The self-proclaimed "Donetsk People's Republic" intends to start integration with Russia's customs union and to gradually exit Ukraine's legislative scope, an official says.

Andrey Purgin, First Deputy Prime Minister of the "Republic", cited Ukraine's decision to sign an Association Agreement with the EU to be among the reasons for this move.

He believes that closer ties between Kiev and Brussels will impact negatively the region.

"With this decision Ukraine virtually cuts itself off the Russian market... Losses in trade with the Customs Union [Russia, Belarus, Kazakhstan] will be at 50 percent or more," RIA Novosti quotes him citing the "Donetsk People's Republic" press service.

Purgin's words come in the midst of talks between pro-Russian rebels in the Ukrainian Donbass region and Kiev representatives, with the Organization for Security and Cooperation in Europe (OSCE) brokering the talks.

In late 2013, former President Viktor Yanukovich announced he would not sign an Association Agreement with the EU and would opt for a Customs Union with Russia instead.

His decision led to widespread protests which finally turned into episodes on violence on the streets of Kiev and prompted Parliament to declare Yanukovych illegitimate.

The Association Agreement, after being officially ratified by Ukraine's Parliament in July, will include Ukraine into a free trade area with the EU.

Russia said Friday, hours after Ukrainian President Petro Poroshenko signed the agreement's document alongside Moldovan and Georgian leaders, that Moscow was determined to act if the deal harms Russian interests.