Main exports of Ukrainian goods to the Economic Unions:
§ the Asia-Pacific Economic Cooperation (APEC): ferrous and nonferrous metals and articles thereof;
§ CIS: machinery, ferrous and nonferrous metals and products, prepared foods;
§ no-country Central European Free Trade Area (TSEFTA): mineral products, ferrous and nonferrous metals and articles thereof;
§ EU: ferrous and nonferrous metals and articles thereof, mineral products, vegetable products;
§ of the country's manufacturers and exporters of petroleum (OPEC): ferrous and nonferrous metals and products, herbal products.
| The main product groups | Export | Imports |
| Ferrous metals and articles there of | 40.2 | 5,0 |
| Mineral products | 10.1 | 30,0 |
| Agricultural products | 8,6 | 3,3 |
| Chemical industry products | 10.9 | 14,2 |
| Machinery, equipment and tools | 8.7 | 17.5 |
| Non-ferrous metals | 2,9 | 2,8 |
| Textiles and textile products | 2.4 | 3,0 |
| Wood Products Industry | 3,2 | 3,2 |
| Processed food | 3,6 | 3,7 |
| Means of transport | 5,4 | 11,4 |
The volume of exports from Ukraine increased in 2010 comparing with 2009 by 29,6% and amounted to 51 billion 430.5 million U.S. dollars. At the same time imports grew by 33,7% and reached 60 billion 739.9 million dollars.
The largest share (85%) in exports were transport services - 3 billion, including pipeline transport services (52%), sea transport (13%), rail (10%), air transport (6%).
2.3 Export and import flows of services
In January-March exports of services exceeded imports by 1 430.7 million. Told the State Statistics Committee, submit the "Ukrainian News".
According to Goskomstat, service exports in January-March 2010 was 2 557.4 million, an increase of 19,6% compared with January-March 2009.
Imports of services amounted to 1 126.7 million, decreased by 0,2% compared with January-March 2009.The increase in services exports was primarily due to growth in services exports pipelines - in 2,3 times to 959.2 million dollars, travel - by 16.4% to 50.3 million dollars and transportation services - 33 9% to 1 884.3 million.
Imports of services decreased mainly due to imports of financial services - by 22,7% to 228.1 million dollars, various business, professional and technical services - by 11,6% to 188.1 million dollars of services - by 39.4% to 27.7 million, and insurance services - by 46% to 13,2 million dollars.In January-March 2010, service exports to CIS countries increased by 82,1% compared with January-March 2009 to 1 370.0 million.
Imports of services from the CIS in January-March 2010 increased by 13,2% compared with January-March 2009 to 179.7 million dollars.
It was reported that in 2009 exports of services exceeded imports by 4352 million.Exports of services in 2009 amounted to 9 520.8 million, decreased by 18,9% compared with 2008.Imports of services amounted to 5 168.8 million, decreased by 20,1% compared with 2008.In 2009, service exports to CIS countries decreased by 10.3% compared with 2008 to 3 808.7 million.
| Countries | Membermillion.U.S. $% | of thetotalvolume offoot |
| Total | 3486,8 | 100 |
| Russia | 2049 | 58,8 |
| United Kingdom | 123,2 | 3,5 |
| United States | 122,7 | 3,5 |
| Germany | 105,0 | 3,0 |
| Belgium | 70,5 | 2,0 |
| Cyprus | 68,4 | 2,0 |
| Switzerland | 47,8 | 1,4 |
| Other | 900,1 | 25,8 |
In recent years, Ukraine has passed most of the hurdles of postcommunist economic transformation. Macroeconomic stabilization was accomplished long long. Prices and trade are liberalized. Privatization has proceeded so that about two-thirds of GDP arises in the private sector. For the last three years, Ukraine has had a sound average economic growth of over 6 percent a year, and it is likely to stay around 6-8 percent a year for the foreseeable future.
A fast economic restructuring is taking place. Industries in which Ukraine appears to have comparative advantages have grown particularly fast: steel, food processing, agriculture, and light industry. Within each sub-industry a desirable consolidation of 3-5 leaders is apparent. Although a few oligarchic groups hold out, they are becoming more normal conglomerates, and a sizeable number of new large and medium-size corporations have emerged. While corruption and repression remain problems, business surveys undertaken by the European Bank for the Reconstruction and Development (EBRD) and the World Bank in 1999 and 2002 suggest great improvements. Ukraine's transition to a market economy has succeeded.
In this situation, foreign trade attracts new attention for many reasons. First, with an official GDP at current exchange rates of about $40 billion, the Ukrainian economy is rather limited, and access to export markets is critical for future economic growth. In recent years, Ukrainian exports have expanded fast by slightly over 10 percent a year and are driving economic growth, but clearly much more can and should be accomplished. The old adage "trade rather than aid" describes what Ukraine needs now.
