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2020 European integration turned into EU exports drop for Ukraine

From January 1, 2021, a zero duty on imported wines from the European Union started to operate in Ukraine under the current Association Agreement, which will deal a severe blow to Ukrainian winemaking enterprises.  This is a consequence of the implementation of the catastrophic for our country signing of the Agreement on the Free Trade Area with the EU.

In September 2020, I addressed the leadership of the Russian Federation with a request to provide assistance in solving this problem and to consider the possibility of partial lifting of the sanctions imposed on a number of enterprises, including the wine industry that asked us for help.

However, the return of Ukrainian winemakers to the Russian market does not remove from the agenda the issue of protecting the Ukrainian market from the expansion of European producers.  The trade and economic partnership between Ukraine and the EU is characterized by the absolute inequality of the terms of the once signed Association Agreement and is implemented according to the formula – you give us raw materials, for example, round timber, we give you finished products with high added value.

The results of such a policy are obvious: according to the State Customs Service, in 2020 alone, the export of Ukrainian goods decreased by 10.24% or by USD 2.22 billion to USD 18.66 billion. Considering the asymmetric and discriminatory conditions of the deep and comprehensive free trade zone with the EU, the negative trade balance in 2020 amounted to USD 5.09 billion. Behind these dry figures are the catastrophic for Ukraine results of signing an FTA with the EU – economic collapse, deindustrialization and destruction of high-tech industries (knowledge-intensive industries), multi-million dollar labor migration. 

The main argument of the ‘European integrators’ in 2013 was precisely the replacement (!) of the Eurasian sales market with the European one, as a more capacious and solvent one.  Today we see that, as we warned back in 2012, this did not happen, and could not happen.

While in 2020 the increase in exported goods in monetary terms to the EU markets (compared to the pre-crisis 2013) amounted to USD 2.0 billion, the decrease in the volume of exported goods to the CIS markets amounted to USD 15.7 billion. If we compare it with 2011 (when the peak of trade was recorded), then the annual volume of exports of goods in 2020 to the EU countries increased by only USD 0.8 billion in nominal prices, while to the CIS countries it fell by USD 20.1 billion.

As a result, the Ukrainian economy has lost just over the past year from USD 19.3 billion in exports to the EU and the CIS (there are also indirect losses in related industrial sectors).  These losses are several times higher than the volume of allocated credit tranches within the framework of the so-called macro-financial assistance from external ‘partners’, whereas the state and state-guaranteed debt of Ukraine for almost 7 years increased by USD 11.1 billion – to USD 84.2 billion. These are the results of the signed by Kyiv in 2014 the economic part of the Association Agreement with the European Union, which led to further severance of trade and economic relations with the Russian Federation and the CIS.

Under the rule of Poroshenko-Zelenskyy, Ukraine in the integration processes not only lost its identity in the foreign economic arena, our country turned from a high-tech state into a raw materials supplement.  In the commodity structure of goods exported by Ukraine (according to the State Statistics Service), agriculture reached 44.5% (of which grain – 19.2%), base metals – 18.9%, while machinery and equipment – only 9.2 %.  In just 7 years, the annual volume of exports of Ukrainian goods decreased by 22.1% – to USD 49.3 billion. In the international ranking of the World Economic Forum on the global competitiveness index in 2019, Ukraine dropped to 85th place among 141 countries.  As a result, in terms of GDP per capita, Ukraine at the end of 2019 ranks 122nd in the World Bank’s world ranking and last in Europe.

We consistently advocate revision of the onerous terms of Ukraine’s participation in the WTO and the so-called deep and comprehensive FTA with the EU, which directly contradict national economic interests, as well as the termination of the policy of reciprocal sanctions and the restoration of mutually beneficial trade and economic ties with Russia and the CIS countries.

Our country needs a radical change of priorities in foreign trade.  Only this will ensure the growth of the Ukrainian economy.  It is this policy that we consistently defend in order to make Ukraine a successful state.

 

Viktor Medvedchuk,

Chair of the Political Council of the Opposition Platform - For Life party

Опубликовано: 11 January 2021
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