Constraining external governance: interdependence with Russia and the CIS as limits to the EU's rule transfer in the Ukraine

Abstract

The question of how effective the EU's external governance is cannot be answered without looking at the broader geographical and historical framework in which the Union extends its influence. We argue that interdependence between Ukraine and Russia in several key aspects shapes the context within which the EU and Russia compete to export their policies. Based on an analysis comparing the institutional rules underpinning the EU's external governance and the CIS rules as well as several sectoral analyses, we show that the effectiveness of external governance varies with patterns of interdependence. We identify sectoral differences in the extent of Ukraine's interdependence with Russia: it is low and receding in trade; medium in foreign policy and high in energy.

Keywords:

• Energy
• EU
• external governance
• Russia
• trade
• Ukraine

Notes

For reasons of consistency, references to interdependence here follow Lavenex and Schimmelfennig (2009) and do not aim to reflect the wider international relations literature on this topic.

This section draws on Dragneva and Dimitrova (2007).

More details in Dragneva and Dimitrova (2007).

The PCA also incorporates a declaration concerning Article 102, which clarifies ‘special urgency’ as meaning cases of ‘material breach’ under the 1969 Vienna Convention (Hillion 2005). Such a suspension would be a very complex process on behalf of the EU.

‘The stake in the internal market’ reward has developed further with the European Commission (2006c) Communication on strengthening the ENP, COM(2006) 726 final, referring to an ‘economic community’. This document contains stronger references to ‘the application of shared regulatory frameworks’ (Gstöhl 2008).

See also the decree by Yushchenko of 16 June 2005 on ‘Urgent Measures for Activation of Ukraine's Participation in the Formation of SES’.

For example, on textiles (PCA, Article 21, Sectoral Agreement of March 2005), steel (PCA, Article 22, Sectoral Agreement of December 2004), and nuclear materials (PCA, Article 23, Sectoral Agreement of July 1999).

There are exemptions concerning some ‘sensitive’ goods, primarily agricultural commodities, traded subject to tariffs and quotas on a most favoured nation basis, most specifically with Belarus, Georgia, Kazakhstan, Moldova, Russia, and Uzbekistan.

The only duty imposed on the country which enters another preferential or integration agreement is to notify its partners of the terms of its participation.

A World Bank study suggests that such a step could lead to adverse effects for Ukraine if Russia uses its superior bargaining power in imposing its tariff structure as the SES common external tariff (World Bank 2004).

See also Barbé et al. (2009) for an in-depth analysis.

An important aspect of this ‘energy addiction’ is the extreme domestic inefficiency of consumption, which the EU is also seeking to address (Emerson et al. 2006).

As Emerson et al. (2006: 37) show, out of five refineries, four are held by Russian capital. Most of Russian foreign direct investment in Ukraine is concentrated in the fuel and energy sector.