Second, the Ukrainian economy is very open with exports corresponding to about half of GDP, and exports have increased at over ten percent a year for the last three years. Exports comprise the growth engine in the Ukrainian economy.
Third, while the domestic market in Ukraine appears to work reasonably well, regional distortions in foreign trade are all too apparent. The most recent statistics for 2002 demonstrate that as little as 19 percent of Ukraine's exports went to the European Union (EU). According to the gravity model, which assesses how much countries should trade with one another, given the size of their economies and the distance between them, it should have been about 60 percent. Meanwhile, the share of Ukrainian exports going to Russia has fallen steadily to only 17 percent last year. Instead, Ukraine is increasingly exporting to all kinds of new distant Third World markets in Asia and the Far East, notably China, and the Middle East, which are more open. It is more important that exports grow than where they go, but this is not a normal development. With little doubt, this represents trade distortion, and Ukraine would benefit if it were able to export more to big markets in its neighborhood. Although Ukraine is a very open economy, agriculture is considered to be 93 percent self-sufficient, suggesting substantial sectoral distortions as well.
Fourth, Ukraine suffers from a predominance of so-called sensitive products in its exports, that is, goods that are particularly exposed to protectionist measures by other countries. They account for about three-quarters of Ukraine's total exports. Steel comprises 40 percent of Ukraine's exports, while each of the three sensitive commodity groups, agricultural goods, chemicals and textiles, account for over 10 percent. According to the WTO, Ukraine came in the 10th place in the world in terms of suffering from actual antidumping measures from January 1995 to June 2002, with no less than 37 antidumping measures concluded by various countries.
Fifth, Ukraine is now facing critical changes in its foreign trade agreements. Its negotiations about accession to the World Trade Organization (WTO) are approaching their final stage. The EU is suggesting that its Partnership and Cooperation Agreement (PCA) with Ukraine should be replaced with an agreement on a Common European Economic Area (EEA). The Presidents of Russia, Ukraine, Kazakhstan and Belarus just signed a declaration of their intention to negotiate a free trade zone. Thus, Ukraine is facing monumental decisions on its foreign trade relations in all directions.
Yet, sixth, although Ukraine is facing so many important problems and decisions in foreign trade, trade issues have been all but ignored in the country until recently. The preoccupation with getting the domestic market economic reforms has been so great. In the mid-1990s, Ukrainians had a tendency to blame the outside world for their hardships. Now, on the contrary, Ukrainians tend to blame themselves for whatever problems they encounter. While an admirably humble attitude, it does not necessarily reflect the truth.
There are always many barriers to trade. First, everybody mentions the problem for exporters to obtain a value-added tax refund. Another query is what the Ukrainian economy looks like at enterprise level, but it appears a rather normal market economy. Then, the three big trade issues come, trade relations with the EU, trade with Russia and WTO accession. The EU should be Ukraine's main export market, but its imports from Ukraine remain surprisingly low, while Ukrainian exports to Russia are swiftly dwindling. WTO accession appears to be the key to Ukraine's trade policy. Agricultural concerns are a topic on their own, but they appear to be less severe than widely presumed.
Ukrainehasgreatexportpotential.Withan area of0.4% of the total globallandand thepopulationat0,8%ofglobal, Ukrainemakes5%of worldmineralandfood processing.The mainstrategicgoalforUkraine- the transitiontoeconomic development,export orientedand, therefore, the productionof goodsable to competeinthe global market.
A fast economic restructuring is taking place. Industries in which Ukraine appears to have comparative advantages have grown particularly fast: steel, food processing, agriculture, and light industry. Within each sub-industry a desirable consolidation of 3-5 leaders is apparent. Although a few oligarchic groups hold out, they are becoming more normal conglomerates, and a sizeable number of new large and medium-size corporations have emerged. While corruption and repression remain problems, business surveys undertaken by the European Bank for the Reconstruction and Development (EBRD) and the World Bank in 1999 and 2002 suggest great improvements. Ukraine's transition to a market economy has succeeded.
Since 1996, Ukraine has repeatedly stated that it wants to become a member of the European Union at the highest official level. The EU has however cold-shouldered them, although Article 49 of the Treaty of the European Union stipulates that any European state may apply to become a member of the European Union. Many European politicians and EU commissioners have publicly ruled out Ukrainian membership of the EU, but formally the question remains open. A broad Ukrainian opinion favors the country's "European choice," though its implications are usually left open.
