Talks With Russia on EU-Ukraine Trade Deal Fail to Reach Compromise

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By Laurence Norman in Brussels and Laura Mills in Kyiv, Ukraine

A month from the deadline for implementing a trade pact between Ukraine and the European Union, a fresh round of
discussions with Moscow aimed at mitigating Russian concerns about the deal produced no breakthrough on Tuesday,
officials said.

Russia laid out a long list of demands for amending the deal in the latest discussions. Talks, which have already
dragged on for 17 months, will continue early next week, the officials said.

The EU hopes an agreement on steps to tackle Russia’s concerns will prevent Moscow retaliating against Ukraine when
Brussels and Kyiv fully implement the accord on Jan. 1. However, hopes are fading that a compromise can be found.

Brussels set up the three-way talks in July 2014 as a way of easing growing tensions between Kyiv and Moscow in the
aftermath of the annexation of Crimea and the conflict in eastern Ukraine. The EU has always said that the discussions
don’t give Russia any veto over its bilateral pact with Ukraine, but said that if the three sides can find practical
solutions to prevent Russian firms losing out, they should do so.

However, despite 18 rounds of talks, EU and Ukrainian officials charge that Moscow has never raised specific
concerns about the pact the two sides could realistically address. Russia continues to warn it will broaden trade
penalties against Kyiv if the full deal goes ahead next month.

EU Trade Commissioner Cecilia Malmström cited some progress in Tuesday’s talks, in particular that Russia for
the first time accepted using an EU draft of possible solutions to its concerns as the basis for talks.

“They still have some political problems” with the agreement, she said. “But I think they are starting to move to
discuss the more concrete issues.”

However, she said Russia unexpectedly came to the meeting with a “very, very long” list of proposed amendments,
some that were unacceptable, but some that could allow for technical solutions. It wasn’t immediately clear what was on
the list.

“I think we can find common language on most of them,” she told reporters after the meeting.

Ukrainian Foreign Minister Pavlo Klimkin said the Russian side presented a mix of new and old demands. “Some
proposals are for us clearly unacceptable,” he said.

“We agreed to continue working at the expert level and at the ministerial level, but because there is not much time
left, some kind of extraordinary measures will be necessary to reach an agreement,” Russian Economics Minister Alexey
Ulyukaev said in comments published by Interfax news agency.

Russia has raised a broad range of concerns about the pact. It contends that the agreement could create nontariff
barriers to Ukraine-Russian trade, undercut Russian food standard rules and sever links between critical defense and
other industries in Russia and east Ukraine. EU and Ukrainian officials say Moscow has repeatedly failed to identify
concrete issues that can be addressed.

The EU and Ukraine have both said they wouldn’t amend the signed pact directly, a step that would force all EU
member states and Ukraine to ratify the agreement anew. However, they have said they can use the flexibility in the
agreement, for example giving Ukraine longer to adjust to higher EU technical standards for products, to give Russian
firms more time to adjust.

The EU has already slashed tariffs for Ukrainian goods but in September 2014, it gave Kyiv until Jan. 1 to cut its
own tariffs for EU goods and fully implement its side of the deal. Ukrainian and EU officials reiterated on Tuesday that
deadline will be met.

As talks have continued and the conflict has dragged on in eastern Ukraine between the Kyiv government and pro-
Russian rebels, bilateral trade has plummeted.

The Ukrainian government says that trade with Russia fell 58% in dollar terms in the first half of 2015 compared
with a year earlier.

Russia has banned certain produce from Ukraine including vegetables and cheese made at specific factories. Moscow
said last month it planned to expand the ban to all Ukrainian produce by January 2016.

Ms. Malmström said there could be fresh technical talks next week and pledged that Brussels was open to
further discussions after Jan. 1 if Russia’s concerns persisted. But she warned that would happen only if Moscow
refrained from new trade penalties on its neighbor.

Write to Laurence Norman at laurence.norman@wsj.com 


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