BRUSSELS (Reuters) - The European Union failed to allay Russia’s concerns about Ukraine’s free-trade accord with the 28-nation bloc on Monday, leaving Kiev to face Russian retaliation through tighter bilateral trade rules from 2016.
Closer ties between Ukraine and the EU, including the free trade deal, were at the heart of a battle for influence between Brussels and Moscow in Russia’s former satellite.
When the then-Ukrainian president, Viktor Yanukovich, ditched the accord in early 2014 under pressure from Russia, protests erupted on the street of Kiev leading to a crisis in which he fled power and a pro-Europe leadership took over.
The European Union and Ukraine delayed implementation of their trade deal by a year out of deference to Moscow’s concerns that it could lead to a flood of European imports across its borders, damaging the competitiveness of Russian exports.
But comments by EU and Russian officials on Monday indicated that numerous meetings between the two sides to try to narrow differences and assuage Moscow’s concerns had failed.
EU Trade Commissioner Cecilia Malmstrom raised doubts about the validity of the Russian concerns, saying some were “not real.”
“We have been very open in listening to some of the concerns of Russia. Some of them we think are not real in economic terms. Some of them could potentially be real,” Malmstrom told a news conference following final talks in Brussels.
Russian Economy Minister Alexei Ulyukayev, speaking in Brussels, said there was no deal and Moscow would scrap trade preferences dating back to 2011 for Ukraine as of 2016, when the bilateral EU-Ukraine deal will be implemented.
“An agreement has not been reached. We were left with our concerns on our own and we are forced to safeguard our economic interest unilaterally,” Ulyukayev told reporters.
Such retaliatory action will mean that Ukrainian firms will pay duties to export to Russia, which says it needs to protect the competitiveness of its exports to Ukraine.
Malmstrom blamed Russia for showing not enough flexibility, while Ulyukayev said the EU’s trade officials were not serious enough about the talks.
Moscow has sought a legally binding agreement involving the three parties, something rejected by Kiev and Brussels which say no third party should be allowed to amend their bilateral deal.
Ulyukayev said the three sides will go on discussing the situation should issues arise as the deal is implemented.
Yanukovich fled to Russia in early 2014 after protesters were shot on the streets. When pro-Western leaders took over, Moscow annexed Ukraine’s Crimea and subsequently gave backing to a separatist rebellion in east Ukraine.
The economic effect on Ukraine and Russia of any Russian trade retaliation is likely to be muted since their bilateral trade fell off considerably as a result of the conflict in Ukraine, which triggered sanctions on Russia from the West.
Editing by Richard Balmforth