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Ukraine | Implications of Dutch rejection of EU deal

Ukraine | Implications of Dutch rejection of EU deal

Dutch voters rejected the ratification of an EU Association Agreement (AA) with Ukraine in a non-binding referendum on 6 April. The Netherlands is the only EU state that has not yet ratified the AA, even though the government supports it. Although the ‘no’ vote complicates the EU ratification process, it is unlikely to affect existing EU-Ukraine cooperation. In particular, Ukraine will almost certainly still have access to the EU market in certain sectors through a partial application of AA trade measures.

It is unclear if the referendum result will influence the Dutch government’s final decision on whether to ratify the AA with Ukraine. Whatever the case, a complete cancellation of the agreement by the EU appears highly unlikely, because doing so would require the backing of all 28 EU member states. We expect that Brussels and The Hague will probably reach a compromise. For example, the Dutch government could ratify the agreement, but not recognise it as a step towards Ukraine’s accession to the EU.

Whatever the outcome, most of the AA’s provisions have already been applied on a temporary basis since November 2014. These include cooperation in the areas of security, justice, the economy, and finance. The most important and controversial AA chapter on free trade, the Deep and Comprehensive Free Trade Area (DCFTA), has been under provisional application since January. This means that the EU has already removed some of its custom tariffs and quotas for Ukraine.

The DCFTA is of particular importance for Ukraine. Both the Ukrainian and the Russian governments have implemented further trade restrictions on each other since the DCFTA came into force in January and Ukraine needs to find a new export market.

In this context, the Dutch ‘no’ vote is unlikely to radically alter the shape of current bilateral relations between the EU and Ukraine. In the medium term, partial AA application is still positive for the unpopular Ukrainian government, which rose to power with the promise to apply for EU membership in 2020. According to a poll conducted by two Ukrainian research centres in December 2015, 57% of Ukrainian respondents were in favour of joining the EU. So progress towards EU integration is likely to obtain public backing.

In an indication that the EU is still willing to push its engagement with Ukraine, a European Commission spokesman suggested in a press briefing last week that the commission will still put forward a proposal on an EU visa-free regime for Ukrainian citizens by the end of the month

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Published: 15th April 2016
Categories: Company News