Deputies of the Ukraine's parliament have voted in favor of introducing a trade embargo against Russia. This is a response to Moscow cancelling a free trade agreement with Ukraine as the country joins the European market.
According to proposer Prime Minister Arseny Yatsenyuk the embargo will begin on January 1, the same date the Ukraine Association Agreement with the EU comes into force.
The new law allows the government of Ukraine "in case of discriminatory or unfriendly actions by the state, recognized by the Verkhovna Rada as an aggressor country" to introduce reciprocal responses, including the abolition of tariff preferences.
“Over the past three years we have cut the dependence on Russia three-fold. Three years ago, the volume of Ukrainian exports to Russia amounted to about 35 percent. Today, it's only 12 percent. We will protect the domestic market of Ukraine,” said Yatsenyuk.
This fall, Ukraine began to impose sanctions against Russia. The blacklist included 29 Russian banks, more than 20 Russian airlines, several military enterprises and software security firm Kaspersky Lab.
The relationship between Kiev and Moscow deteriorated even further in December, when they failed to agree on the economic part of Ukraine’s Association Agreement with the EU.
In mid-December Russian President Vladimir Putin signed a decree suspending free trade with Ukraine as of January 1, 2016. Putin said Kiev’s move to open its borders with the EU compromises Russia’s interests and economic security. Moscow is also concerned that without such a barrier, Ukraine could illegally supply embargoed European goods to Russia.
During the negotiations with representatives from Ukraine and the EU, Moscow’s position has been that Ukraine is not entitled to preferential trade with CIS (Commonwealth of Independent States) countries once it aligns itself with the European trade bloc. Prime Minister Dmitry Medvedev explained that Ukraine cannot be part of two free trade zones at the same time.
According to Russia’s Economic Development Minister Aleksey Ulyukayev, the food embargo against Ukraine has nothing to do with the failed talks. It is a proportionate response to Ukraine joining US and EU-backed anti-Russian sanctions in August, he said.