The institutional cooperation between the European Union and Ukraine has been rudimentary. The EU offered Partnership and Cooperation Agreements (PCA) to the CIS countries, which were little but a codification of WTO principles for non-WTO members. They do not offer any trade concessions beyond what the EU accords to its WTO partners, while the EU has concluded free trade agreement with many other countries. Ukraine has been treated as one CIS country among many. The Ukrainian PCA was concluded in 1994, but it did not come into force until 1997. It is valid for ten years and can be prolonged. Although it is comprehensive, covering political dialogue, trade in goods and services, economic, environmental, scientific, cultural and legal matters, it contains little of substance. The EU's only subsequent trade policy advance to Ukraine is its conclusion of a textile agreement that eliminated its import quota system.
The contrast between the development of exports to the EU from the ten post-communist EU candidate members in Central-Eastern Europe (CEE) and the CIS countries is huge. Barely half of the exports from the former went to the EU in 1989, rising to 67 percent in 2000. By contrast, 33 percent of Soviet exports went to the EU in 1989, but by 2000 that share had fallen slightly to 31 percent, according to IMF statistics. With exports to the EU of only 16 percent of its total exports in 2000, Ukraine was especially disadvantaged in spite of its vicinity to the EU. Given economic geography - Ukraine's location, transportation routes and the relative size of adjacent economies - the EU should be Ukraine's all-dominant export market buying 60 percent of its exports. Through regression analysis, Peter Christoffersen and Peter Doyle have established that the growth of potential export markets has been one of the most important determinants of growth in the transition countries.
One reason for the disparity in EU trade between the CEE and the CIS countries has been slower economic reforms in the CIS countries, but another reason has been diverse EU trade regulations. The EU has developed an elaborate hierarchy of trade treaties, ranging from simple trading partner to full member-state. As countries on the way to be full members, the CEE countries are close to the top of this hierarchy, while the CIS countries are at the bottom. The EU offered favorable Europe Agreements to the CEE early on, which committed all parties to eliminate tariff and non-tariff barriers on industrial products by the end of a ten-year period, which ended in 2001 or 2002. They were asymmetric to the benefit of CEE. Agricultural products are subject to preferential treatment under tariff quotas. On January 1, 1998, the EU lifted quantitative restrictions on imports of textiles and clothes from CEE.
The CEE countries are considered market economies by the EU (and the US), which means that an antidumping investigation is based on their own prices. The CIS countries, on the contrary, have been labeled "economies in transition" by the EU, which signifies that they are treated as state-trading countries and an antidumping investigation is based on a hypothetical country's (much higher) prices. Recently, Russia and Kazakhstan have been recognized as market economies of the EU and the US, and Ukraine should be able to make that grade very soon. The last EU objection is that the state plays too great a role in the Ukrainian economy, while the US last year rejected Ukraine as a market economy because of tax benefits for the steel industry, which have since been abolished.
Unlike the Central European economies, the major CIS countries are not members of the WTO. To date, four small CIS countries have become members of the WTO, the Kyrgyz Republic, Georgia, Moldova and Armenia, while all the others are at various stages of their accession.
Altogether, there is a world of difference in EU treatment of the CEE and CIS countries, respectively. CEE is about to become EU members, while the CIS countries have no associate status, no customs union or free trade arrangement. Largely, they are not even members of the WTO or recognized as market economies by the EU. Their trade status is reminiscent of "open season," and the US offers similar treatment.
These differences in status are reflected quite consistently in trade treatment and their total effect is significant. Even before their entry into the EU, the CEE countries get 80 percent of lines duty free to compare with, while 54 percent of lines for the CIS countries as GSP beneficiaries. GSP (Generalized System of Preferences) are trade benefits designed for developing countries, but they are not very beneficial for the CIS countries. For very sensitive goods - textiles, metals and many agricultural goods, most-favored nation (MFN) duty rates are reduced by only 15 percent, and for sensitive goods - chemicals, many agricultural goods, footwear, plastics, rubber, leather goods, wood, wood products, paper, glass copper, etc. - MFN tariffs are reduced by 30 percent. Only non-sensitive goods, which are not very significant in Ukraine's export, are duty-free. Moreover, the GSP regime suffers from many weaknesses. The supposed beneficiaries do not conclude any contract and therefore have no recourse to any dispute settlement conflict. The rules of origin are onerous, while special simplified agreements have been reached with CEE. GSP tariff reductions are less than those the EU accession countries get. Besides, Ukraine is so developed that it can easily be deprived of GSP because of too high economic development. Strikingly, nobody even talks about GSP in Ukraine.
Patrick Messerlin assessed EU Protection by industry in 1999. He put the level of overall protection for the whole of the EU economy at almost 12 percent. EU protection however varies by commodity, with rates of overall protection exhibiting wide differences by sector. Messerlin studied ordinary customs tariffs, major border non-tariff barriers (quantitative restrictions and antidumping measures), while he has ignored all the non-border barriers, that is, an array of norms and standards.