The free trade area gives Ukraine substantial economic opportunities. However, hard work remains to be done to reform the economy and the public administration in order to fully realise the benefits of the DCFTA and the economic potential of Ukraine. The EU is supporting Ukraine in its reform process, which is vital for a Ukrainian economy weakened by conflict, Russian sanctions and trade restrictions. Member States are also supporting Ukraine. Today in the Foreign Affairs Council we agreed to better coordinate the available assistance and effort.
The DCFTA gives Ukrainian businesses preferential access to the EU market – the largest in the world with 500 million consumers. Independent studies show that medium term effects can amount to a 6 per cent increase of Ukraine's GDP and that the long term effects if the planned reforms are implemented properly will be much larger. Ukraine will gradually align their laws and regulations in areas such as competition, product regulations, government procurement and food standards which will not only help them export more to the EU, but will most importantly encourage much needed investment from EU companies as they will encounter an improved and more stable business climate. Intensified efforts to fight corruption and improving the rule of law are crucial to improve the business climate and attract investment. We are mobilising EU technical expertise to help Ukraine with this important reform effort.
We are also engaged in efforts to boost the business opportunities of Small and Medium-sized Enterprises (SMEs) in Ukraine through various programs, for example the DCFTA Facility for SMEs that will provide €100 million in grants and unlock at least €1 billion in new investments for Ukraine. It will help SMEs to comply with EU food standards and technical regulations so that they get access to our market, and also increase their access to finance and help them integrate into global value chains by facilitating partnerships with EU businesses. The assistance will help Ukrainian companies seize new opportunities to grow and create jobs.
I regret the fact that Russia has recently imposed further sanctions on Ukraine, for example they have withdrawn trade preferences, banned almost all food imports from Ukraine and restricted the transit of Ukrainian goods through Russia. These were far from the first sanctions that Russia has imposed since the start of the crisis and they will reduce Ukraine-Russia trade even further, causing injury to Ukraine in the short term. As a part of the Minsk process, my team and I engaged in trilateral talks with Russia and Ukraine in order to find out exactly what Russia's concerns regarding the DCFTA were, and we were very forthcoming and open. It is normal that a country has several trading partners and there is no inherent reason why Ukraine cannot have close ties to both the EU and Russia simultaneously. Despite our openness and flexibility we could not regrettably come to a political agreement.
Despite these difficulties, I am convinced that there is light at the end of the tunnel for Ukraine. The DCFTA offers hope for reform and new business opportunities that will create jobs and growth both in the medium and long run. At our meeting today, I assured Minister Klimkin that the EU is a strong and loyal partner and that I remain committed to help boost trade and growth.