International trade is of crucial importance for Ukraine's economy. Key industries such as metallurgy or chemical manufacturing currently export more than half of their total output. Overall, the share of exports in GDP accounted for some 58% in 2003 and is projected to reach almost 66% in 2004 (State Statistics Committee of Ukraine). Similarly, also imports play an important role in Ukraine's economy. Increased availability of high-quality imports has improved the welfare of final consumers and the efficiency of domestic producers. Opportunities to import machinery have contributed to renewing the domestic capital stock. The availability of new varieties - for example on food markets - has stimulated competition in the respective sectors and induced further product development. Trade flows by country are fairly diversified by destination and origin. Roughly l/3rd is exported to either other CIS countries, the EU (including new member states, EU25), or the rest of the world. On the import side, about 50% stems from the Russian Federation (2/3rd of which are energy fuels), the rest from either the EU25 or other countries.
Against this background, membership of the World Trade Organization (WTO) would be an economically important step to further support Ukraine's integration into the global economy. While the country officially applied for membership in 1993, policy-makers, economists and representatives of the business community still discuss controversially about potential benefits and costs of WTO accession. On the one hand, it is argued that improved market access for Ukrainian goods such as steel, agricultural and chemical products to markets in the European Union (EU) and North America will increase profits of Ukrainian exporters. Furthermore, efficiency and welfare gains from reduced tariffs on imports of e.g. machinery or food products are mentioned as benefits from WTO accession. On the other hand, critics are concerned about increased international competition that might push domestic firms out of the market, and about the ability of Ukraine's economy to fully enjoy the benefits of WTO membership in general.
