Ukraine and the Customs Union with Russia


Ukraine’s economy is mostly export-oriented. The most promising industries are the aerospace industry, energy generation, transportation, machine building, agriculture, as well as transit facilities.

Russia and Europe, the pros and Cons
Presently, the Ukraine only enjoys the observer status in the Custom Union. Ukraine finds it’s presence in the Customs Union as most unfavourable. Ukraine is expected to agree to all terms and conditions of the agreement but will not be entitled to make any amendments. At the same time, the EU offers quite transparent conditions. All rules are already clearly stated.

The prospects and threats

Ukraine’s joining the CU has the following several prospects in it:

  •  gas prices shall go down. This will allow reduce the costs in machine building and chemichal industry.
  • heavy machine building exports shall increase.
  • domestic products exports will rise.
  • unemployment rates shall go down due to rise in exports and increased demand for the sphere of services;
  • Russia is ready to offer credits to substitute the IMF assistance even though the exact interest rates are not clear.

The threats of Ukraine joining the Customs Union:

  • Ukrainian salt producers fear Russian competition;
  • Car importers are concerned about the risk of being ousted from the market by the cars assembled in Russia;
  • Price rise for Russian quality products.
  • Price rise for European quality products will be multifold. As a result, few people would be able to buy imported goods that used to be more affordable.
  • Since the borders are going to close for imports the quality of domestic products shall decrease due to lack of competition.
  • Ukraine shall not have any development prospects within the CU. We are going to remain an inferior little brother of Russia. While Europe is going to keep enhancing sustainability issues and developing new technologies Russia and its three little ‘brothers’ Belarus, Kazakhstan and Ukraine will keep developing heavy metallurgy, domestic machine building eating up somebody else’s gas.

The outlook

Ukrainian companies fear unfair competition with Russian companys.
Conflicts with the sweets industry already emerged. More conflicts and unbalanced conditions are feared by other industries.