Russia is likely to penalize Ukrainian imports starting in January after negotiators failed to agree on ways to address Moscow's objections to Kyiv's free-trade agreement with the European Union.
"It is a very probable scenario that there will not be an agreement before January 1," when the EU trade pact goes into effect, and that will prompt Russia to end Ukraine's preferential trade status, Russian Economy Minister Alexei Ulyukayev said after unsuccessful trade talks between Russia, Ukraine, and the EU in Brussels on December 1.
While the three parties agreed to keep talking, time is running out on the EU's yearlong bid to quell Russian opposition to the accord, which is at the root of the broader conflict between Kyiv and Moscow.
"The clock is ticking very, very fast," said EU Trade Commissioner Cecilia Malmstrom after hosting the meeting. She stressed that she expects the agreement to go into effect on January 1 as Ukraine and the EU are no longer willing to heed Russian calls for a delay after having already postponed the accord for a year in an effort to appease Moscow.
Malmstrom said she was willing to continue trying to address Russian concerns next year, but only if Moscow does not take retaliatory measures.
Ukrainian Foreign Minister Pavlo Klimkin criticized Russian negotiators for delivering new demands just before the negotiating session on December 1, some of which he said were "unacceptable."
Malmstrom also said she was "a bit surprised" when "Russia came unexpectedly with a very, very long list of amendments that they presented at the table."
Kyiv's sharp break with Moscow in the last two years was triggered by its move toward closer trade with the West.
Ukrainian wavering over whether to sign the EU trade accord in late 2013 fuelled street protests that toppled pro-Moscow president Viktor Yanukovych, leading to Russia's annexation of Crimea and a revolt by pro-Russia separatists in the east.
Now, after nearly two years of sharp conflict and a raft of tit-for-tat trade sanctions between Moscow and Kyiv, Ukrainian officials reckon they have little to lose from the end of favored trading status on January 1.
Malmstrom said that technical teams from the three sides could meet again as early as next week, and they could reach "practical solutions" on such issues as veterinary standards and customs data-sharing.
But she noted that the trade dispute has become part of the broader political confrontation between Moscow and Western powers, and it is not clear if either side has the political will to resolve it.
Russia maintains that the Ukraine-EU deal could lead to a flood of European imports across its own borders and damage the competitiveness of Russian exports to Ukraine.