One year after the entry into force of the EU-Ukraine Association Agreement (1st January 2016), the trade statistics released by the Ukrainian State Statistics Service report an increase in exports to the EU in 2016 compared to 2015. While this increase is still modest (+3,7%), it demonstrates that the Agreement, and more particularly the establishment of a Deep and Comprehensive Free Trade Area (DCFTA) between the EU and Ukraine, is proving to be beneficial to Ukraine, the EU Delegation to Ukraine reported on its website February 22.
Following two years of declining trade, due to external aggression, a global decrease in commodity prices and severe economic crisis, exports from Ukraine to the EU began to increase again in 2016, by 3,7% in 2016 (to a total of $13.5 billion), according to the report.
This performance should be seen against the backdrop of a 8.9% decline in Ukraine`s exports to the rest of the world. The decline in exports to Russia have continued to decrease sharply, by 25.6%, largely as a result of Russia`s restrictive measures against Ukraine.
This led to the EU becoming Ukraine`s largest export partner, representing 37.1% of Ukraine total exports in 2016, while Ukrainian exports to Russia represent now only 9.9% of the total. Taking into account the imports, total trade between Ukraine and the EU has increased by 8.1%, which is evidence that the DCFTA is having a positive effect.
Already after one year many of the EU`s import tariffs have been lowered for Ukrainian goods (and in many cases already brought to zero) and Ukrainian agricultural exports already benefit from tariff-free quotas, meaning duty free exports of several agricultural products up to a certain limit.
On the other hand, the increase in trade remains moderate so far. A more substantial boost to trade between Ukraine and the EU will come only later, progressively. The DCFTA is to be implemented in full over the course of following 7 years – a period foreseen in the Agreement.
In particular, Ukrainian exports will benefit from the alignment of Ukrainian regulations and standards with EU one. This deep integration of food and consumer safety legislation, and harmonization of standards for industrial, agricultural and consumer goods, will open up the EU market much more than the decrease in tariffs.
This, however, requires a significant effort by the Ukrainian authorities to press ahead with reforms as quickly as possible, according to the EU Delegation.
The Association agreement is a tool that both the Ukrainian government and businesses need to seize, while the EU continues to stand side-by-side with Ukraine in that process. A large part of EU assistance to Ukraine is targeted at facilitating the implementation of reforms that are foreseen by the agreement and which will deliver sound, sustainable and substantial benefits to the Ukrainian citizens, the EU Delegation wrote.