25. Foreign trade of Ukraine

Ukraine exports products to 140 countries of the world. Its main export products are ferrous metals and metal products, engines, transport and mechanical equipment, chemicals, and vehicles. Top import items include mineral products, automobiles, transportation equipment, chemicals, and textiles. Ukraine relies heavily on trade, particularly with the other former Soviet republics, although not nearly as much as it had a 15 years ago. Inter-republic trade accounted for 73% of its total imports in 1988 and 85% of its total exports. In 1991, imports from the other republics equaled 26% of GDP and exports to them amounted to 25% of GDP. However, trade with former USSR states has since rebounded, with Ukraine taking in 59% of its imports from them and selling 33% of its exports to them in 2000.

In 1991/92, inter-republic trade contracted severely, partly due to a breakdown in payment mechanisms, and trade with other countries dropped as well. Much of Ukraine's foreign trade has been carried out in the context of intergovernmental agreements. However, the government has since stabilized its foreign trade. In 2000, total imports were valued at $14 billion, and total exports at $14.6 billion. Ukraine trades heavily with the other former Soviet republics, and since 1993 has had extensive trade ties with China.

Ukraine's trade is still heavily oriented towards the CIS and especially to Russia. Its major trading partners are CIS countries, the EU nations, Central Europe, China, and the United States. Most imports of oil and gas are from Russia and Turkmenistan, while imports of technologies are mainly from Western countries. Exports, which are minimal for a developed country, consist mainly of raw materials and agricultural goods.

In 2000, exports totaled $14.6 billion and imports totaled $15 billion. Ukraine's main export markets are in Russia (24 percent), the European Union (30 percent), and the United States (5 percent). Its main importers are Russia (42 percent), the European Union (29 percent), and the United States (3 percent).

Ukraine remains interested in bilateral trade and economic cooperation with Russia and the CIS, but is careful to pass up any larger political or security relationship. As an Associate Member of the CIS, Ukraine has rejected all attempts to transform the CIS into a supra-national organization. As a result, Ukraine has refrained from joining the Russia-Belarus Union, the CIS Customs Union, and the Payments Union. However, mindful of the preference for bilateral relations with the CIS countries, in March 1998, Ukraine and Russia concluded an Interstate Economic Treaty.

Under the trade provisions of the PCA (EU-Ukraine Partnership and Co-operation Agreement), trade between Ukraine and the EU is in theory free of most restrictions. In practice, trade in steel and textiles are subject to special taxation schemes, and Ukraine is subject to actual or prospective EU anti-dumping measures for a variety of products, including silicon, carbide, and magnesium. (Anti-dumping measures keep a country from flooding the market with a product that it can produce much more cheaply than its competitors.)

Progress on an EU-Ukraine free trade zone most likely will not get underway until Ukraine is admitted to the World Trade Organization (WTO). Ukraine is continuing negotiations with the WTO on the basis of its initial offer and revised service offer. The EU supports Ukraine's eventual entry into the WTO, but does not believe that Ukraine yet meets the conditions for membership. WTO membership is an issue on which the United States and the EU consult and co-operate, as affirmed in the Joint Statement on Ukraine released at the December 1997 U.S.-EU summit.