Economical Sciences/2. External economic

Y. Rosinska

National University of Food Technologies

Ukrainian choice: the European Union or the Customs Union

The main characteristic of the modern world is the development of integration processes. Today is situated in the center of the integration processes. On one side Ukraine need to develop economic relations with the EU, and on the other side Ukraine has possibility joining the Customs Union of Russia, Belarus and Kazakhstan.

Modern scientists actively discuss about what kind of integration vectors should choose our state and which one can help to provide a combination of protecting national interests and modernize the economy.

Clearly, the integration of Ukraine into the EU or the Customs union has benefits and possible risks.

Benefit for Ukraine from EU integration.

First, and most substantially, there are positive trade effects. Abolition of existing tariffs will reduce final product costs by an estimated 5 percent to 10 percent. This presents a significant advantage. Lower costs will attract more trade, and the increased trade flow will more than make up for the loss of domestically captured tariff revenue, which the government kept for itself in the first place.

Second, Ukrainian businesses and foreign businesses in Ukraine will become more efficient and more price competitive. Companies will be able to choose their workers from a larger and more diverse workforce, increasing productivity due to economies of scale. The lowered transaction costs will attract competition into Ukraine and force Ukrainian firms to improve quality and lower prices, operating closer to at-cost levels.

Finally, there are economic benefits to having a single business environment. When manufacturing companies in the 27 EU member countries produce goods according to the same standards, which means less red tape, a smaller regulatory burden, and faster consumer adaptability.

Also among the advantages of EU membership for Ukraine should be noted: the upgrading and modernization of domestic enterprises, improving access of Ukrainian goods and services to the EU market, increasing investment from EU Member States in Ukraine's economy, improve social standards, human rights in the social institutions of the EU, opening borders for the free movement of people, raising living standards.

But integration of Ukraine into the EU will have some risks: the possible displacement of domestic producers of the domestic market, the need to search for partners and investors to modernize production, increased competitive pressures in the domestic market, reducing competitiveness national agricultural production, because the EU has a strong support system industry and is quoting certain kinds of goods, the complexity of transition to the European prices; outflow of qualified personnel, the revival migration that threatens Ukraine demographic crisis and labor shortages, political implications are for a partial loss of sovereignty and territory authorities subordinate EU threat involving Ukraine in the conflict of civilizations between the West and the Muslim world, possible move to Ukraine hazardous industries and use Ukraine as a commodity "appendage", and its population as cheap labor.

In order to make the right choice also should study the benefits for Ukraine as a result of joining the Customs Union, which include: ensuring the effective functioning of free trade between member states, minimizing non-tariff restrictions, guaranteed access energy in Ukraine through the territory of the Member States.

However, such accession has next drawbacks: the Customs union - is the formation of a single customs territory and it is not in the national interests of Ukraine and undermine its sovereignty, because in this league are supranational governance structures (Interstate Council, the Commission of the Customs Union etc.); endanger the loss of full membership in the World Trade Organization, because the mechanism quotas of votes and distribution of import duties and taxes (from Russia 88%) have unequal character that does not accordance with the principle of non-discrimination WTO.

If we want, to reduce the risks from such integration, it is useful to introduce the following measures: adaptation the national legislation to the norms and rules of the FTA with the EU and the Free Trade Agreement with CIS; develop a State program to adapt sufficiently competitive branches economy of Ukraine to operating conditions in accordance with the rules of free trade agreement with the EU to improve the State program of import substitution, which is based on national capacities to produce competitive products and impede the flow of imported goods at dumping prices.

So, Ukraine today is in a very difficult position, because national economic interests are both in the West and the East. It’s necessary to find an optimal balance between these vectors and integrate in both directions. However, Russian experts think that integration possible in a unilateral direction. But European Commissioner for Enlargement and European Neighbourhood Policy Stefan Fule said that the European Union has nothing against cooperation between Ukraine and the Customs Union, but cooperation should not hamper relations between Ukraine and the European Union.

Literature:

1. Грищенко А. Європейський та Євразійський вектори економічної інтеграції України / «Економіка України», 2012 - № 7.

2. Ariel Cohen Ukraine's Economic Benefits from Integration into the Euro-Atlantic Community / [Electronic resource]. – Access mode: http://www.heritage.org/research/lecture/ukraines-economic-benefits-from-integration-into-the-euro-atlantic-community