Strict lockdowns and quarantine measures amid the COVID‑19 pandemic barely dented trade between Ukraine and France in 2020.
Bilateral trade with France, Ukraine’s fourth largest trading partner in the European Union, reached $2.1 billion last year, a few hundred million dollars less than the pre-coronavirus year of 2019, but still robust.
The trade ties remain durable as the two countries trade cars, wine, boats and wine. “Both countries continued to strengthen their economic relationship,” said Bertrand Barrier, head of the French-Ukrainian Chamber of Commerce.
French cars
Ukraine mainly exports agricultural products to France while importing pharmaceutical goods, food, beverages and French cars.
Every fifth new car sold this March came from French brands Peugeot, Citroen and Renault. The latter is the most popular car brand with Ukrainians at the moment.
Beating Japan’s Toyota, sales of new Renault automobiles took the lead last month. Ukrainians bought 1,263 Renault cars, mainly crossovers, helping the company reach 14% of total market share.
“The market was growing well in March, and we were glad to see that,” Renault Ukraine spokeswoman Anna Sibekina told the Kyiv Post.
But just a year ago, the company had difficulties amid government restrictions aimed to curb the spread of the coronavirus. Renault had to “adapt to new realities, establish productive work with the dealer network,” Sibekina said.
And the French manufacturer managed the new reality well.
The company ended last year with 16,390 cars sold in Ukraine and a 17% market share in the country. Three out of five most popular models on the country’s market were also Renault’s — the five seater jeep Duster, compact sedan Logan and city hatchback Sandero.
Barrier believes that car producers, just like other French businesses in Ukraine, did well as they have already gained experience working in a “quite difficult environment” during previous crises.
Besides, Ukrainians spent more money locally due to travel restrictions. “People did not have the possibility to shop abroad as much as before,” said Barrier.
Bilateral trade between Ukraine and France has been growing since 2015 and reached $2.1 billion in 2020.
Food & wine
The total worth of imported wines to Ukraine hit a record $180 million in 2020.
With a 15% market share, France was the second largest wine exporter to Ukraine, sandwiched between Italy and Georgia. This year’s results may be even better as Ukraine lifted import duties on wine produced in the EU for the next seven years.
“The volume of import of French wines to Ukraine has increased recently which is positive news,” said Barrier.
According to Peralcon, an advisory company in the food sector, the market of the European wines will only grow in Ukraine. “We expect new foreign players to enter the arena, including emerging small and medium-sized wineries,” Peralcon experts wrote.
Cheese, often a great companion to wine, was also among top products imported from France to Ukraine.
In total, 3,900 tons of French cheese, or 8% of total imports, ended up on the shelves of local grocery stores, making France the country’s third largest source of cheese in 2020 after Poland and Germany.
For the past five years, the volume of all imported cheese to Ukraine has increased ninefold — from 5,400 tons in 2015 to 46,800 tons in 2020.
This trend is not in favor of domestic producers as “it’s hard for them to compete with the EU producers in terms of quality and price,” according to Ukrainian Agribusiness Club.
Meanwhile, fueled by France’s demand for berries and nuts, Ukrainian exporters earned nearly $20 million, according to Ukrainian Agriculture Export Association.
France was the final destination for nearly one tenth of Ukrainian exports of walnuts and berries, mainly frozen blueberries and raspberries, last year. By the end of 2020, France has become the second largest buyer among European countries after Poland.
Figures could be even higher if it wasn’t for additional “customs procedures at borders” and there was “less transportation by sea and land,” according to Dmytro Kroshka, head of the association.
Supplying boats
After Russia illegally annexed Crimea seven years ago, seizing 75% of Ukrainian naval ships based there, Ukraine was left helpless amid the growing military threat from the sea.
With only a 30-year-old flagship frigate Hetman Sahaidachny and a couple of rusty vessels to its name, the country desperately needs additional patrol boats to ensure security in the 12-mile coastline zone.
In 2020, Ukraine signed a 136-million-euro contract with French shipbuilding company Ocea for the supply of 20 patrol boats for the State Border Guard Service.
France will build 15 boats, the rest will be constructed on Ukraine’s Mykolaiv sea port.
Prime Minister Denys Shmyhal called the contract a “strategic order,” since Ukraine will not only employ hundreds of people while manufacturing ships, but also receive experience and technology.
According to Interior Minister Arsen Avakov, the hull for the first 32-meter patrol boat has already been built.
“These are the real results of joint Ukrainian-French cooperation to protect our maritime borders,” Avakov announced on Feb.15. “We expect to receive the first boat in the fall of this year.”
Investment plans
Around 180 French companies currently operate in Ukraine. As of the first half of 2020, foreign direct investment from France to Ukraine reached $1.1 billion, according to the government’s investment promotion office UkraineInvest.
But while Ukraine’s agricultural and IT sectors continue to be the main drivers for French investors, the future of renewable energy projects is uncertain, according to Barrier.
“The renewable sector was strongly affected by the change in the tariff legislation,” he said, referring to Ukraine cutting its green tariff to 0.16 euros for a kilowatt.
Still he believes that there is an interest in Ukraine among investors — it will recover as soon as the economy, hurt by the pandemic, bounces back.
Barrier said: “We have a strong feeling that investments were only postponed.”
