Journal

Volume 74, #1

       “Economic Sciences: theory and practice” is scientific, refereed, biannual journal. The Journal of “Economic Sciences: theory and practice” has been founded by Azerbaijan State University of Economics in 1994.              
The Journal has been received to registration in the centre of international ISSN (International Standard Series Number, ISSN-2220-8739). Also, it has been included by the Supreme attestation Commission under the President of Azerbaijan Republic to the list of scientific publications on economic sciences.


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TRADE OF THE EU WITH EASTERN EUROPEAN COUNTRIES (CASE OF UKRAINE AND TURKEY)

Evangelos Siskos, Konstantia Darvidou


Abstract

Trade security issues involve customs control and trade facilitation, sustaining competitiveness of domestic producers under open economy, optimization of foreign trade structure, stability of trade flows, and dependency on markets and suppliers.
We analyze the structure and trends in exports of the EU-28 Member States, Ukraine and Turkey, as well as their bilateral trade in goods and services. Nowadays both these countries have trade preferences in bilateral trade with the EU. 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. Despite both Turkey and Ukraine have similar levels of services export structure similarity with the EU, Ukrainian services exports are 6 times lower than the ones of Turkey, therefore threat of competition with Ukraine is minor. 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 (especially Greece) and some other Member States. Turkey is larger trade partner for the EU because of higher income per capita than in Ukraine and longer period of free trade regime with the EU. Economic recovery of Ukraine after the crisis in 2014-15, free trade regime 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 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