Bringing Trade with Ukraine into a New Era
During a visit to Ukraine in June, Secretary of Commerce Carlos M. Gutierrez underscored the importance of continued U.S. commercial engagement, while pointing out the significant challenges that must be addressed if the bilateral trade relationship is to grow.
by John Ward
Since the collapse of communism in the former Soviet Union in the early 1990s—and the subsequent establishment there of market economies—U.S. commercial relations have been growing in size and importance in the region. Testimony to that growth came when Secretary of Commerce Carlos M. Gutierrez, accompanied by members of the President’s Export Council, visited Ukraine on June 4–5, 2008.
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|On June 5, 2008, Secretary of Commerce Carlos M. Gutierrez (left) toured the newly opened Cisco Entrepreneur Institute in Kiev. The institute will offer opportunities for leaders of small and medium-sized businesses in Ukraine to learn from and collaborate with one another. (U.S. Department of Commerce photo)
“This week I have come to Kiev to strengthen our economic relationship as outlined by Presidents Bush and Yushchenko earlier this year, and to explore ways to increase economic cooperation between our countries as Ukraine continues its progress toward building a market economy,” said Gutierrez.
Gutierrez was the first secretary of commerce to visit Ukraine since its independence in 1991.
The secretary’s visit coincided with changes in the political and economic landscape in Ukraine that could make this country a more important trading partner for the United States. Since the so-called “Orange Revolution” of 2004–2005, Ukraine’s government has followed a policy of seeking closer ties with the West. More significantly, from the point of view of its commercial relationships, Ukraine recently became a member of the World Trade Organization (WTO), with active support from the United States and the assistance of the Commerce Department’s Commercial Law Development Program.
Growing Bilateral Trade
With a population of 46 million, Ukraine is the second-largest market for U.S. exports in the former Soviet Union. Bilateral trade between the two countries, which was $800 million in 1997, exceeded $2.5 billion in 2007. Important market sectors include vehicles, agricultural machinery, aircraft, and food products.
Expanding commercial engagement with Ukraine has been an important element of U.S. trade policy in the region. In April 2008, during a visit to Ukraine by President George W. Bush, the United States and Ukraine signed a trade and investment cooperation agreement. That agreement established the joint U.S.–Ukraine Council on Trade and Investment, which provides a forum for discussing ways to increase commercial opportunities and to reduce impediments to trade.
In May 2008, after 15 years of negotiations, the WTO extended membership to Ukraine—a development that has enormous ramifications for future trade relations. During his visit, Gutierrez noted that “Ukraine’s membership reflects its commitment to trade based on market forces, transparency, and the rule of law.”
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|Kiev, the capital of Ukraine. Bilateral trade between the United States and Ukraine grew from $800 million in 1997 to $2.5 billion in 2007. (© iStockphoto.com/Pavlo Maydikov)
Under its accession agreement with the WTO, Ukraine made a commitment to facilitate market access by, among other things, capping customs duties, lowering tariffs, removing subsidies, and, for services, allowing access to the Ukrainian market for foreign services providers in 11 core service sectors. By fulfilling these commitments, Ukraine will be opening itself to many more potential trading partners in the United States.
Areas of Concern
Although the future expansion of U.S.–Ukraine trade lies in those recent developments, there are still points of contention between the two countries. When Gutierrez spoke to the American Chamber of Commerce in Kiev on June 5, he noted that the United States wants to see progress in its commercial relationship with Ukraine in a number of areas. These include:
- Streamlining the regulatory environment
- Resolving inconsistencies in commercial laws
- Passing a law to improve corporate governance
- Completing the privatization of state-owned industry through transparent tenders
“Those are four things the government can do that will be a major leap forward in giving Ukraine the status of a very, very attractive country in which to invest,” said Gutierrez.
U.S. Firms’ Success Noted
During his visit, Gutierrez witnessed evidence of successful U.S. commercial engagement with Ukraine. On June 4, he met with Sergiy Polovenko, Ukraine representative at the North Dakota Trade Office. With help from the U.S. and Foreign Commercial Service, exports of agricultural equipment from North Dakota to Ukraine grew from $35.3 million in 2006 to nearly $52 million in 2007.
On June 5, Gutierrez visited the newly opened Cisco Entrepreneur Institute at the National Technical University of Ukraine–Kiev Polytechnic Institute. According to Cisco Systems, the institute will offer in-person and distance learning workshops, and was specifically created to help entrepreneurs improve their skills and enhance business development opportunities, particularly small and medium-sized businesses.
These developments point to the potential that exists in Ukraine for future trade with the United States. “U.S. companies,” remarked Gutierrez, “are eager to work with and become partners with Ukraine as it continues on the path to a market economy and implements pro-growth policies that welcome trade and investment.”
John Ward is a writer in the International Trade Administration’s Office of Public Affairs. Christine Lucyk, senior policy advisor in the International Trade Administration’s Market Access and Compliance unit, assisted in the preparation of this article.
Czech Republic Embracing “Freedom and Economic Openness”
Before Secretary of Commerce Carlos M. Gutierrez visited Ukraine, he stopped on June 3, 2008, in Prague, Czech Republic, where he met with Prime Minister Mirek Topolánek and Minister of Finance Karl Schwarzenberg to discuss bilateral trade and investment. Here is an excerpt from a statement issued by Gutierrez during his visit:
This week, I have come to Prague to highlight our strong bilateral relationship, acknowledge the Czech Republic’s commitment to democracy, and forge stronger political and economic ties that will benefit all of our citizens.…
The Czech Republic has embraced freedom and economic openness and, as a result, has the highest gross domestic product per capita of any of the countries of Central and Eastern Europe. To continue to attract investment and grow foreign trade, the Czech government must push for greater transparency and judicial reform, as well as step up protection of intellectual property.
In an increasingly knowledge-based economy, protecting the fruits of one’s labor from infringement or theft is critical. Foreign companies must know their products are protected and their brands are respected in the Czech Republic. Such protection only serves to benefit Czech industry, as well.…
As the Czech Republic assumes the presidency of the European Union next year, I look forward to strengthening our collaborative efforts. Through stronger ties—both political and economic—the United States and the Czech Republic will continue to work toward a freer, more prosperous future.