pleased to inform you today that yesterday evening, Vice Prime Minister Klyuyev and I, reached an agreement on all elements of a free trade deal; we still have to finetune some technical details. It is now up to the Ukrainian leadership to create the political conditions wherein this deal can materialize. This should allow us to technically conclude the Association Agreement including the deep and comprehensive free trade area by the end of the year; of course provided that the political conditions are created so that this deal can happen in practice.
So what exactly are we negotiating?
Classic trade agreements foresee the mutual opening of markets for goods and services - the abolition of import duties for example. But these negotiations go much further.
We have to address the "behind the border" issues in order to boost trade in practice.
For example, in order to be exported towards the EU, Ukraine's dairy and meat products have to pay tariff duties but maybe more importantly to meet certain sanitary standards. It's all very well abolishing those tariff duties but if you don't help Ukrainian exporters meet the EU sanitary standards for milk or beef for example, then there will be no actual trade in those products.
So in this agreement we will tackle such issues: Ukrainian laws and standards will become compatible with those of the European Union in trade-related areas. This is a very important chapter of approximation of legislation.
This means that Ukrainian manufacturers will meet EU norms and standards simply by respecting Ukraine's own rules and regulations. Coupled with the abolition of import duties already mentioned, this means that the barriers and costs of accessing the EU, the largest market in the world, could be swept aside.
The coverage of this trade package within the Association Agreement with Ukraine will also be exceptionally broad - including issues like the rules on public purchasing or on competition. This means that the laws, standards and eventually also practices on government procurement and competition will be sufficiently similar in the Ukraine to the ones of the EU.
In negotiating this type of deal, the EU is making an unprecedented offer of deep integration with its own market. This could be the most ambitious deal of its kind ever negotiated by the EU - not in terms of trade volume but in terms of economic integration.
This is why we describe our free trade area with the Ukraine as "deep and comprehensive" - abbreviated we call it a "DCFTA" - indeed more trade jargon!
But what does this mean for the business climate in Ukraine?
We want to create a modern, transparent and predictable environment for consumers, investors and business people in both markets.
The very process of updating its rules and regulations will offer Ukraine a predictable pattern for its trade and economic reforms. The economic provisions of the deep and comprehensive free trade area will form a stable blueprint for Ukraine to update its regulatory environment. It would establish a transparent scenario for operators to know what reforms are coming and when - based on the agreed calendar of regulatory approximation with the EU.
Predictability, stability, transparency, risk-reduction - these are the buzz words for the modern investor in the competition for capital.
We all know that Ukraine needs more investment to restructure and modernise its economy. And we all know that capital markets are very much in demand in these difficult economic times.
The DCFTA would provide a stronger external anchorage for the reform process and it is only by increasing confidence in the reform process that the door will open to European - and international - investors.
Ladies and Gentlemen,
Here in the European Parliament I have to remind no-one that our trade relations operate in the broader political context of our overall relationship with Ukraine. I will not hide from you that recent developments in Kiev have put all our negotiations into question. But as High Representative Ashton said last week, we should not walk away.
We should continue talking. Our offer of concluding the trade negotiations as part of the Association Agreement with Ukraine should remain on the table.
Only when we have a deal sketched out and on the table, what is the case today, then we know exactly what is possible - and also what could be lost.
As I mentioned at the beginning, the agreement reached yesterday, should allow us to technically conclude the Association Agreement including the deep and comprehensive free trade area by the end of the year; hence, providing us with this clear picture. After that, we will have to see how the land lies.
Ladies and Gentlemen,
Minister Klyuyev and I know all too well that we are not negotiating this bilateral trade deal in a vacuum. These are difficult times for the global economy.
The economic recovery is unsteady. Negotiations in the multilateral trading arena are deadlocked after ten years of hard work. And protectionist measures are on the increase worldwide.
But Europe is active in its response. We are standing up to the fight against protectionism.
Only a few days ago the European Commission published its latest monitoring report on trade restrictions. We have found that over the last year 130 new trade restrictive measures have been introduced by the EU’s trading partners - a rise of 30%.
Economic recovery in many countries has not led to the reversal of such policies - only 17% of all measures introduced since the beginning of the crisis so far have lapsed.
What is more, several G20 members are embarking on industrial policies based on import substitution, local content requirements and restrictions in public procurement.
Some governments have not kept all their promises. The EU will therefore continue to remind its trading partners of their commitments in the strongest terms.
Ladies and Gentlemen,
The work Vice Prime Minister Klyuyev and I are doing to improve our bilateral business environment will be complemented by our international efforts to keep protectionist forces at bay.
It is important really, that in the face of economic challenges, Europe has the courage and confidence not to retreat into the false security of protectionist tendencies. Not for us the cold comfort of closed markets - because we know the risks that this runs. Instead we are outward looking and opening opportunities through trade.
We will endeavour to keep trade flowing. Despite the economic difficulties - or should I say because of the economic difficulties - Europe needs global trade more than ever.
And the trade negotiations with Ukraine are a perfect example of a win-win outcome. The deep and comprehensive free trade area which we are envisaging in the context of the Association Agreement would be of mutual economic benefit to the EU and to Ukraine. It would open each others' markets, it would modernise and diversify Ukraine's economy, and, most important of all, it would be a milestone in sharing our common European values and standards; and I hope that in the coming days or weeks the political context can be created for this deal to materialize.
Thank you very much for your attention.