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Russian Raw Materials Help Ukraine
Official talks began this week on the creation of a free-trade zone between Ukraine and the European Union. Ukrainian President Viktor Yushchenko and European Trade Commissioner Peter Mandelson have indicated that they intend not only to liberalize the trade in goods and services, but to allow for the free movement of the workforce as well, which would be unprecedented for the EU. Even if that labor conditions are not liberalized, the agreement for Kiev will be a significant increase in the accessibility of Western markets for goods and capital.
At present, the most significant foreign market for Ukraine is Russia. According to the Russian Ministry of Economic Development and Trade, Ukraine has a 5.5-percent share in Russia's total volume of foreign trade, while Russia occupied 29 percent of Ukraine's. Russian-Ukrainian trade and Russia's share in Ukraine's volume of trade has been growing steadily since 2002. Nonetheless, Ukrainian exports to Russia are increasing notably faster than Russia's to Ukraine. In 2007, Russian exports to Ukraine grew 8.9 percent to $16.3 billion, and import from Ukraine grew 44.2 percent to $13.3 billion. As a result, Russia's positive foreign trade balance with Ukraine was reduced for the first time in recent years.
Russia's exports to Ukraine consist by more than half of raw materials, while Ukraine's exports to Russia are more diversified and has a substantially higher share of products with high added value. Economists are not concerned that the free trade zone being formed with Ukraine will damage the Russian economy. The Ukrainian economy's orientation on manufacturing and export to Europe will guarantee that Russian raw materials will have a place there, and Europe's interest in Russian raw materials is only increased thereby.
www.kommersant.com
All the Article in Russian as of Feb. 20, 2008
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