CEFTA – EU enlargement safeboat for Georgia and Ukraine in the wake of an illiberal order

Insufficient alignment of Azerbaijan, Armenia and Belarus with the core policy of Eastern Partnership poses the EU a serious dilemma. On the one hand, the EU needs to decide whether the deeper inclusion of these countries in European processes is more important than values and meeting the standards.

Flags of Eastern Partnership countries

EU’s initiative to develop its relationship with Georgia, Ukraine, Belarus, Moldova, Armenia and Azerbaijan lead to the establishment of the Eastern Partnership (EaP) platform – a framework which aims to provide an avenue for discussions concerning visa regimes, free trade deals, economic strategy and strategic partnership agreements.

EaP trade dimension embraces the concept of trade between the EU and the partner countries as well as among Eastern European neighbours. However, among EaP countries only Georgia, Moldova and Ukraine attained to be a signatory party to a European Union Association Agreement that includes the creation of the Deep and Comprehensive Free Trade Areas (DCFTA). In a nutshell, it enables Georgia, Moldova and Ukraine to have access to the European Single Market in certain sectors and allows EU investors to enjoy the same regulatory environment in the associated country as in the EU.

In case of Azerbaijan, Armenia and Belarus, the EU engages in individual discussions about various options concerning mutual trade, investment protection and compliance with international trade rules and trade-related international standards including the modernization of economies and improving the intellectual law-related legislation.

However, in spite of the promising trade-related dialogue with these countries and their potential for reforms, the core policy of Eastern Partnership is adherence to human rights, rule of law,… Click to Tweet

Insufficient alignment of Azerbaijan, Armenia and Belarus with the core policy of Eastern Partnership poses the EU a serious dilemma. On the one hand, the EU needs to decide whether the deeper inclusion of these countries in European processes is more important than values and meeting the standards. On the other hand, Brussels has a substantial concern regarding the Russian grip on Yerevan, Baku, and Minsk.

It brings the EU to the brink of a complex issue and challenges it to choose between values and geopolitics as grounds for the decision-making process.

Taking a firmer stand on values would disorient Yerevan, Baku and Minsk officials and would eventually make it more appealing for them to direct their foreign policy towards Russia. Click to Tweet
Meanwhile, there are positive and progressive steps made towards the EU in those countries.

A possible solution would be to keep the EaP initiative for interested in a closer cooperation with the EU countries whose domestic reforms and foreign policy are under constant adjustments due to the pressure from Moscow. Such an approach would soften Russia’s concerns regarding the EaP initiative. Meanwhile, the dialogue between EU and EaP countries would be kept relevant and active.

Thus, the EaP as the first-tier and Central European Free Trade Agreement (CEFTA) as the second-tier arrangement would bridge the chasm between EU values and geostrategic interests. Click to Tweet

CEFTA would be a pool of non-EU successful countries whose EU membership perspective is not fully decided yet (7 existing member countries plus Georgia and Ukraine). Furthermore, such arrangements will unleash much bigger economic benefits from mutual cooperation among developing and reforming countries within CEFTA rather than trying to find collaboration options within different-speed and approaches EaP members. In terms of trade, Easter Partnership countries joining the CEFTA would enjoy increasingly higher economic trade potential and economic benefits, hence receive more opportunities for strengthening their economies. Hence, CEFTA would serve as a progressing pathway towards the EU membership.

  • Case of Georgia and Ukraine

In the case of Georgia and Ukraine, the debate about the next step of EU integration is in full swing. When it comes to the topic of EU enlargement, member states are divided in opinions and extension process is perceived challenging for elites and electorates in the EU.

For Georgia and Ukraine, the right and pragmatic way is to follow the successful track record of Central European countries in their EU integration process. Currently, Georgia and Ukraine are in a similar situation as the six EU candidate and potential candidate countries from South Eastern Europe.

In common, they all have to wait in line, while reforming at home and convincing EU member states regarding the benefits of extended membership. The model of “EU waiting line” has its list of priority countries in accordance with their progress with reforms at home. To be specific, the decision on progression towards the final EU membership will be made based on the candidate county’s achievement of concrete milestones and success in the reform process. It will be a very similar pathway as the Nordic, Baltic, Benelux and the Visegrad countries took based on “reform and pass” logic.

According to the European Treaty, all European countries are entitled to apply for EU membership if they have fulfilled the Copenhagen criteria on democracy, rule of law, and the market economy. However, the question is how the country can accede the EU in the most effective way.

In case of Georgia, as a successful model within EaP countries and positively acknowledged by the EU for its progressive steps, especially for being engaged in developing proposals for Working Document “Eastern Partnership – 20 Deliverables for 2020”, there are still a number of milestones to be reached. The country still needs to demonstrate a tangible progress in the democratization process, human rights and especially good governance including public administration reform which started with a six-month delay in mid-2017. Taking into account that Georgia is facing a de-facto crippling annexation of its territory by Russia, the further membership in CEFTA would take Tbilisi closer towards the EU.

