Ukraine-Russia ties will weaken with EU deal

Subject

The EU-Ukraine trade agreement.

Significance

The delayed EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA) will start in January. The accord is set to strengthen ties between the EU and Kyiv. Russian President Vladimir Putin has ordered the ending of a free-trade zone with Ukraine, arguing that the new Kyiv-EU deal will harm Russia's economy. Also, in retaliation for Kyiv's participation in sanctions against Russia, the Kremlin has ordered an embargo against Ukraine food imports into Russia, which could cost Kyiv 300-600 million dollars per year.

Impacts

• Ukraine will continue to reorient itself and sell food and products to other markets, such as Turkey and Israel.
• An influx of imports from the EU could prove a serious challenge to many local producers and thus should stimulate reforms.
• Termination of Ukraine trade with annexed Crimea from mid-January will weaken Kyiv-Moscow ties further.