Ukrainian and European Union officials signed a partnership and cooperation agreement Friday under the shadow of a dispute over Ukrainian tarriffs on imported used cars. For the record, EU and Ukrainian officials hailed the agreement. They said that mutual trade and investment would rise from March 1, the day the agreement entered into force.
'This new agreement gives us a framework to continue and deepen cooperation between Ukraine and the members of the European Union,' said British Ambassador Roy Reeve at a press conference.
The agreement commits both sides to creating conditions favorable to trade and investment. The EU accounts for 15 percent of Ukraine's foreign trade, the second-largest share after Russia, with annual turnover at around $4 billion.
But commercial ties could be under threat from Ukraine's imposition last month of a steep import tax on second-hand foreign cars, many of which come from EU countries. The new tax imposes a minimum customs value – the sum on which import tax is paid – of $5,000 on all imported cars, while cars older than five years are banned from import altogether.
The measure, which was introduced to support domestic car manufacturing, provoked an outcry in some European countries. The move also angered the European Commission, the EU's executive body, which said they might complicate Ukraine's bid to join the World Trade Organisation. Filip Cornelis, acting head of the EU delegation to Ukraine, said the new agreement could give the EU justification for imposing economic sanctions on Ukraine for closing off its car market. He declined to elaborate on what form such sanctions would take.
However, Cornelius said Brussels is hoping that the car import tax problem can be settled amicably. He said the EU Council of Ministers would send a team of 15 specialists to Ukraine on March 9 for talks with the government. 'I'm sure we'll be able to find ways to solve this problems to the satisfaction of both sides,' he said. Borys Gudyma, Ukraine's envoy to the EU, denied Ukraine was guilty of closing off its car market to foreign competition.
'Let's not dramatise the situation. We did not aim to put the EU in a bad position,' Gudyma said. 'We wanted only to rebuild our car industry. All other companies are welcome to Ukraine to produce cars. There is no discrimination.' Cornelis said coal and steel issues would also be covered in the planned talks with the EU. The Union has launched several anti-dumping court cases over Ukrainian metal exports.
(Material from Reuters was used in this report.)
