Page 32 - Azerbaijan State University of Economics

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

Conclusion
Considering goods export structures, Turkey is much more competitor for the
EU than Ukraine. Ukraine is rather a complementary economy to the EU and no
Member State is vulnerable to competitive pressure from Ukrainian exports of goods.
As for structure services exports, both Turkey and Ukraine have similar levels of
competition with the EU. But Ukrainian services exports are 6 times lower than the
ones of Turkey, therefore threat of competition with Ukraine is minor in this case too.
Competition with Ukrainian services exports is relatively higher in Central
Europe, but since transport is a major type of services, competition can be balanced
by cooperation benefits based on route connectivity under geographical proximity.
Turkey is a major competitor to Southern Europe and some other Member States.
The highest competition in services is with Greece (both Greece and Turkey are
tourism oriented and neighbor economies).
Turkey is larger trade partner for the EU. It is natural because of higher
income per capita than in Ukraine and longer period of free trade regime with the
EU. Bulgaria and Greece are relatively more dependent on exports to Turkey
considering geographical proximity. But Ukraine is larger market for the EU for
some chemical, energy, food products and worn clothes. Ukraine is also larger
supplier of some agricultural products, iron and steel, wood, energy products etc.
Economic recovery of Ukraine after the crisis in 2014-15 can secure the EU
exports to that country. Besides establishing free trade regime, customs cooperation
and approximation of customs legislation of Ukraine under the Association
Agreement can also help to facilitate bilateral trade and improve trade security.
Economic development of Ukraine based on foreign-direct investment by enterprises
of European and other countries in the Ukrainian economy and the opening of the
EU market for Ukrainian goods can replace some of the exports of industrial
products from Turkey.
Several EU new Member States rely more on trade with Ukraine than with
Turkey, especially Cyprus. But the overall level of trade dependency on Turkey and
Ukraine is low enough. Economic crisis in Ukraine in 2014-15 led to negative
growth of EU exports to Ukraine, while exports to Turkey grew. Securing growth of
the EU exports to Ukraine will largely depend on the pace of economic recovery.
But several Member States had better growth of exports (especially Greece) to or
imports from Ukraine than to / from Turkey.
Trade balance of the EU is positive with Ukraine both in goods and services.
Trade surplus in goods with Turkey is not offset by trade deficit in services. As for
regional pattern, most Southern European countries have trade deficit with Ukraine
in goods. But Greece is an exception with trade surplus with Turkey and Ukraine

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