Freedom to trade
internationally is largely being upheld in Ukraine. The country has been a
member of the World Trade Organization since 2008. Since 2016, Ukraine has been
a part of a Deep and Comprehensive Free Trade Area with the European Union.
Ukraine’s main export partners are the EU, China, Russia and Turkey. The
imports of the country come primarily from the EU, China, Russia and Belarus.
Ukraine’s exports have been declining before 2014 already, but the outbreak of
war in 2014 has worsened the trend. The Ukrainian export slightly increased in
2017, but decreased again by the end of the year. Since 2014 there has also
been a decline in direct foreign investment, leading to negative growth.
However, in 2017 there was a slight recovery of investment activity. Most
the investor countries belong to the European Union: the Netherlands, Germany,
France, Austria, Luxembourg, the United Kingdom. Among the main factors that limit foreign
investment in Ukraine are the ongoing military actions in Donbas, lack of trust
towards the judicial system, lack of free circulation of land and inhibition of
large privatization. The new Ukrainian
government has so far publicly pledged to resolve some of these issues, namely
to open the agricultural land market, conduct a large scale privatization and
implement a new reform of the judiciary. Over the past five years the
importance of the EU market for Ukraine’s trade has risen significantly. In
2018 the EU’s share in the structure of both exports and imports of goods in
Ukraine amounted to 43%. The PrivatBank litigation remains one of the biggest
threats to the Ukrainian economy. The stalling of talks on the new loan program
between the International Monetary Fund and the Ukrainian government has been
attributed to the IMF’s concerns over government’s commitment to transparency
and independence of the banking sector.
If Ukraine’s dispute with the PrivatBank’s former owners ends in the
victory of the latter, it could seriously harm the country’s economy and would
likely spell the end to the cooperation with the IMF.