Ukraine today is ready to provide its products in the EU market at the appropriate level

On June 27 in Brussels, President of Ukraine Petro Poroshenko has signed the economic part of the Association Agreement between Ukraine and the EU.

It is well known that after the signing of the political part of the Agreement and in order to support Ukraine's economic and political situation in early 2014, the EU has unilaterally opened its markets to products, which come from Ukraine, by introducing an autonomous preferential trade regime.

Autonomous trade preferences took effect on April 23 and will be valid until November 1, 2014 or until the entry into force of the Association Agreement between Ukraine and the EU, if it occurs earlier.

Ukrainian exporters have started to actively use given preferences. Thus, despite the fact that only two months have passed since the introduction of the autonomous trade preferences regime for Ukraine, as of the end of June this year were issued about 4473 EUR1 Certificates. Moreover, a gradual shift to EU markets has started since the beginning of this year.

Thus, the previous custom information on the volume of trade between Ukraine and the EU for 5 months shows that since 2014 there has been an increase in exports to the EU by more than $ 1 billion and a decrease in imports from the EU by $1.8 billion.

From the signing of the Agreement and implementation of provisions for a Free Trade Area Ukraine, first of all, expects to get access to the EU market, including through the reduction of import tariffs and harmonization of requirements to product quality, and as a consequence - increasing competitiveness and increasing demand for Ukrainian products in the EU market.

The growth of total exports of goods and services relative to the baseline level is expected to reach 2 percent (about UAH16.8 billion.). The main sectors of an exports increase: agriculture, food, textile and leather industry, energy materials, corporate banking, transport, metallurgy and metal processing, chemical industry, coal and peat.

The reduction of EU import duty rates will stimulate the growth of exports to the EU and provide Ukrainian exporters a certain cost advantage in the markets of the EU Member States. Ukraine today is ready to provide its products in the EU market at the appropriate level. Thus, according to the Agriculture Ministry forecasts and related associations of manufactures, the real export growth could be much higher.

In turn, an additional rise in total imports of goods and services, due to the new terms of trade in the first year of the FTA is likely to be about 0.7 percent (about UAH7 billion), as the level of tariff protection of Ukraine today is not a barrier to imports from the EU.

While most of all, having regard to the volumes, will increase imports of services of financial intermediation, products of chemical production, forestry, production of other nonmetallic mineral products, food industry, agriculture, services to legal entities, production of machines and equipment.

It is expected a slight decline in the revenues of the State budget of Ukraine from import duties on goods, which come from the EU. However, it is predicted that the relevant shortfall will be covered by revenues from other sources, including the payment of VAT on imports (as some imports increase is expected), as well as income tax of undertakings, particularly in those areas where it is expected increase of goods production.