The conclusion of FTAs creates favourable conditions for the development of trade and economic cooperation with certain states or groups of states and is therefore an effective instrument for increasing the volume of Ukrainian exports by reducing or removing barriers to the access of goods and services to foreign markets. Establishing a free trade regime with prospective trade and economic partners allows Ukraine to diversify exports in terms of destination markets and range of products, thanks to long-term liberalised market access.
Primarily, FTAs seek to advance and protect the economic interests of Ukrainian producers and exporters and also provide a balanced tariff policy, including in relation to groups of sensitive industrial and agricultural goods, with a view to establishing the basis for the creation of favourable conditions for the expansion of trade and economic cooperation.
FTAs in force
Ukraine has concluded FTAs with the European Free Trade Association (EFTA), the European Union (EU), Canada and the Commonwealth of Independent States (CIS) and also with Montenegro, North Macedonia, Georgia, Azerbaijan, Uzbekistan and other countries.
The creation of a deep and comprehensive FTA between Ukraine and the EU is provided for in the economic part of the EU–Ukraine Association Agreement, which was signed on 27 June 2014.
The FTA between Ukraine and the EFTA states (Switzerland, Norway, Iceland and Liechtenstein) was signed in Reykjavík (Iceland) on 24 June 2010, ratified by Ukraine in Act No. 4091-VI of 7 December 2011 and came into force on 1 June 2012. The agreement covers trade in goods (industrial, agricultural, fish and other marine products) and services and dispute settlement. Given the difference in the level of economic and social development between Ukraine and EFTA member states, the agreement provides for the principle of asymmetrical obligations of the parties, which allows Ukraine to adapt its trade with the EFTA states to free trade terms.
Two further documents were signed as part of the agreement on the provision of technical and financial assistance to Ukraine for adaptation to the new terms of trade, namely the memorandum of understanding concerning the programme of bilateral cooperation in agriculture between the Ministry of Agrarian Policy and Food of Ukraine and the Swiss State Secretariat for Economic Affairs and the joint statement on cooperation in the field of fisheries between the State Agency of Fisheries of Ukraine, the Ministry of Fisheries and Agriculture of Iceland and the Ministry of Fisheries and Coastal Affairs of Norway.
The CIS Free Trade Agreement (member countries: Ukraine, Azerbaijan, Belarus, Armenia, Kazakhstan, Kyrgyzstan, the Republic of Moldova, the Russian Federation, Tajikistan, Turkmenistan and Uzbekistan) was signed on 18 October 2011 and ratified by Ukraine on 13 July 2012.
There are also bilateral FTAs currently in force between Ukraine and Azerbaijan (ratified on 12 July 1996), Uzbekistan (4 November 1995), Tajikistan (6 July 2001) and Turkmenistan (5 November 1994). Ukraine’s main trading partners within the CIS are the Russian Federation, Belarus, the Republic of Moldova and Kazakhstan.
The free trade area between Ukraine and Georgia has been in operation since 1996 under an agreement signed between the Government of Ukraine and the Government of Georgia on 9 January 1995, which came into force on 4 June 1996, and the intergovernmental protocol amending and supplementing the agreement signed on 17 June 2009 in connection with Georgia’s withdrawal from the CIS.
The FTA between the Government of Ukraine and the Government of Montenegro was signed in Kyiv on 18 November 2011, ratified by Ukraine in Act No. 5445-VI of 16 October 2012 and became effective on 1 January 2013. The agreement covers trade in goods and services and dispute settlement. Under the terms of the agreement, imports from Montenegro are duty-free. Therefore, with a view to preventing potential negative consequences for its economy, Ukraine excluded a number of groups of sensitive agricultural goods from the free trade regime. In addition, Ukraine’s right to apply export duties according to obligations under World Trade Organization (WTO) rules has been maintained.
The FTA between North Macedonia and Ukraine was signed in Skopje on 18 January 2001 and ratified by Ukraine in Act No. 2599-III of 5 July 2001. The agreement covers the removal of trade restrictions on industrial and agricultural goods, establishing conditions for fair competition in trade and investment promotion and providing for the development of joint investment projects, the protection of intellectual property and cooperation between the parties in the markets of third countries.
These FTAs promote the free movement of goods and services between the countries concerned, which contributes to attracting investment, reducing import costs, expanding domestic production and infrastructure, promoting exchanges of experience and technology, creating employment, increasing tax and duty revenues and strengthening intergovernmental relations.
The Association Agreement between Ukraine, on the one side, and the European Union, European Atomic Energy Community and their member states, on the other side (signed on 21 March 2014 and 27 June 2014, entered into force on 01 September 2017).
This is a comprehensive trade agreement aiming to reduce and to remove tariffs imposed by its parties on goods, to liberalize access to the service market as well as to adjust the Ukrainian business rules and regulations to the EU rules and regulations to ensure the free movement of goods and services between the two parties and the mutual non-discriminatory treatment of companies, goods and services in Ukraine and in the EU.
More details are available under the link.
The Free Trade Agreement between Ukraine and Canada (CUFTA) was signed on 11 July 2016 and entered into force on 01 August 2017. In accordance with the CUFTA, Canada abolished 98% of its duties on Ukrainian goods. Ukraine enjoys a 0% duty for exporting some of its agricultural goods to Canada, but it shall observe quotas set for them.
Ukraine, on its side, abolished its duties for 72% of Canadian goods. Import duties for agricultural and industrial goods from Canada were abolished as well; however, transition periods equal to 3, 5 and 7 years were agreed for that. Also, Ukraine set quotas for the import of frozen pork meat and pork lard from Canada.
Ukraine and Canada are now working to extend the Agreement to the service sector and investments.
On 21 January 2019, Ukraine and Israel signed their Free Trade Agreement.
In July 2019, the Verkhovna Rada ratified the Free Trade Agreement with Israel, in August the President of Ukraine signed the law ratifying this Agreement. The Free-Trade Agreement with Israel entered into force on 01 January 2021 in accordance with the Law of Ukraine «On the Ratification of the Free-Trade Agreement between the Cabinet of Ministers of Ukraine and the Government of the State of Israel». The Free-Trade Agreement allows to export agricultural products and industrial goods, products of chemical and light industry as well as construction materials and electronic equipment to Israel under a simplified procedure.
On 01 January 2021, the zero-rate import duty was implemented for the following groups of goods:
Within the next 3-5-7 years, it is planned to implement the Agreement in phases and to extend the zero-rate duty to other groups of goods. According to the Agreement, the regulations of the Pan-Euro-Mediterranean Convention shall be applied to determine the origin of goods.
Ukrainian manufacturers will be able to import raw materials and other materials from Israel, process them in Ukraine and export finished goods to the EU under the preferential or zero-rate duty.
Work is also in progress to sign the Free Trade Agreement between Ukraine and Turkey.