Russia, Ukraine and the EU agreement — interview with a key negotiator

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2014/09/20 • Analysis & Opinion, Featured

by Serhiy Sydorenko

Lana Zerkal, the deputy minister on Euro-integration, is a “novice” at the Ministry of Foreign Affairs, but in the field of European integration she is one of its most experienced professionals.

Zerkal is sometimes called one of the co-authors of the Association Agreement (AA). From the first to the last round, she has participated in negotiations for both the political and the economic parts of the agreements, representing the Ministry of Justice in the negotiation process.

In 2013, Zerkal left the Ministry of Justice for the private sector. However, after the victory of the Maidan revolution, she decided to “downshift” and returned to public service.

The absence of a longtime diplomatic “background” makes her an interesting (interview subject). Recently, she “undermined” the administration’s position when she admitted something the administration had long denied, namely that the “Brussels agreement” was in fact the result of Russian pressure.

In this interview with European Pravda (division of Ukrainska Pravda — Ed.) Lana Zerkal outlines Kyiv’s current legal position on negotiations with the Russian Federation and also discusses the status of the visa-free agreement between Ukraine and the EU

Is there any joy that the Association Agreement (AA) was ratified on Tuesday (September 16)?

– There is satisfaction and fatigue from the process. It was fairly difficult and long, since we began these negotiations still in 2007. I have to admit that during the early years nobody really cared about what was happening with the agreement. Only later did a few politicians, who were in government at the time, say that the “negotiations were not quite right.”

We, the negotiators, had to understand the situation realistically during the initial years in order to formulate a negotiating position and defend it ourselves. Finally in 2011, the negotiations ended but the agreement was not signed. Later, there was disillusionment tied to (the events)  of last year.

As for now, I can’t say there is no joy, but it is somewhat subdued.

Some say that the AA ratification does not yet mean irreversibility since the process is continuing and the Russian Federation is demanding that Ukraine withdraw from the agreement

– My position is that Ukraine respects international laws and agreements. We certainly would like for all of our partners to respect international laws and agreements as well.

This (withdrawal) would mean that the Ukrainian government can reject the agreement simply by denouncing it. I don’t think that anyone would ever support such a decision — at least not if they are conscious and of a sound mind. This is why for me it is obvious that what has happened is irreversible. One more step has been taken on Ukraine’s path toward the EU.

Of course we can modify certain rules of the agreement by mutual consent. They would need justification, such as changes in market conditions, for example. However, this means modified not cancelled.

But a decision has been reached with Russia to postpone the trade section of the agreement. And this is the key part of the AA.

– Let’s see what constitutes Chapter IV of the agreement (trade and questions relating to trade). There are three sections: Ukrainian tariffs, EU tariffs, and a section on bringing Ukrainian regulations in line the European ones. In fact, of the three sections only one is delayed — the liberalization of the Ukrainian market for European goods.

Russia insists that the AA rules on adopting EU standards should not be incorporated into Ukrainian legislation.

– First, the adaptation of legislation and the carrying out of reforms is the sovereign right of Ukraine. I think that only Ukraine has the right to decide on the laws it needs.

Second, let us look at Article 486 of the AA. It states that all areas that are not included in the temporary implementation part are subject to the Partnership and Cooperation Agreement (PCA).

Now let’s look at Article 51 of the PCA. What is stated there? That Ukraine will gradually bring its national legislation in line with the European one in 16 areas that are identified in this article. What are these areas? These are all the areas that make up the fourth chapter of the AA.

However, under the “Brussels Agreements,” nobody has restricted Ukraine’s right to carry out the Partnership and Cooperation Agreement. It is a completely different document, which was approved still in the 1990s.

Do the EU and the Russian Federation support your interpretation of the “Brussels agreements”?

– The EU supports it completely. In Brussels they know that we began the adaptation under Article 51 of the PCA long before the Association Agreement. In 2004, we even passed a law on the general government program for adaptation and we approve the annual plans. This process has been going on for a long time.

