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EU offers concessions but sees “tough” Ukraine talks

Free trade talks between the European Union and Ukraine will be tough and prolonged, but the 27-member bloc can offer concessions and Ukraine will suffer few ill effects, EU Trade Commissioner Peter Mandelson said.

Ukraine received permission this month to join the World Trade Organization -- a condition set by the EU before negotiations that would further integrate the large agrarian and industrial former Soviet state with its Western neighbors. Deputy Prime Minister Hryhory Nemyrya last month described free trade talks as a "Herculean" task that could take up to five years. But Mandelson said the road to transition would be much calmer. “We’re not talking about some kind of swift, savage transformation of an economy, which is going to produce huge adjustment challenges and problems,” Mandelson said in an interview late on Sunday as the EU and Ukraine launched the talks.

President Viktor Yushchenko, swept to power by the peaceful “Orange” revolution, made WTO membership and joining the EU and NATO priorities as part of bringing Ukraine closer to the West. Mandelson last week visited Russia, where he told Reuters Moscow could complete procedures to join the WTO this year if it gave a “quick response” to a small number of issues holding up agreement. As for Ukraine, following its WTO deal, no target date has been set for even starting EU accession talks. But Ukraine has asked that potential membership be mentioned in a new “enhanced agreement” to include the free trade deal.

Grain, steel
Once called the breadbasket of Europe, Ukraine is a leading global grain exporter and has developed a strong steel industry, a key contributor to economic growth. Both sectors may become sticking points in negotiations over a trade deal, under which trade tariffs would be eliminated and Ukraine would adopt EU standards. But Mandelson said there was no huge overlap in agricultural products offered by the EU and Ukraine, and pressure could be alleviated by transition periods for introducing changes and abolishing tariff regimes. “If there are sensitivities in agriculture, then we’ve got to respect those,” Mandelson said. “We’ve got to negotiate and there will be transition periods as well that will enable adjustments to take place.”

Ukraine’s entry into the WTO, expected in the next six months, helps the steel sector by giving Kiev the right to challenge the many anti-dumping rulings against it and EU steel import quotas. Mandelson gave no prediction over how long the talks might take. But he said they would probably require a period somewhere between Nemuyrya’s forecast of five years and Yushchenko’s hope of doing so within a year. “If it was as easy as turning on a light or turning on a switch then we could do it much more quickly, but then also the consequences and benefits would be far fewer,” he said. “If we want to make these as deep and comprehensive a trade agreement as both sides do, it will take time. It will take some tough negotiations but I can promise you, it will not take a day longer than it needs to.” (Reuters)