The Free Trade Area between Ukraine and the European Union came into effect on Friday, January 1st. The accord is part of a broader EU Association Agreement that was signed in 2014, but the parties took a one-year pause on Russia's request for consultations with the country, which failed.
The agreement eliminates 97% of tariffs on Ukrainian goods and reduces the average tariff on Ukrainian exports from 7.6% to 0.5%, according to Ukraine's Ministry of Economic Development and Trade.
The free trade deal coincides with the start of Moscow's food embargo against Kiev, effectively ending Russia’s trade agreements with Ukraine. Prime Minister Arseny Yatsenyuk has put the cost of Moscow's measures at some $600 million.
"Moscow closing its market to Ukrainian merchandise, a powerful economic attack, is another part of the war... against us," Poroshenko said.
Ukraine, whose market has been traditionally oriented toward Russia, will now have to turn itself toward the European market, and the free trade agreement includes more than abolishing customs duties. As stipulated by the agreement, Ukraine has to introduce European technical standards, phytosanitary regulations, and other regulations concerning the security of industrial and food products.
"The agreement will contribute to the modernization and diversification of the Ukrainian economy and will create additional incentives for reform," the European Commission said in a statement on Thursday.
The actual implementation of the accord will take the Ukrainian legislature up to 10 years, and the work of the Ukrainian government will be especially critical during the first years.
As the agreement comes into effect, mutual openings of the European and Ukrainian markets for goods and services will create new possibilities for companies, investors, and consumers in both the EU and the former Soviet Republic.
“The Free Trade Area will ensure top-quality products and strengthen the level of security of consumers… owing to a further convergence of Ukraine’s legal framework with the European Union legislation,” the EU Delegation to Ukraine stated.