As to the Russian Federation, they have a somewhat different understanding or rather misunderstanding of the process. They were completely unaware that we are proceeding with the adaptation outside the AA. This appears strange to me since at one point Russia also concluded a PCA with the European Union, and the rules are identical.

Now they are trying to tell us: “You must not do the adaptation” …

But, excuse me, there is Ukraine’s law and international law. Moreover, in Chapter V of the AA “Sectoral Cooperation” there are as many as 28 additions that deal with adaptation. In Brussels we did not agree to stop the fifth chapter of the AA, we did not assume such obligations. We only dealt with the 4th chapter.

Well, we will now have to expend efforts and explain these things to the Russians. We are ready to do that.

What about the government’s plan for the implementation of the agreement? There is also Chapter IV despite the fact that its implementation is “deferred.”

– Indeed, the Prime Minister insisted for this plan to include Chapter IV. But as has been reported by the media, it will be in the plan with a “footnote” indicating that implementation deadlines will depend on the conditions of the temporary implementation.

Therefore, since the temporary implementation by decision of the EU Council will be postponed until 2016, the implementation of these conditions also will begin in 2016.

Meanwhile, we heard the European Commissioner for Trade, Karel de Gucht, say that in case of Russia’s violation of the “Brussels Agreements” the EU may reconsider the terms of the implementation of Chapter IV.

In this case, the points of our plan will automatically take effect before 2016.

According to the “Brussels Agreements,” during the period before 2016 certain consultations with the Russian Federation are to take place. Why are they needed if we do not intend to change the agreement?

– The meaning of consultation is to explain. We explain to our Russian partners the essence of the EU legislation. There is also the issue of seeking common solutions in those areas where the “concern” of the Russian side could materialize, at least hypothetically. These areas were clearly outlined according to the results of the tripartite ministerial meeting still in July 11, namely: technical standards, sanitary and phytosanitary measures, customs cooperation.

Note that tariff liberalization was not even mentioned then. The appetite of the Russian partners grew during the meal!

As a result of several rounds of consultations we are nonetheless close to agreeing with the Russian Federation and the EU on common approaches to prevent possible risks without modifying the agreement. I hope we will see results. However, this is possible only with the political will of all parties.

Russia is demanding that Ukraine adopt a document that proves that it has the same understanding of the “Brussels agreements” as does Russia.

– The only possible document that could serve as confirmation of the “Brussels Agreements” is the decision by the EU Council regarding the temporary implementation, which Brussels is currently preparing.

That’s good, but Moscow is asking for the adoption of the Ukrainian decision specifically.

– These statements are being made. But I have the impression that our Russian colleagues have not understood that the agreement between the EU and Ukraine does not allow the Ukrainian side to adopt a legally binding document. According to the agreement, the extent of the temporary implementation is in no way regulated by the decisions of the Ukrainian side. It is strictly within the exclusive competence of the EU

The letters of the Russian Ministry of Economic Development and Trade give the impression that they are confusing the Ukrainian agreement with the agreement between Moldova and the EU. In the Moldovan agreement, there really is a different principle determining the extent of the temporary implementation.

So, to summarize. Moscow is demanding that we adopt a certain document under threat of trade restrictions. Kyiv is not prepared to do that. Thus, it remains for us to wait until Russia carries out its threat to abolish free trade with Ukraine.

– No, we expect better. We are waiting for an adequate understanding of the agreements. To do this we will make every effort to explain how we fulfill the terms of the agreements and we will do so at all levels to avoid further escalation of trade disputes. After all, this is a tripartite agreement between Ukraine, Russia and the EU. The obligations of the parties are listed clearly.

We are fulfilling our obligations and will demand the fulfillment of the appropriate obligations by Russia. In particular, there is the issue of the preservation of a preferential trade regime with Ukraine. Based on the spirit of the agreements, we will also demand the cancellation of previously imposed restrictions for Ukrainian exports.

These decisions (by Russia), in our view, have been adopted for purely political reasons without any basic justification.

The agreement provides for Ukraine’s right to revise trade positions, especially on tariffs and quotas. Do we plan to initiate this process?

