On 1 September 2017, the EU-Ukraine Association Agreement came into full force. The Association Agreement, including its Deep and Comprehensive Free Trade Area (DCFTA) part, is the main tool for bringing Ukraine and the EU closer together. The DCFTA offers Ukraine a framework for modernising its trade relations and for economic development by opening up markets and harmonising laws, standards and regulations in various sectors. This will help align key sectors of the Ukrainian economy with EU standards.

The DCFTA has been provisionally applied since 1 January 2016, constituting a major milestone in bilateral trade relations and offering new economic opportunities to both the EU and Ukraine. Ukrainian businesses receive stable and predictable preferential access to the largest market in the world, with over 500 million consumers. EU businesses are able to benefit from easier access to the Ukrainian market and build new relationships with Ukrainian suppliers and partners.

On 1 October 2017 the additional autonomous trade measures of the EU for Ukraine entered into force. The EU regulation on the measures tops up the quantities of agricultural products that Ukraine can export to the EU under the Association Agreement without paying customs duties. It also accelerates the elimination of EU import tariffs for several industrial products, as foreseen in the Association Agreement.

Snapshot of trade statistics

The concrete results of implementation of the DCFTA can already be seen: Ukrainian exports to the EU has never been higher than in 2018, there is also a significant increase in EU exports to Ukraine.  

Source: Eurostat

The EU remained Ukraine’s main trading partner, representing 42% of Ukraine’s total trade, with a similar split between imports and exports. Total trade between the EU and Ukraine reached about €40 billion in 2018, an increase of close to 9% when compared to 2017. Ukraine is EU’s 21st largest trading partner.

In 2018, Ukraine mainly exported base metals and articles thereof (21.9% of total), vegetable products (18.9%), mineral products (15.0%), machinery and appliances (11.8%). Ukraine’s export profile is now more diversified than a decade ago when 70% of exports consisted on vegetable products, base metals and mineral products. Today, other categories such as animal products, foodstuff and machinery products, feature much more prominently on the export list. Footwear and articles of stone, although still relatively low have seen exports increasing by more than 50% over the last 10 years.

Investments

Foreign trade and investments are vitally important for both the Ukrainian and the EU economies, in terms of growth and jobs, lower prices, better quality and greater choice for consumers through increased competition, and so on. Unfortunately, foreign direct investment remains low, pointing to the need to improve the business climate and encourage investment, in particular through enforcement of the rule of law and the fight against corruption. According to the State Statistics Service of Ukraine, the volume of direct investment (equity capital) into Ukraine's economy from the EU countries as of 31 December 2018 totalled USD 24.7 billion. The main investor-countries are Cyprus - USD 8.9 billion (35.9 % of the total volume of investment from the EU), Netherlands - USD 7.1 billion (28.5%), United Kingdom - USD 2 billion (7.9%), Germany - USD 1.7 billion (6.7%), Austria - USD 1 billion (4.1%) and France - USD 0.6 billion (2.6%).  Significant volumes of direct investment from the EU countries are concentrated in industrial enterprises (34.4%), enterprises of wholesale and retail trade, repair of vehicles and motorcycles have accumulated 13.8% of direct investment, organizations carrying out transactions with real estate 12.8% and financial and insurance institutions have accumulated 10.5%.

More information on EU trade agreements - European Commission’s annual report on the implementation of trade agreements -  https://trade.ec.europa.eu/doclib/press/index.cfm?id=2071

Civil society organisations in Ukraine - EU partners in dialogue and advancing reforms

The EU acknowledges the important role of civil society in transformation processes in Ukraine. Civil society is a critical governance actor and a driver for reforms. In Ukraine it has proven a reliable interlocutor for the EU and partner governments, and a vehicle for the voice of citizens.

We aim to make our support more predictable to potential civil society partners and increased impact of our financial support to civil society organisations by:

• Expanding the range of actors we engage with;

• Supporting civil society in policy dialogue with governments and in participation to the delivery of sector interventions;

• Building technical expertise, leadership within civil society as well as better links to constituencies;

• Engaging in strategic partnerships with organisations that have the knowledge and the capacity to engage with smaller organisations and support the healthy growth of civil society;

• Making available fast mechanisms for intervention

Financial support to capacity development, enabling environment and engagement in policy dialogue of civil society organisations represents indicatively 5% of the total EU financial assistance allocated to Ukraine (2014 – 2020). This makes the EU one of the top sources of funding for civil society support. The European Union regularly publishes Calls for Proposals and invites interested CSOs and partners to regularly follow announcements made on the EuropeAid website. A number of additional support tools are made available through the Eastern Partnership Civil Society Facility and EU Prostir.

EU Country Roadmap for Engagement with Civil Society in Ukraine

In 2018 the EU Delegation, together with EU countries and in consultation with civil society and national authorities, renewed the EU Country Roadmap for Engagement with Civil Society in Ukraine. The Roadmap reflects EU's ambitions to support civil society in Ukraine to be recognised as a legitimate partner in policy and sector reform dialogue with the Ukrainian government, in ensuring an enabling environment for civil society organisations and in supporting organisations build their own capacities.