Alexander Okhrimenko

President of the Ukrainian Analytical Center, Ph.D. in Economics, on the economy and business, latest trends and forecasts.

Russia’s trade war against Ukraine in August this year finally showed Ukrainian business that Russia is an unreliable partner. For many years Ukrainian businessmen have thought that the misunderstandings in commercial operations with Russia are of a temporary nature. Besides, the old business liaisons of Ukrainian and Russian businessmen created an illusion that Ukraine has to exclusively pattern its behavior on Russia as a very large consumption market. But now these illusions have been put an end to. And, possibly, Russia, not wanting that itself, stimulated Ukrainian businessmen to think about new sales markets abroad. And in connection with that, the number of Ukrainian businessmen backing the EU Association Agreement signature has only grown.

At present the main problem which hinders sales of Ukrainian goods to the EU countries is the inconformity of the standards and specifications. Ukrainian goods, which are primarily foods, metallurgy products, chemicals and some kinds of machine-building – can find buyers in the EU countries. As a result, that would allow partially diversifying Ukraine’s export and decreasing Ukraine’s dependence on Russia. But that would be feasible when Ukraine introduces appropriate changes to its standards and specifications in the framework of the EU association to eliminate substantial obstacles for European consumers to buy Ukrainian products.

Now Ukraine is undergoing technical re-equipment of operating enterprises and building new enterprises in accordance with the west European standards. There are positive examples of creating fowl and eggs production according to the latest requirements of the standards accepted in the EU countries. Besides, Ukrainian milk and confectionary enterprises are not technically inferior to west European enterprises. The same can be said about some metallurgical and chemical enterprises, let alone pharmaceutics which have been operating according to the west European standards for a long time.

The main problem arises when it comes to diversification of Ukraine’s export of machine-building products to the EU countries – as an alternative to Russia. At the moment 95% of all Ukraine’s machine-building is oriented to Russia. As for the export of locomotives and train carriages, 100% of such products are oriented to Russia.

That is why, in order that Ukrainian manufacturers could enter EU markets, not only the problem with the standards needs to be solved but also conditions for industrial cooperation of Ukrainian and west European enterprises must be created. Also, this cooperation is a reality because Ukraine has the necessary number of highly qualified engineers and workers. And the main point: Ukraine has enough experience of cooperation in manufacturing machine-building products with other countries.

 

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