– Nothing prevents us even now, under the regime of autonomous trade preferences, to start a dialogue with the EU regarding increased trade quotas and the acceleration of the process of lowering tariff rates. The existing parameters of the agreement really need to be changed, since they are based on trade results during the 2005-2007 period. Right now we can use the 2012-14 period as a basis, when Ukraine is exporting more.

Moreover, we have already reached the preliminary agreement for these changes. We expect that on several points the EU will give us new, increased quotas under the unilateral trade preferences. Of course, this agreement will influence the way that the trade parameters of the AA are changed, after the beginning of the temporary implementation of Section IV.

The issue has to do with increasing quotas for the duty-free export of chickens, juices and a number of other product groups. Right now we are conducting a dialogue with the producer associations to determine our positions.

By the way, applications that involve regulatory convergence also need certain amendments — even if only for the fact that the EU has changed the law in 2011.

 With the beginning of the year certain officials argued that they were expecting the implementation of a visa-free regime to begin on January 1, 2015. Is this a realistic expectation?

– Right now, according to all our plans, only the launch of the issuance of biometric passports is planned.

However, the cancellation of the visa regime is impossible until the EU assesses how the issuance is taking place, how the system works, how protected the serially produced passports are. This assessment takes time. Therefore, in my view, the realistic forecast for getting visa-free travel would be at the Eastern Partnership Summit in Riga in May 2015.

But this will be possible provided that Ukraine fulfills all points of the plan — if the passports are issued without problems, if the level of protection of personal data is adequate, if we provide quality protection of the border, if the police works without complaints, and so on.

I think the political will exists for that — both in Ukraine and in the EU. However, of course, there is the “casus belli” of cost and war.

But isn’t war an obstacle that in fact blocks the visa regime? After all, we do not control a large section of our border.

Despite the open border in the ATO (Anti-Terrorist Operation) area, the visa-free regime is possible. The EU needs to be reassured that only those entitled to Ukrainian documents receive them.

If we prove the accuracy of our work, the exactness of our documentation of all the data of the passport holder, then I think the war will not be an obstacle. The main thing is for the EU to be convinced that no person who enters our territory illegally from the east will be able to obtain a Ukrainian passport and enter the EU without a visa.

I should add that one factor of the visa-free regime is a serious argument, even for the people in the troubled regions, in favor of territorial integrity. And this is in the interest of all, including the EU.

There is one more problem — the low volume of biometric passports planned for 2015. Therefore, even if we obtain the visa-free regime, most Ukrainians will not be able to take advantage because they will not be able to obtain the new types of documents.

The prime minister is really unhappy with the planned volume of output of the biometric passports. But here we have a limiting factor — the need for funding. To equip the passport issuing offices and also the border crossing checkpoints is not cheap. Even the Georgians and Moldovans, whom we consulted, confirmed that the costs of equipment for one post is 5,000-6,000 Euros.

Just count how many posts we have in Boryspil alone. And now imagine how many there are in all the border crossings. In Ukraine we’re dealing with a huge figure.

Therefore, initially, after Ukraine obtains the visa-free regime, there will be a possible shortage of biometric passports. But I am convinced that the state will address this issue. This is a very important social issue, so donor funds and other sources will be found to allow us to increase the volume of issued documents.

By the way, speaking of donor aid. Will the donor conference take place?

It will, of course. Right now it is planned for December. The EU and various countries (not just European) and international organizations will participate.

Right now Ukraine is preparing a reform strategy that will be closely tied to the AA and will be presented during the donor conference. And, of course, there will be a special focus on the financing for the rebuilding of the destroyed infrastructure in the Donbas.

Will these be grants or loans?

We’re talking only about donor funds — those that are not repaid. The donors will choose from our program the direction they find most interesting. This means that even at the stage of preparing the strategy we need to determine the approximate amount of funding needed for each direction. Then we’ll look at the possibility of including in the conference program an investment component or the organization of a separate initiative. In this case, it’s undoubtedly a question of credit funds and the attraction of direct investment.

What tasks in the implementation of the AA seem the most difficult for you?

