23:17, September 11, 2013

Stefan Fule

European Commissioner for Enlargement and Neighbourhood Policy

Chairman, Honourable Members,

The Eastern Partnership Summit in Vilnius is fast approaching. It
promises to mark a momentous step forward in our political association
and economic integration with several of our eastern European
neighbours. Clearly - and wrongly - this is seen in some quarters as
a threat. As a result, we have seen enormous pressure being brought
to bear upon some of our partners.

The European Union has always been perfectly clear about its policy
towards our Eastern neighbours. Our common interests dictate that we
should work with our eastern neighbours to build a zone of prosperity
and stability in our continent. Already the existing Partnership and
Cooperation Agreements, signed in 1994, foresaw the development of
a free trade area. Feasibility studies launched in 2004 led to the
development of "deep and comprehensive free trade areas" (DCFTAs)
as an integral part of the "new enhanced agreements" - subsequently
known as Association Agreements (AA) - proposed in 2006. The first
DCFTA negotiations started with Ukraine in 2008, as soon as it had
become a World Trade Organization (WTO) member. The Commission's
Communication of 2008 then laid the basis for the offer extended to
our Eastern Partners at the Prague Summit establishing the Eastern
Partnership in 2009 and confirming our joint objective of political
association and economic integration underpinned by AA/DCFTAs. From the
beginning, the European Parliament has strongly supported this approach
of transforming this part of Europe both politically and trade-wise.

It is true that the Customs Union membership is not compatible with the
DCFTAs which we have negotiated with Ukraine, the Republic of Moldova,
Georgia, and Armenia. This is not because of ideological differences;
this is not about a clash of economic blocs, or a zero-sum game. This
is due to legal impossibilities: for instance, you cannot at the same
time lower your customs tariffs as per the DCFTA and increase them
as a result of the Customs Union membership. The new generation of
Association Agreements will bring enormous transformative benefits
through legal approximation, regulatory convergence, and market
liberalisation. Independent studies indicate that a DCFTA will bring
substantial benefits. Exports to the EU could double over time,
leading to increase in GDP of up to approximately 12%. But in order
to implement these, our partners must enjoy full sovereignty over
their own trade policies, which members of the Customs Union will not.

It may certainly be possible for members of the Eastern Partnership
to increase their cooperation with the Customs Union, perhaps
as observers; and participation in a DCFTA is of course fully
compatible with our partners' existing free trade agreements with
other Commonwealth of Independent States (CIS) states.

Let me be clear: the development of the Eurasian Economic Union project
must respect our partners' sovereign decisions. Any threats from Russia
linked to the possible signing of agreements with the European Union
are unacceptable. This applies to all forms of pressure, including:

~@ the possible misuse of energy pricing;

~@ artificial trade obstacles such as import bans of dubious WTO
compatibility and cumbersome customs procedures;

~@ military cooperation and security guarantees: and

~@ the instrumentalisation of protracted conflicts.

This is not how international relations should function on our
continent in the twenty-first century. Such actions clearly breach
the principles to which all European states have subscribed. In
the Helsinki Principles of the OSCE we have committed to respect
each country's "right freely to define and conduct as it wishes its
relations with other States in accordance with international law".

The European Union will support and stand by those who are subject
to undue pressures.

Let me emphasise that AA/DCFTAs are not conceived at Russia's expense.

On the contrary, Russia will also benefit greatly from the integration
of the Eastern Partnership countries into the wider European
economy. Our vision is that these agreements should contribute in
the long term to the eventual creation of a common economic space
from Lisbon to Vladivostok, based on WTO rules.

So we encourage our partners to deepen their ties with Russia,
as we do ourselves, but in a way which is compatible with AA/DCFTA
obligations. The European Union is ready to work with its neighbours
to find ways to promote greater regulatory convergence between the
EU and members of the Customs Union. The last thing we want to see
is a protectionist wall cutting our continent in two. In today's
ever-more-competitive global economy, we cannot afford to waste our
efforts on a regional geopolitical rivalry.

Closing Remarks

Chairman, Honourable Members,

We need to do a better job of explaining to Russia why it also stands
to benefit from the creation of DCFTAs between the European Union
and its traditional economic partners. The trade-creation effects
will undoubtedly be more important than the trade-diversion effects,
contrary to what some of our Russian friends fear. We will continue
to raise this issue in our bilateral dialogue with Russia.

I understand that Russia sees the extension of European Union standards
and norms as a potentially problematic issue because those of the
Customs Union are currently not always identical with them.

However, we are already now actively cooperating with Russia on
the alignment of many norms and standards. This is a key element of
the European Union-Russia Partnership for Modernisation. And these
standards are also increasingly adopted by the Customs Union. Let me
stress that European Union norms are often adopted internationally,
and are of course fully compatible or identical with WTO rules. So
the European Union is actually helping all our partners including
Russia to modernise and open up to globalisation.

Likewise, the New Agreement we have been negotiating to replace
the European Union-Russia Partnership and Cooperation Agreement
should include provisions for greater convergence of the regulatory
framework between the European Union and Russia and thereby help to
generate stability and predictability for both Russian and European
Union companies.

When we set out to build the Eastern Partnership at Prague in 2009,
there was no substantial talk of the Eurasian Union project. It is
the Russian decision to build the Customs Union and the Eurasian
Union that created a situation where our European partners are now
confronted with a choice between two projects for regional economic
integration. It is inconceivable that our partners should become
victims of their incompatibility. It is inconceivable that through
a decision, made freely, our partners should be punished and their
trading relationship with customs union members threatened to be
placed under far worse conditions than our own arrangements.

We stand by on our side to do all we can to avoid this and work with
our neighbours to find ways of maximising the compatibility between
the EU and Eurasian structures in a way that can facilitate trade
and economic integration.

Thank you.