Ukraine May Increase Exports to EU by $9,7 Billion

Tuesday, July 6, 2021
Ukraine May Increase Exports to EU by $9,7 Billion

The trade and economic part of the Association Agreement with the European Union is disadvantageous for Ukraine and requires revision

This conclusion is contained in a study conducted by the State research Institute of informatization and modeling of the economy jointly with the Center for Market Economy Development CMD Ukraine.

The research materials were presented at the hearing Strategic guidelines for deepening trade and economic relations between Ukraine and the European Union in the context of the Association Agreement, organized by the Government and Committee on economic development.

The authors of the report note that the share of agricultural raw materials (corn, wheat, rapeseed, oil cake, soybeans, etc.) and mineral resources (iron ore) is growing in the structure of exports from Ukraine to the EU. At the same time, enterprises in high-tech industries are reducing their exports: instrument making, mechanical engineering, and the chemical industry.

The share of engineering products in exports to the EU in 2019 was only 14,4%. At the same time, almost half of this volume falls on sets of wires, which are mainly exported by subsidiaries of automakers from the EU.

At the same time, complex and high-tech mechanical engineering products prevail in merchandise imports from the EU: cars and trucks, mobile phones, insulated electrical cables, and insulating fittings, fuel elements, combine harvesters, fertilizers, plant protection products, pharmaceuticals, etc.

Therefore, the trade balance of Ukraine with the EU remains negative: by the end of 2020, imports from the EU in monetary terms exceeded Ukrainian exports by $4,3 billion to the European market.

These are anti-dumping, countervailing and special duties, requirements for additional certification, accreditation, etc. At the same time, the duty-free quotas allocated under the association agreement for Ukrainian products are scanty, the report emphasizes.

Thus, the untapped potential for exporting goods from Ukraine to the EU reaches $9,7 billion. This is 47,5% of all exports of Ukrainian products to the EU countries in 2019. According to the authors of the report, this potential is much higher. Since it is estimated based on the existing raw material structure of Ukrainian exports to the EU.

While the most promising industries for the restructuring of trade and economic relations with the EU are engineering, automotive, electrical machinery and equipment, as well as certain areas of ferrous metallurgy, the military-industrial complex, and the production of polymer materials.

One of the authors of the study, head of the analytical center CMD Ukraine Igor Guzhva noted that the EU is a large and solvent market, for which almost all countries of the world are fighting. “Therefore, the Association Agreement and Free Trade Agreement can provide an additional competitive advantage for Ukraine. Achieving greater results in EU markets requires special skills, entrepreneurial dexterity, and strong government partnerships. This is primarily about the need to develop in Ukraine, by analogy with the EU, financial, fiscal and institutional incentives for competitive production and export,” said I. Guzhva.

Earlier, deputy chairman of the Governmental committee on economic development Dmitry Kisilevsky announced the need to revise the economic part of the association agreement with the EU. According to him, now the free trade agreement is such only in name. Ukrainian goods do not have free access to the EU market, while the Ukrainian market is completely open for European goods. Kisilevsky stressed the inadmissibility of such an imbalance.

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