In the case of Ukraine, we witnessed an effective and swift implementation of the AA/DCFTA, what guarantees a clear path for Ukraine’s political association and economic integration with the EU. Moreover, Ukraine kept implementing structural reforms, generating positive trends in the economic and social sphere despite strong internal and external challenges. However, substantial work is still required on the implementation of anti-corruption efforts. Taking into consideration Russian hostility towards Ukraine and annexation of Crimea accompanied with the post-Maidan crisis, Kyiv’s progress towards the EU accession need to be buttressed and solidified. Ukraine’s application for membership of CEFTA is suggested as the next stepping stone towards the EU accession.

  • CEFTA – A running bicycle

Historically, Central European Free Trade Agreement (CEFTA) played a very positive and important role for Central European countries on their way towards the EU integration. Back in 1992, Poland, Czechoslovakia, and Hungary founded CEFTA as a preparation tool for the final EU membership. As countries had joined the EU, they departed from CEFTA, while other countries with an ambition to join the EU have joined CEFTA. Slovenia, Romania, Bulgaria, and Croatia all acceded to CEFTA and left when got successfully ‘upgraded’ to the full EU membership.

At present, CEFTA has seven members – Albania, Bosnia-Herzegovina, Kosovo, Macedonia, Moldova, Montenegro, and Serbia – all of whom joined in 2006-2007. Membership of CEFTA requires membership of the World Trade Organization (WTO), Association Agreement with the EU, and free trade agreement with the current CEFTA members. It does facilitate trade among these countries and prepares them for the EU accession.

Instead of trying to develop a new Eastern Partnership Free Trade Agreement (EPFTA), Ukraine and Georgia should rather join an already functioning and successful model – CEFTA. To be specific, EPFTA with Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine could have a limited scope of functionality since Azerbaijan and Belarus are not members of the WTO and not likely to join for many years.

As regards Armenia, the long-lasting and exhaustive conflict with Azerbaijan halts Yerevan WTO membership. On top of that, Armenia and Belarus are members of Russian created Eurasian Economic Union what prevents their participation in free trade arrangements with the EU. Thus, technically only three countries – Georgia, Moldova, and Ukraine – qualify to move further towards the EU due to their membership of the WTO and enjoying Association Agreements with the EU.

In the wake of illiberal forces throughout Europe and Russia’s growing hostility, Moldova’s foreign policy proved to be successful finding the EU enlargement safeboat within the CEFTA. Therefore, it raises a legitimate question: why Georgia and Ukraine do not follow Moldova and join CEFTA? So far, CEFTA membership has been successfully relieving the concern of EU candidate states of not being approved by all EU member states.

  • Trade and economic benefits

The Western Balkan countries endeavour to integrate their economies into the Regional Economic Area agreed in July at the Trieste Summit 2017. Currently, the discussions are being held to create a customs union of the Balkan six. In this light, Georgia and Ukraine’s prospective CEFTA membership would bring a vast market, natural resources and technological capacity of Ukraine and impressive reform experience of Georgia for the benefit of all participating states. This would allow CEFTA members to build a prosperous market including South-Eastern and Eastern European countries and much faster accelerate towards the EU accession.

Instead of considering setting up an EPFTA, the fastest way for Georgia and Ukraine would be joining the already existing CEFTA (a running bicycle), a successful free trade agreement with a solid track record of the progress of eight former members turning into the full EU member states.

Furthermore, if the rest of Eastern Partnership countries fulfil conditions and criteria for the CEFTA membership, they could join the pool of EU candidates and enjoy significant economic benefits before acquiring the EU membership. Georgia and Ukraine’s accession to CEFTA, as a successful European free trade zone, could trigger active geopolitical changes in broader EaP and propel Belarus, Armenia, and Azerbaijan to refocus their foreign policy.

Finally, an enlarged CEFTA would substantially improve economies of all member states and facilitated their EU accession process. CEFTA could serve as the next vital building block for the further EU integration of Georgia, Ukraine, and other EaP countries. Its enlargement has a strong potential to alter the old geopolitical choices in the wake of illiberal order.

Originally published in European Security and Defence magazine

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Author

  • Beka Kiria is Director of the Gagra Institute. Prior to founding the Institute, Kiria was an independent political analyst and worked at the Ministry of Defence of Georgia in the capacity of Senior Specialist at Defence Policy and Planning Department. He developed a number of key national defence and security documents and led a legislative review of the defence and security sector acts. Kiria graduated from the University of Leicester, UK with Master’s degree in Public International Law. Previously, he studied International Relations at Cambridge Art and Science College, UK.

  • Gunther Fehlinger is serving as the Secretary-General of CEE BC - the voice of FDI & SME Business Associations in Central Eastern Europe, SEE, EaP & Central Asia. Gunther is based in Ukraine since 2016 and works as the development and investment consultant in Albania, Montenegro, Kosovo, Northern Macedonia, Moldova. Gunther serves as the President of Europeans for Tax Reform and enjoys his 25 years enlargement advocacy of EU, NATO, EU Customs Union, CEFTA, and RCC.

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