Trade and the Future of Ukraine

In this multimedia feature, Robin Quinville, director of the Global Europe Program at the Wilson Center, speaks with Baroness Catherine Ashton, who, among many other notable roles, served as the first woman commissioner for trade in the European Commission. Together, they examine the role that trade plays in helping Ukraine rebuild, in strengthening the US-UK relationship, and in helping to create a peaceful and stable Europe.

Cover photo: Ariel view of the Port of Odessa. Shutterstock/Sun_Shine.

Unedited transcript:

Robin Quinville, Director of the Wilson Center’s Global Europe Program:

Hello from the Wilson Center, I'm Robin Quinville. I'm the director of the Global Europe Program here at the Wilson Center. And it's really a pleasure to welcome you to this Wilson Quarterly multimedia event.

Following on our discussion of strengthening supply chains and strategic competition, this issue of the Wilson Quarterly is reinvigorating a conversation on trade and investment to examine the unique role that European trade has in supporting Ukraine's postwar rebuilding.

We are happy to have the Right Honorable Baroness Catherine Ashton join us here at Wilson. She's a distinguished fellow with our program and it's a delight to have you here with us. Baroness Ashton served as the European Union's first High Representative for Foreign Affairs and Security Policy. So that's from 2009 to 2014. She earned wide praise as a negotiator leading the P5+1 talks on Iran's nuclear program and galvanizing agreement between Serbia and Kosovo on their future.

Before these impressive achievements, she served as the first woman commissioner for trade in the European Commission, and now she's written a new book titled, “And Then What? Inside Stories of 21st Century Diplomacy.” So, Cathy, thank you so much for being here with us today.

The Right Honorable Baroness Catherine Ashton, former European Trade Commissioner:

Great pleasure, Robin.

Robin Quinville:

So as the EU's foreign minister in 2013, you know better than anyone the impact of Ukraine's decision to link its future to Europe's. The question of whether to sign the association agreement really galvanized events at that period, and it led to the change of government in Ukraine and it was all over this agreement to reduce trade barriers between Ukraine and Europe and Ukraine's European future. Tell us more about those negotiations and why they had this effect.

Catherine Ashton

Well, as I say, it's great to be with you, Robin. So you have to imagine that for seven years by 2013, negotiations have been going on between Ukraine and the European Union. The purpose behind them was to offer opportunity for Ukraine in areas like their food production, the breadbasket of Europe. They were often described as [having] technology and the ability for some of their industries to rejuvenate, to recognize they needed to change, to grow and develop alongside that, because it was more than a trade agreement, you also had the opportunity to look at the judicial system, to look at anti-corruption measures, to do the kinds of things that we value so highly in terms of a democratic future and making sure the institutions are fit for purpose and provide for the citizens. So it was a broad agreement with trade at the real heart of it. Seven years of negotiation completed. It just needs a political signature to take it forward. And at that moment, as we all know, President Yanukovych made the decision under pressure from Russia that he was not going to sign the agreement.

And events spiraled from there. That led us to where we are today.

Robin Quinville

You know, I think people have a bit forgotten that because at the beginning when Russia invaded Ukraine, people were saying, oh, it's about NATO. But it was about these early decisions on trade and on Ukraine's European future. Since Russia's invasion, Ukraine has shown this remarkable resilience. And Russia has deliberately targeted civilian infrastructure, obviously trying to cripple its economy as well as win a military victory. It's and it's striking at the economy, not only for the now, but for the for the future as well. How can the EU use trade policy positively in this instance to try and secure Europe, Ukraine's future with Europe?

Catherine Ashton

It's going to be incredibly important when we help to rebuild Ukraine, that the infrastructure is not just seen as the buildings that are lying in twisted ruin right now, but also the infrastructure that makes it possible for people to live and work and thrive in an economy that's functioning. And that's going to depend a lot on the work done, of course, here in the US, but especially, I would argue, done in Europe.

And that's going to be opportunities to have no barriers to trade, the opportunities for Ukraine to get investment, foreign direct investment coming in from Europe, to get support from the European Commission, to redevelop its industries, its agriculture, and to be able to rebuild in that broadest sense, absolutely crucial, because also for the Ukrainian people, they want to have a thriving economy and not be dependent on us just giving them money and resources.

They want to be able to do this by having a strong economy.

Robin Quinville

Can the EU, as it negotiated this agreement and future agreements, actually put in some of the steps that need to be taken to meet the entry requirements into the EU eventually?

Catherine Ashton

They certainly will. I mean, it's quite difficult getting into the EU as countries that have got here. And I will tell you it's something called the key. And the key is all of the legal requirements, the legislative changes you have to make. Your judicial system must be up to scratch. You have to show in each part of your system of government and in each part of your economy that you are meeting the standards and requirements of an EU member state.

And it can take a considerable amount of time to do it all. So one of the ways that the European Union helps is to put resources and people into that system and actually help develop the systems you need internally, the ways of doing things and so on. And that, I think from the experience of other countries, is incredibly important.

I remember years and years ago, of course, in the days when the UK was part of the EU, when Poland was coming in, and that we were working with the judicial system, our judges were talking to their judges, helping to support them, to develop the kind of work that was needed to make sure this system was appropriate and compatible. So there's lots and lots of things that will be done alongside side the giving of resources and, of course, support.

Robin Quinville

So it's more than just the suspension of import duties and things like that. It's practical assistance to make the system that is at work in Ukraine support of a fast or as fast as possible EU membership.

Catherine Ashton

That's right. If you simply do like agriculture, there'll be lots of ways that the farming communities will be working together, ways in which you can provide machinery, ways in which you can provide opportunities to grow certain crops, support to do that, things that will be needed to kind of get the economy moving. All of those are available to Ukraine as a country that is moving closer and faster, of course, to Europe.

