Ukraine needs a free trade agreement with the European Union to help the eastern European nation kickstart the economy and regain competitiveness on global markets, President Viktor Yanukovych said.
“By choosing to get closer to the European Union, we are making a pragmatic choice for optimal and rational modernization,” Yanukovych said at the World Economic Forum in Kiev today. Ukraine has 10 years before it exhausts its competitive advantages in producing steel and chemicals, its chief exports, Yanukovych said.
Ukraine is due to sign an association agreement that includes a free trade pact with the 28-member EU this month. Russia is threatening to impose sanctions on its neighbor if Ukraine snubs Moscow’s customs union with Belarus and Kazakhstan and proceeds with the deal.
Ukraine’s economy entered its third recession since 2008 in the third quarter after weaker global demand for its exports of steel and chemicals battered industry. Faced with a widening current account gap and trade restrictions from Russia, gross domestic product fell 0.4 percent in third quarter from the previous three months.
An agreement with the EU is the right match for Ukraine given its current stage of development, Yanukovych said, adding that the former Soviet republic needs to revive economic growth and boost its appeal to investors.
An “urgent” strategic task for Ukraine is to “preserve and strengthen its competitiveness” in global trade, he said. One of the ways to achieve that will have to include “systemic changes” in diversifying the geography of exports and goods shipped, according to Yanukovych.
Closer ties with the EU won’t exclude partnership with the Commonwealth of Independent States, a loose grouping of former Soviet republics, he said. Ukraine must establish mutually beneficial relations with CIS countries and look to provide a link between the EU and Asian markets, he said.
Ukraine needs to impose discipline in public procurement, fight corruption and keep the business climate favorable, the president said.