In 2020, the trade turnover between Belarus and Ukraine amounted to $ 4.5 billion. This is 22.2% less than a year earlier. Belarus exported $ 3.1 billion worth of goods to Ukraine and $ 1.4 billion worth of goods to Belarus. At the end of May, Belarus introduced an individual licensing regime for some Ukrainian goods for six months. The government called such actions unjustified and discriminatory but promised to find other markets for the affected Ukrainian exporters. UNN found out how long the trade war would last and how long the Ukrainian economy would lose.
Kyiv. Ukraine. Ukraine Gate – June 22, 2021 – Ukraine News
On May 26, Ukraine suspended flights to Belarus. On the same day, the Council of Ministers of Belarus introduced individual licensing for the import of certain groups of goods, which included confectionery, chocolate, juices, beer, chipboard and fiberboard, wallpaper, toilet paper, and packaging, agricultural machinery, washing machines, and furniture. The Belarusian government has stated that there is no policy in this, but purely economic interests. More precisely, the answer to Ukraine’s decision in April this year to introduce a special duty on imports of buses, trucks, and special vehicles from Belarus in the amount of 35% of the customs value.
The Ukrainian government considered such a “response” discriminatory and, despite the length of the six-month decision, promised to find new markets instead of Belarus. This will be handled by the Ministry of Foreign Affairs together with the Ministry of Economy.
“Any Ukrainian company that will suffer from restrictions from the Republic of Belarus can immediately apply to the Council of Exporters and Investors at the Ministry of Foreign Affairs. And we, together with our colleagues from the Ministry of Economy, will look for ways and make every effort to find such an alternative market for such a company, ”Deputy Minister of Foreign Affairs of Ukraine Dmytro Senyk said last week.
According to him, now the Ministry of Foreign Affairs and the Council of Exporters and Investors at the Ministry of Foreign Affairs seek to become a “window” for Ukrainian exporters when entering international markets.
“Currently, the Foreign Ministry is holding weekly webinars for exporters with ambassadors to various countries, active work is underway to intensify cooperation with African countries, and training of diplomats in the economic field is planned,” the deputy minister said.
According to experts, Belarus has long been creating non-tariff restrictions on the supply of a large number of Ukrainian food products. Therefore, even in 2020, Belarus dropped out of the top ten main markets for agricultural exports from Ukraine.
Andriy Yarmak, an economist with the Food and Agriculture Organization of the United Nations (FAO), says that the new restrictions imposed by Belarus do not apply to the main goods of Ukrainian exports to Belarus. For example, Belarus imports more than half of its soybeans and almost all its oilseeds from Ukraine. If it banned or restricted these imports, it would lead to an even greater increase in the cost of livestock production in this country, and so very subsidized.
“These positions are almost all our exports to Belarus. But there is also unpleasant but not critical news. First of all, it is a “confectionery” – and although it is only 7% of our exports to Belarus, for example, in caramel, Belarus is the second-largest market for Ukraine. At the same time, in recent years, dependence on the supply of Ukrainian confectionery products in Belarus has declined sharply. We have been working with the Association of Confectioners to diversify exports for several years, and the results have been very encouraging, ”says Yarmak.
The economist explains that the Belarusian market has already begun to lose its leadership in many product categories. For example, caramel (the main position of our exports to Belarus from confectionery), then there are growing exports of Ukrainian products to Poland (market № 1 now), Romania (three times in three years), Great Britain (7 times in the last year), Lithuania and Bulgaria.
“For the liver, too, despite the fact that Belarus is the main market, but supplies to Belarus have long been falling, and in Turkey, Moldova, Romania, Poland, Iraq, etc. – grow. Belarus has also ceased to be the number one market for chocolate. This is where the leadership in the EU comes in, ”says Yarmak.
According to Taras Kachka, Deputy Minister of Economy, Trade Representative of Ukraine will get the most to certain industries. For example, about 20% of Ukrainian confectionery exports and about a third of beer exports go to Belarus.
Experts call the situation “unpleasant”, but in other categories – without significant problems for our suppliers. Not only the countries of the European Union but also the Middle East can compensate for the Belarusian market. The most attractive countries in the region are Saudi Arabia, the United Arab Emirates, and Iraq.
By the way, Mr. Senyk (Deputy Minister of Foreign Affairs of Ukraine – ed.), Has excellent experience in promoting our products to the markets themselves. When he was the Ambassador of Ukraine in Singapore, we very successfully, thanks to his professional work, promoted Ukrainian products there. That’s why I would also pay attention to Southeast Asia, ”says Yarmak.
Interviewed exporters say that the government’s initiative to hold briefings for suppliers to different countries is a useful job. However, we would like to see more active work on opening new markets, which was previously carried out very effectively by the Ministry of Agrarian Policy. Due to its liquidation, the pace of opening new markets is now lost.
Economists are very careful in calculating the losses from licensing certain groups of goods. First, we are talking about licenses, not a complete ban on the import of goods. Secondly, it is unknown how this will work. There is no information yet on whether shipments have stopped completely or whether the products are finding their way to the market. After all, Belarus itself actively “helped” importers from Russia to import Ukrainian and European goods bypassing the “anti-sanctions” of the Russian Federation.
“Hypothetically, all this will stop 100%, the annual losses can be estimated at about 50-70 million dollars or 0.03% of Ukrainian agricultural exports. That is, in fact, zero impact from the point of view of agribusiness, but tangible for the confectionery industry, ”says Yarmak. According to Dmitry Goryunov, a senior economist at the Center for Economic Strategy (CES), the total value of exported goods to Belarus that have been licensed is about $ 120 million.
Should the Ukrainian government financially support exporters who will suffer losses? Interviewed experts pay attention to other priorities. First, to intensify work on export diversification and support for our exporters. Secondly, the return to the issue of access to export financing, which has not yet been resolved in Ukraine, is long overdue.
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Source: Ukrgate