Small but useful
In the past couple of years Ukraine’s exports to the EU more than doubled. Moreover, after the new wave of EU enlargement next May the common European market could top the list of the recipients of Ukrainian exports, thus matching the markets of Russia and other CIS members taken together. But how can the benefits of being an EU member be used to neutralize the negative — at least for Ukraine — consequences of EU enlargement? The participants of the scholarly discussion, Ukraine in the EU Market, have provided answers to this difficult question.
Among other things the scholars pointed to the unsatisfactory structure of Ukraine’s presence in Europe, which is quite typical of Third World countries and inadequate for Ukraine’s full-fledged participation in the European economic space. According to the discussion participants, Ukrainian companies are too slow in improving the forms and methods of their participation in this market, which prevents Ukraine from competing effectively in its most dynamic segments. On the other hand, Ukraine faces many problems in the most attractive segments of the European market such as agricultural produce, metals, and high-tech products, which is due to the limitations in force in the EU.
How can one break free from this vicious circle? Speaking in an interview with The Day, Prof. Oleksiy Plotnykov, chair of the Department of International Currency and Financial Relations at the Academy of Sciences’ Institute of World Economy and International Relations, noted that for objective and subjective reasons Ukrainian enterprises can barely meet the tough competition of the European markets: “As a result of the structure of the nation’s economy and ineffectual reforms Ukraine has found itself lacking in the high-tech and competitive products that are in demand in the EU. Among the subjective reasons is the status of our country that is neither a prospective member nor even a candidate for EU membership, while its neighbor status is still unclear. This imposes limitations on Ukrainian exporters working in the European market. Therefore, today the question is not one of making a breakthrough, but one of preserving the level of presence we have achieved thus far.”
Vyacheslav Medvediev, chief of the European Integration Department at the Ministry of the Economy, cited an estimated $370-390 million Ukraine will lose, unless it can agree with the EU on new terms of trade after EU enlargement. However, according to him, there is still hope, and political factors will be a major determinant in what concerns both receiving higher export quotas and obtaining market economy status.
Hryhory Nemyria, director of the Center for International and European Research at the Institute of International Relations of the Kyiv Shevchenko University, spoke within this context of a European carrot that is a powerful stimulus for us to work in the European market. According to Nemyria, if at present we have no possibility to receive the big carrot, that is, to join the EU, this does not mean that we can afford to lose a chance to get a small but no less useful carrot. In particular, discussing the duration of the joint Ukraine-EU Action Plan that is being drafted, he proposed an unconventional approach to it, which is based on the fact that, in his view, the EU will not have the funds to implement such a plan. In this case, Nemyria proposes that Ukraine wait until other countries adopt similar plans. Meanwhile, Ukraine will be able to cite them as examples to prove that these plans do not work without adequate funding and instead put forward its own variant of the plan on the terms that suit it best.
Valery Lytvytsky, aide to the NBU governor, voiced his concern that in the coming years Ukraine will not be able to support its exports to Europe with favorable currency exchange rates. Speaking in an interview with The Day, he also stressed that Ukraine should avoid the extremes (such as breaking off relations with Russia over Tuzla and freezing European aspirations after the EU poured cold water on Ukraine’s EU membership ambitions) and further diversify the existing structure of exports. Simultaneously, according to him, analysis of the balance of payments suggests that increasing exports to the CIS alone could have adverse effects.
However, all the discussants agreed that all causes of delays in Ukraine’s EU accession and complications in its work in the European market lie within Ukraine, which has delayed reforming the structure of its economy and has of late slowed down the process of adapting its laws and standards to EU requirements.
