Russia’s Concerns for the EU-Ukraine Association: Myths and Realities

Reaction of Russian Federation to the EU-Ukraine Association Agreementand the Deep and Comprehensive Free Trade Area (DCFTA) as a part of it is a significantchallenge for Ukraine. A great majority of Russia’s concerns can be questioned orbe easily solved by legal instruments. Instead Russia practiced hard negotiations ina form of economic war against Ukraine. Hypothetical and practical concessions toRussia related to the Association Agreement implementation are discussed. We payspecial attention to raising competition for Russian exports as a possible motivationfor actions of Russia. The paper studies two possible motivations in details. The firstone is the possibility of increased competitive pressure of Ukrainian exports to the EUon Russian exports to the EU because of the EU preferential treatment for Ukraine(competition in the EU market). And the second one is the possibility of increasedcompetitive pressure of the EU exports to Ukraine on Russian exports to Ukrainebecause of Ukraine’s preferential treatment for the EU (competition in Ukrainianmarket). We compare trade structures of bilateral exports of the three countries toestimate the possibility of such motivations. Our calculations show that increase incompetitive pressure on Russian exports is rather low. Our research provides theevidence in favor the presumption that economically the EU-Ukraine DCFTA is onlya minor challenge for the Russian economy, and hard approach to Ukraine is rather apolitical decision of Russian authorities. Return to non-confrontation regime can bemutually beneficial for Ukraine, the EU and Russia.