Geopolitics aside, trade relations between Russia and Ukraine are improving
Geopolitics aside, trade relations between the Russian Federation and Ukraine are improving.
The value of bilateral trade between the neighboring countries is likely to reach $30 billion this year, Russia’s Foreign Affairs Minister Sergei Lavrov said last month.
Last year, trade turnover between Ukraine and Russia stood at $22.4 billion; the figure stood at $19 billion for the first eight months of this year, suggesting Lavrov’s prediction may not be spot on.
Sixteen years since independence, Ukraine’s economy is still tightly connected with Russia’s. While EU countries have in recent years become Ukraine’s largest trading partner as a group, Russia continues to maintain the largest share of trade with Ukraine.
By the end of August 2007, the largest share of Ukraine’s exports – 25.5 percent – were destined for Russia. The boost of exports to Russia came from growing sales of railway equipment, electric machinery, ferrous metals, chemical products, paper and cardboard.
Russia also remains the country of origin for most of Ukraine’s imports, accounting for 28.7 percent at the end of August. Oil, gas and energy supplies and their derivatives traditionally constitute 50 percent of all imports into Ukraine from Russia.
Russian companies are also increasingly active in starting up businesses in Ukraine. Thus far in 2007, Russian companies have registered 202 new enterprises in Ukraine, according to the State Statistics Committee. Over the same period, German companies registered 40 new companies, while US companies established 79 business operations in Ukraine. In total, there are 12,838 Russian-owned companies operating in Ukraine, while there are 3,465 German-owned companies and 3,101 American-owned businesses.
“The matters of protectionism in trade relations between Russia and Ukraine have taken a back seat,” said Oleksiy Blinov, an economic expert with the Kyiv-based International Center for Policy Studies.
“Now, as we can see, there are not so many anti-dumping investigations and appeals from Russia to impose duties. That means Russia understands: The market laws are more or less functional in Ukraine. Ukraine is not involved in dirty cases, like the export of counterfeit goods or unconcealed dumping, because everybody wants to earn money normally. And that is why the market model works,” Blinov explained.
In terms of industrial cooperation between the two strategic partners, machine-building has been the dominating sector for years.
“Russian modernization is primarily oriented on local enterprises or on imports from CIS countries. And here Ukraine has very few competitors,” Blinov said.
“Thanks to the tremendous growth that Russia is experiencing, our economy will grow even faster,” he added.
“[Much] will depend on the future state of the Russian economy. All indications suggest it’s going to be positive.”