Robin Quinville

Right. How can US policymakers support EU efforts? And is there something that you could identify if you were talking to two US policymakers, as you sometimes do, that would you recommend?

Catherine Ashton

I think it's important for the US to do what it does really very, very well, which is to offer a combination of financial support and also strategic support. You know, the US is good at bringing in expertise and knowledge, and especially when you're thinking about an economy like Ukraine's with a big reliance on agriculture, but also the potential of huge capacity in technology and beyond to make sure that there is a lot of work being done across the Atlantic to help support the growth and development of those technologies in those companies.

I also hope we'll see American investment, you know, companies coming into Ukraine and perhaps government can do some supportive work to help them do that in what will be initially quite challenging circumstances and business will do what business does best, but a bit of government support can go a long way.

Robin Quinville

I'm sure that Ukrainians are looking for that. If you pass their embassy here in Washington, it has a huge sign on it that says we are open for business, right? You were a European Union trade commissioner before you were a high representative for foreign and security policy. So can I ask you a little bit about where you see the US-EU trade discussions heading?

And where should they be heading, given all of your experience in this?

Catherine Ashton

There's always this kind of dream of a free trade agreement across the Atlantic, and it's something the EU has long wanted, bearing in mind it's very complicated to achieve, and it's complicated because you're trying to do the best for your own country, or in the case of the EU group of countries, while also recognizing that getting a deal requires you to give a little, if not a lot in certain areas of your economy.

You know, trade deals are not 'everybody wins on everything.' They are a kind of a mixture. In some areas, perhaps your businesses will do less well, but they'll do very well in others. And the kind of combination helps to grow the economy, which means everybody does better. And those discussions, when you're talking with businesses who've got really strong interests in making sure either they can export as much as possible or that they can protect what they do as well as possible, are quite complicated.

And that was my experience. So when you're looking at, for example, we just mentioned agriculture in the context of Ukraine, think about it in the context of Europe. It's very complicated. Having said a lot, because we share the same values and ideals and we have markets that operate in very similar ways. There's a lot you can do on the way to getting to that magic moment of a free trade agreement, and I hope we'll continue to try and do that.

There's a lot of talk about whether both sides are becoming more protectionist in their attitude, and it's about protecting industries and communities while not falling into protectionism, which is about actually running industries that would be better off transforming into something else. And I think we're in the beginning of those discussions and debates. The pandemic, in a sense, brought them alive because of supply chains and so on.

But there's a lot more that we can do, and I hope we'll see the continuation of the ongoing dialog that's so valuable as a way of trying to address those issues.

Robin Quinville

Now, it occurs to me that it might be easier to do in a sort of sector by sector or a subject specific basis rather than an overall overarching trade agreement, at least to get there eventually.

Catherine Ashton

What it can be. The only challenge with doing it sector by sector is that you always start with the easiest sectors and then you end up with the really tough ones and the really tough ones don't necessarily want to be thought of as just a sector. You know, if you're going to persuade an industry that actually it may have to put up with greater competition, you're only going to do it if it could see that there's a broader advantage.

And I remember negotiating trade deals where certain industries in Europe were going to have greater competition for sure. But what they could see was that if the other sectors worked well, they were going to have an advantage. Then the economy in Europe would grow anyway, and that means they would sell more of their goods at home as well as potentially abroad.

But it's the overview that that really pushes it and it also requires governments to be engaged with it so that they're talking to their industries and explaining what they're going to do, either to mitigate what they can see coming or at least to show the support to them and sometimes put a little bit of pressure on them to say, actually, this is good for the economy overall and the economy overall means the consumer.

The consumer should be the winner at the end of all this. And business should thrive because consumers are able to make good choices and have the goods that they want.

Robin Quinville

It's that balance which is so tricky to find.

So the UK is negotiating its post Brexit trade agreements with countries, and I thought I'd ask you for you to look in your crystal ball and give us the prospects for a US-UK trade agreement.

Catherine Ashton

Well, I think we've been talked about as being quite low down the list or even at the back of the queue, I think as I recall, and that's understandable for a number of reasons, most particularly because there are bigger fish to fry. As I say, from the US perspective, there are much bigger, more important deals to be done.

Having said that, there's a huge reliance from the UK's perspective on this amazing relationship. We call it the special relationship. It's not just a word that we use, we mean it. We think of the context of our relationship with the US as being extremely valuable and important. So trade is an expression of that. And even though I think getting to a trade deal with the huge nature of the US and its capacity versus the UK, that's going to be quite a challenging discussion to have for certain industries for sure.

But there's more we can do together, more investment, more capacity to be able to do things. More smaller moves, as you were saying, may be sectors, but maybe also just moving things a little bit, moving the dial toward a greater trade, sort of a appropriate relationship for the future that I hope we'll see, because it would be great if we could do that.

Robin Quinville

I have seen that they have been doing some discussions at the state level, so so maybe doing it at the subnational level and those are ongoing.

Catherine Ashton

Well, if you take some of the states like California, I mean, they are huge economies. You could have fantastic arrangements for any country with even one of the states of that size. And that nature. So I think that would be good to do. But I guess in the end, the ultimate objective would be, you know, across the whole nation.

Robin Quinville

Well, you name checked my home state, so thank you for that. And thank you, Cathy, for this insightful conversation. I have really appreciated your insights into all of these things. And to our audience, I hope you learned as much as I have. I also hope that you will explore the rest of the Wilson Quarterly's spring issue available at Wilson Quarterly dot com.