We always found the issues of the rule of law and human rights more difficult. In addition, we still have a lot of the “Soviet” approaches to work in most of the law enforcement institutions. Their reform has always generated considerable resistance. I think that even now this will not be easy to do. Not easy but necessary. Here a separate EU mission supporting reforms in this area can play a key role under the leadership of Kálmán Mizsei (head of the EU Advisory Mission for Civilian Security Sector Reform), which began work in Ukraine.

Translated by: Anna Mostovych
Source: Pravda

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  • Edison

    Russia insists this and Russia demands that. Tell Russia to get out of Ukraine and Crimea, and pay war reparations, before they are invited to comment on the AA.

    • Vlad Pufagtinenko

      Bravo

  • Rods

    Thank you for the excellent article with much useful information.

    When talking about winners and losers at the moment with any negotiations with Russia I look at it in the context of “The Great Game” between Russia and the UK in the 19th century where each side was vying to maximise their influence in Asia, with Russia trying to also capture as much territory as possible (some things don’t change!) and the UK was protecting their empire’s jewel in the crown, India. This can best be charactered as the art of political sparing with alliances, treaties, invasions, lies, deception, half truths and influences all hidden in a veil of smoke an mirrors. Both sides were very good at playing these games. You can read a good background article on Wikipedia.

    Looking at the EU agreement in the context of the delay for full implementation until 1st January 2016, the superficial view is a win for Putin, but once you look under the cover in my opinion it looks rather different.

    1. The EU- tariff agreement is by far the most important of the three main parts. This will allow Ukraine to maximise its exports to the EU, which is desperately needed with Ukraine’s current economic problems. We have seen in the last quarter, without this in operation a 14% increase in exports from Ukraine to the EU, this is only going to get better. To me this is a Poroshenko win.

    2. The delay in removing the tariffs from exports from the EU to Ukraine, will help the Ukraine economy where it helps to protect their home producers. Even if Russia bans all exports from Ukraine to Russia then they will probably be no worse off than the situation in January 2016, if they don’t then this is an economic win. Again I make this a Poroshenko win.

    3. The delay in implementation of EU laws and standards. Now this is of benefit to Ukraine for two reason, less political capital and time needs to be spent of this, where there are more pressing things and the implementation of the laws, standards and their enforcement will cost public money, so a much needed saving here. So again a Poroshenko win.

    When a similar analysis is made of the Minsk agreement again lifting the hood and looking underneath gives a different result from the superficial inspection. Just one aspect was very skilfully handled: After the passing of the Special Area law by the Rada last week this was followed by the Lustration law which keeps Ukraine in “The Great Game”.

    Personally, I think Poroshenko has played Ukraine’s weak hand very, very skilfully and well in his first 100 days in office and may this long continue for the benefit of Ukraine.

    • nysq1

      I hope you’re right!

  • Jacob Schønberg

    Біометричні паспорти не дорогі! Люди здають свою вже готову фотографію в електронному форматі (будь-який фотограф можете зробити це); відбитки пальців (сканер (USB) можна купити за ціною близько 40 євро. Подивіться
    на Alibaba). УКРАЇНА прокидайся ! Ви втрачаєте багато
    МОЖЛИВОСТЕЙ, ДІЮЧИ ТАК ПОВІЛЬНО! BIOMETRIC PASSPORTS are not expensive! People already supply their photo with electronic format – any photografer can do this; a finger print scanner (USB) can be bought for around 40 EUR just go and look on Alibaba. The safety lie with the verification (maybe Schengen can help). UKRAINE WAKE UP YOU LOOSE OPPORTUNITY BEING SO SLOW!

  • Paul P. Valtos

    Tell Russia to kiss your proverbial rear. It’s about time to get down to their level.

  • Paul P. Valtos

    Did anyone ever consider looking into recently retired Ukrainian Americans former US military who might just turn the table regarding corruption in the Ukrainian military. I think there would be a few field grade and general officers who would volunteer their services from the American end to help Ukraine streamline and clean up Ukraine’s defenses. Most would be war hardened men with worlds of wisdom and courage who spent some of their careers in Iraq, Afghanistan where the Soviets failed. They would have to be given free reign though.