Page 24 - Azerbaijan State University of Economics

Evangelos Siskos, Konstantia Darvidou: Trade of the EU with Eastern European countries
(case of Ukraine and Turkey)

on foreign direct investment of companies from European and other countries in the
Ukrainian economy and the opening of the EU market for Ukrainian goods can
replace exports of some industrial products from Turkey. The economic crisis in
Ukraine in 2014-15 led to a negative growth of exports from the EU to Ukraine,
while exports rose to Turkey. Provision of EU export growth in Ukraine will largely
depend on the pace of economic recovery. However, several Member States have
higher rates of export growth (especially in Greece) or import growth from Ukraine
than from Turkey. But the overall level of trade dependence on Turkey and Ukraine
is quite low. EU trade balance is positive with Ukraine in goods and services. The
positive balance of foreign trade with Turkey is not compensated by the trade deficit
in services. Greece has a trade balance in surplus with Turkey and Ukraine both in
goods and in services.

Keywords: EU, Turkey, Ukraine, bilateral trade, foreign trade structure

JEL Classification: F1, F13, F150

Introduction. Most of the Eastern European Countries are at the frontier of the EU,
which is interested in developing efficient trade links with these countries. Turkey
and Ukraine are the second and the third most populated countries in Eastern
Europe. Turkey has established a customs union with the EU in 1996 and is a
candidate for accession since 1999, while Ukraine has recently established an
Association Agreement with the EU. Both countries benefit from mutual trade
preferences with the EU and are either involved or have large potential for
increasing involvement in value chains with the EU companies.
Increasing interconnectivity and interdependency of countries is seen as one of
the main challenges for customs and trade policy (Aigner 2017). Securing trade links
with the EU partners involves many issues including avoiding illegal transactions or
tax evasion, protecting interests of national producers and avoiding excessive
barriers to trade for the benefits of domestic consumers and exporters.
At the customs service‘s level trade facilitation and security issues should be
balanced in order to minimize risks and costs. The topical issues include mutual
recognition of controls, security standards and authorized economic operators
through international agreements, which should facilitate trade without questioning
security (Aigner 2017).
In case of Ukraine Chapter 5 of Title IV of the Association Agreement
between the EU and Ukraine is devoted to customs and trade facilitation issues. E.g.
Article 75 encourages balanced approach for trade facilitation, security and
prevention of fraud, while article 76 envisages application several international

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