Agricultural exports hinder project for FTA between Turkey and Ukraine
For nearly five years, Ukraine and Turkey have been negotiating the establishment of a free trade area (FTA). It is expected that this agreement will be signed at the end of this year or early next year, after a solution is found to overcome the outstanding problems related to Turkey's agricultural exports to Ukraine. The agreement comes at a time when trade growth between Ankara and Kiev is recording a major development.
Turkey has always been an important trading partner for Ukraine. In some years, it has ranked second as a destination for Ukrainian exports, after Russia. In 2015 Turkey accounted for more than 7% of those shipments; however, Ukraine has been losing its position as an exporter to Turkey. In 2013, Ukraine supplied Turkey with goods worth $ 37 billion, and in 2016 the total value had fallen to $ 20 billion. At present, Turkey ranks fifth among the major buyers of Ukrainian exports.
Alexander Okrimenko, head of the Ukrainian Centre for Analysis in Kiev, points out that it is better for Ukraine to establish an FTA with Turkey than with the European Union because Ukraine cannot participate fully in the EU market, and the balance of Ukrainian foreign trade with the EU has always been negative and will remain so in the future. Besides, Ukraine's foreign trade with Turkey has always been positive. It is easier for Ukraine to work with Turkey. There are no bureaucratic restrictions. Therefore, establishing an FTA with Turkey is important and necessary for Ukraine, and Turkey can win a lot from it.
Ukraine and Turkey will probably never join the European Union, and Ukraine will need to create its own union. It is believed that the EU will find itself willing to work with them. The goal is to gain a position of strength in politics and economics and this new Turkish-Ukrainian economic union is believed to be what the Eurasia region needs.
The main problem that hinders the establishment of an FTA between the two countries is the import and export of food, as there is competition in this area between the two countries, so the Ukrainian side wants to impose restrictions on agricultural products, especially fruits and vegetables, exported from Turkey to Ukraine. It is clear that the Turkish side does not agree and wants to receive some form of compensation worth imposing restrictions.
According to the Ukrainian analyst, the solution to this problem lies in giving Ukraine the opportunity for Turkish companies to invest in agricultural business in Ukraine. This would require special conditions to be granted to Turkish businesses. It can be done, but so far, there has not been enough political will in Ukraine.
Publication date: 10/5/2017
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