The expected impact of The EU-Ukraine Association Agreement

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Published by: Transnational Institute (TNI), Rosa Luxemburg Foundation (Brussels Office), Center for Social and Labor Research.

On 6 April 2016, the Netherlands voted in a referendum on the EU’s Association Agreement (AA) with Ukraine. The referendum was a special democratic event – 427,939 signatures of citizens were collected to make it possible. With a turnout of 32.2%, just above the 30% threshold, the vote was valid. The deal was rejected by 61.1% of votes, compared with 38.1% in favour. The Transnational Institute conducted a background analysis that explains why, from an economic point of view, the Association Agreement would be a bad deal for ordinary people, both in Ukraine and the EU.

The projected economic and social costs of the Association Agreement for Ukrainians

  • Enriches an oligarchic economy where large sectors of the economy’s wealth are siphoned off into offshore trusts
  • Contributes to de-industrialising Ukraine, because its industrial producers will struggle to meet EU standards and lack sufficient capital and technology to compete with EU multinationals
  • Reinforces a Ukrainian economy based on agro-exports and raw commodities, with less value-added benefits for the population
  • Harms Ukraine’s critical small business sector that constitutes 99.8% of all Ukrainian enterprises and accounts for 67.8% of employment
  • New jobs created by EU investments are unlikely to compensate for losses by Ukraine’s domestic business sector and EU investors will exploit Ukraine’s lower and frequently unenforced social and environmental standards
  • Contribute to the ongoing brain drain as highly educated workers migrate to the EU. Between one third and one quarter of the Ukrainian work force is currently already working abroad

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