Ukraine can export more products to Europe

Author : Yuliana Romanyshyn

Source : 112 Ukraine

Ukraine, a neighbor of the EU, could be taking advantage of the geopolitical situation
14:09, 14 March 2016

Read the original text on Ekonomichna Pravda.

A few months ago the CNN TV channel showed the movie, which marketed the investment attractiveness associated with some of the EU countries.

"Georgia has signed an association agreement with the EU. Now everything that is manufactured in Georgia - a country where doing business is extremely easy - you can easily and freely export to the EU. Do business in Georgia," said the voice on the video background.

Ukraine, a neighbor of the EU, could be taking advantage of its geopolitical situation. The Association Agreement with the EU has opened great opportunities for Ukraine, but their maximum realization is a big challenge.

First of all, it concerns the implementation of a deep and comprehensive free trade agreement (DCFTA), which began to operate in full from 1 January 2016.

Related: Ukraine's import and export after launching the FTA with the EU

More than 34% of Ukrainian exports go to the EU market. This is mainly agro-industrial products, ferrous metals, electrical and mechanical machinery.

Although according to the State Statistics, exports to the EU in 2015 fell by 23% and amounted to about 13 billion dollars. This is despite the fact that since April 2014 Ukrainian producers can enjoy the benefits provided by the EU autonomous trade preferences.

The fall in trade is largely caused by the war and the deterioration of the global environment. However, the possibility of free trade is nearly used.

Pole with Ukrainian roots Boris Laykish became engaged in import of Ukrainian foodstuffs to Poland in the summer of 2014 after the EU autonomous trade preferences for Ukraine. He joined colleagues from the firm Petro Trade, that are already engaged in this business and also have Ukrainian origin.

Boris was looking for Ukrainian companies, which produce cheaper quality products or products that are not represented on the Polish market, such as halva. "Poles often bring halva from Ukraine. They love it," explains the businessman.

Later, his company began to bring to Poland other Ukrainian confectionery products, especially sweets and chocolate. For instance, became the exclusive importer of "Rochen". The problem is technical unavailability of the Ukrainian producer to the western market, said Laykish. For example, texts in Cyrillic lettering on the package do not allow Polish consumers to know the composition of the product or its origin.

But there are almost no problems with the safety of Ukrainian products. They usually pass the laboratory tests. "Only once in the content analysis showed the forbidden cookie ingredient, which is forbidden in the EU, and the manufacturer changed the composition of the ingredients," says Laykish.

Related: Ukraine – top exporter of corn to China

The standards introduced in Ukraine are different from the European ones. For example, the content of carcinogenic and toxic substances "aflatoxin" at national and European legislation is different.

"Otherwise we could translate the documents, and that would be enough to sell in the EU. Instead, we have had to spend laboratory testing in Poland. If the company from Ukraine wants to export goods, it should study the laws of the EU, this will help avoid unnecessary hassle and expense," Laykish says.

Often the problem is the unwillingness of Ukrainian businessmen to do business with foreign partners. Boris was surprised that some manufacturers who themselves found his company, offered their goods.

Boris compares with Slovak businessmen. Those unless you were getting yourself then send the catalog with prices and box product to test. Then someone called and asked if the parcel is delivered, and what is the impression of the product.

Another problem of Ukrainian producers is that they want to immediately adjust the supply of large quantities. However, importing a risk: you need to invest more, and it is unknown whether the goods first pass customs. Ukrainians lack of information on trade rules in the EU market.

Related: Exporting labor would save Ukraine

Appropriate communication skills are very important as the conformity of products with EU standards.

The experts advise the Ukrainian producers to visit potential partners abroad personally, to communicate with business associations to find them and learn English, because it helps to communicate directly with potential customers.

In Ukraine, there are many other cases of successful entry to the EU market. One of them is Lviv company "Galicia",  Galicia Trade. It produces juice directly expressed without using concentrated sugar or water. "Galicia" has “mastered” the Polish market and now it is preparing for expansion to the Baltic States and other EU states.

The company plans to produce bio-juice, growing fruit and vegetables on the basis of biological certification. Much of the raw material is grown in western Ukraine.

Winning at the EU market without the benefits of free trade zone is more than real, says Andriy Yelin, director of "Galicia". Most of the assortment combines apple and cherry juice, apple and pear, apple and blackcurrant and apple juice refers to products for which export to the EU duty-free quota is used - 10 thousand tons per year.

In 2016 Ukrainian companies have reached them before mid-February. However, from January 1, the company stopped paying 5% fee for packing material imported from Poland, but the devaluation of the hryvnia destroyed this advantage. Therefore Galicia Trade seeking appropriate substitutes for the Ukrainian market.

Canadian economist Barry Hebb lives in Odesa. Like many others, he sees no problem in the banking system, which does not allow money to loan to low interest. Ukrainian small and medium businesses will be difficult to adapt to the demands of Europe if it fails to invest more in development.

Related: Ukraine to export meat on UAE market

"It is important to open new opportunities for microfinance. It depends on the political steps at the national level," said the economist.

Free trade with the world's largest market should be a huge incentive to improve the investment climate in Ukraine, the creation of high-tech enterprises and production of competitive goods.

Another frequently mentioned barrier is unfavorable business climate. "This market is full of challenges - says Director of Norwegian Business Development Pelagia Oyvind Satren. - If Ukraine is be able to conduct a successful anti-corruption reforms, the company will invest in production capacity. There are great opportunities for manufacturing, re-export to the European market".

Related: Top 10 exporters of Ukrainian goods

Pelagia supplies fish in more than 40 countries. Cooperation with Ukraine started in the early 1990s. In 2007, there was a warehouse built in Mykolaiv, and in 2009 the company opened Egersund Seafood import.

Lviv is an eample of promising investment. The proximity to the border, cheap labor and the promotion of local authorities helped dozens of companies to open or establish a branch of their company.

The last of them is the Japanese Fujikura, specializing in the production of automotive wiring, Dutch and CTP, which is building an industrial park in Lviv.

Related: Ukraine’s quotas on duty-free export of honey, juice and corn to EU exhausted

"When an investor comes to the city, I guarantee him safety, honesty, respect and promote maximum - says Mayor Andriy Sadovy. - It must guarantee not only investors from other countries. It is necessary to love us".

He recalls telling example: opening a restaurant in Lviv "McDonalds" caused a big stir in its time, but due to increased competition places to eat around it quickly raised the level of service.

"We must do everything possible for investors more experience come to the market, because they bring with them their culture production," concludes Sadovy.

Related: Blockade of Russia will cause $ 450 mln fall in exports

Related: Three Ukrainian companies banned to export honey to EU

Related: Ukrainian export: all hope goes for agriculture

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