EU and Ukraine: Market Status Recognition
Earlier this month Dutch Prime Minister and current President of the EU Council Jan Peter Belkenende announced that the EU decided against granting
Ukraine market status recognition following a EU-
Ukraine summit in the Hague last Thursday 8 July 2004. The
Netherlands currently holds the EU's 6-month rotating presidency. Regarding the decision, the EU and
Ukraine were unable to reach an agreement on an action plan but agreed to "pursue discussions in the coming weeks". EU-
Ukraine relations are increasingly important in light of the May 1, 2004 expansion of the EU in which EU and
Ukraine became immediate neighbors.
According to a press bulletin released by the EU, the main obstacles preventing
Ukraine from receiving immediate market status recognition are lack of promises to make social, economic, and civil rights reforms. More specifically, the EU has outlined the two most essential requirements for a pending recognition of
Ukraine as a market economy nation: elimination of state interference in pricing in the metals and fertilizer sectors and a tightening of bankruptcy rules.
Ukraine has denounced the decision and accused the EU of basing its decision on political rather than economic reasons. In its defense
Ukraine claims that it has fully met its commitments with regard to pricing and bankruptcy-related legislation and has provided plenty of statistical data in this respect during the recent EU-
Ukraine summit.
Ukraine also points to the case of
Russia which imposes similar pricing policies when it comes to exports, but has already been granted market economy status by the EU.
In a similar comment, Ukrainian Prime Minister Viktor Yanukovych is reported as stating that there were no economic grounds for such procrastination. At the same time, Premier Yanukovych expressed confidence that recognition of
Ukraine as a market economy would come soon and would help to compensate for the losses of Ukrainian companies resulting from the EU's enlargement. In addition, receiving “market economy” status is regarded as a crucial step for
Ukraine's entry into the World Trade Organization (WTO).
The one result of the EU-
Ukraine summit in favor of
Ukraine is the finalization of a trade agreement previously reported by SteelOrbis that increases the quota limits for Ukrainian steel exports to the EU.