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  • Wary of possible Russian sanctions, Ukrainian enterprises choose the EU

    19.01.2015

    Most Ukrainian industrial enterprises support the European direction in the country’s economic integration. This has been shown by the survey of the Kyiv based Institute for Economic Research and Policy Consulting.The percentage of the enterprises that opt for economic integration with Russia and other CIS countries has shrunk almost three times compared to 2013. Yet, some in the Ukrainian industrial sector are concerned about possible Russian sanctions in case Ukraine pursues closer trade relationships with the EU.

    More than half (54,5%) of the 314 industrial enterprises polled by the Institute for Economic Research and Policy Consulting in October 2014 consider the European Union as the priority direction for Ukraine’s economic integration. This is shown in the special report by the Institute that studies the results of the surveys of the industrial enterprises conducted in 2014. Only 11.2% of the industrial producers include Russia and other countries of the Commonwealth of the Independent States (the CIS) in the priority directions for economic integration. The share of such enterprises has contracted almost three times compared to 2013 when they comprised 29.6% of the sample.

    However, more active trade with the EU brings some risks into consideration for Ukrainian industrialenterprises. Specifically, a part of industrial firms are wary of the possible sanctions from the Russian Federation: 25.8% of the polled enterprises consider this to be a risk in case the free trade area with the EU is introduced. The risk of Russian sanctions is especially relevant for the enterprises of the heavy industry and machine building. As the survey shows, more than 40% of the firms in these sectors consider possible sanctions from Russia a risk.

    Additionally, Ukrainian business associates a number of other risks with the reduction of trade barriers between Ukraine and the EU. 24.3% of enterprises consider the need to adopt new safety standards under the free trade area with the EU a risk. Firms of the food industry and the wood processing industry voice most concerns about this risk. Also, Ukrainian industrial producers predict the rise of competition resulting from the expected increase of import from the EU. 21.3% of the surveyed enterprises mention this risk. This specifically applies to the wood processing industry and the light industry. Nevertheless, almost 40% of the polled firms do not expect any negative consequences of the free trade area with the EU entering into force.  

    19_01_2015_BTS__ENG_1

    IER "Business Surveys"

    Authors:  Fedets Iryna
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