In addition tosigning the economic part of the Association Agreement withUkraine, the first item of the agenda also includes the signing ofthe Agreement with Moldova and Georgia.
Before lunch, thesummit participants will hear President of Ukraine PetroPoroshenko. He is expected to provide a detailed account of thesituation in the country and assess the conditions in EasternUkraine. This is essential because the developments in Ukraine inthe coming hours and days will determine whether a decision will bemade in Brussels to move to the third stage of sanctions againstRussia. It concerns actual economic or financialembargo.
Contrary to theassertions of some German media that the EU leaders have alreadyagreed in this regard behind the scenes and sanctions are a donedeal, the Office of German Chancellor Angela Merkel says thatGermany still relies on diplomatic efforts to find a peacefulsolution to the conflict. But the final collective word, Merkel'sadvisers say, is up to the Heads of States and Governments of theEU who, according to them, have always shown a consensus on theissue.
Another intrigueof the upcoming EU summit is Russia's hard-to-predict reaction tothe association of the three former Soviet countries with theEuropean Union and the threat of Moscow to impose trade sanctionsagainst Ukraine.
Berlin believesthat economic and trade agreement with Ukraine, which will besigned on Friday, does not contradict its existing trade rules withRussia. However, they acknowledge that with both countries beingWTO members, Russia has a certain room for maneuver and it has theability to raise customs tariffs on goods imported from Ukrainewithout violating international rules.
German governmentunderstands Moscow's recent statements in this regard, however, ina way that Russia will not rush with unilateral retaliatorymeasures and it will try to find a reasonable solution to theproblems that may arise after Ukraine's association throughdialogue with Kiev and Brussels.
In addition, theChancellor's advisers explain that if we analyze the trade flowsbetween Ukraine and the EU on the one hand, and Ukraine and Russiaon the other, it turns out that they vary widely in the range ofgoods and they do not compete but complement eachother.
Unilateral tradeconcessions for Ukraine where introduced by the EU in March inadvance of signing the economic section of the AssociationAgreement. These benefits will be valid until October 30, when thefinal rules enter into force. Hence, there is still 4 months leftfor negotiations with Russia to settle all thedetails.