Ukraine and Israel have agreed to sign a bilateral free trade agreement in the near future.
The negotiations of the agreement have been finalized, Ukraine’s President Petro Poroshenko wrote on his Facebook page March 28.
“The finalizing of the agreement will give a powerful push in our bilateral trade,” Poroshenko wrote. “I look forward to seeing my friend (Prime Minister of Israel) Benjamin Netanyahu in Kyiv to sign the agreement.”
The agreement has been under negotiation since 2013, but talks were put on hold when Ukraine’s ousted President Viktor Yanukovych refusing to sign an association agreement with the European Union. The negotiations then resumed during the second half of 2015.
Poroshenko and Netanyahu last met in January, during the 48th annual session of the World Economic Forum in Davos. They discussed trade relations and the need to conclude the negotiations.
The Embassy of Israel to Ukraine told the Kyiv Post that both the Ukrainian and Israeli sides will now start working on the “legal scrub” and translate the agreement into Ukrainian and Hebrew.
“This process will most likely take a number of months, and afterwards the agreement will be signed,” said Elizabeth Solovyova, the head of the embassy’s trade and economic department. “After the signing, both sides will then begin the procedure of ratifying the agreement. It’s too early to estimate how long this will take.”
The signing of the deal would be a major victory for Ukrainian businesses, Ukraine’s Deputy Economy Minister Natalia Mykolska said.
“We are opening the Israeli market for Ukrainian businesses,” Mykolska said. “This is a market that has been under our focus in regards to the country’s export strategy, because Israel is a market that imports a lot. Just last year Israel imported $69 billion.”
The Israeli market is already familiar with Ukrainian products that have consumer preferences, and Israel is a market to which Ukrainian products can be delivered via the Black Sea, she added. The ones that will get the most out of the deal are producers that already export to Israel, while Ukraine’s agriculture and industrial producers will also benefit from the deal.
“We’re canceling duties for industrial and agriculture products; for some they will be canceled right away” such as for 80 percent of industrial products. On the other hand, some industrial products will gradually be liberalized.”
In 2017, the total bilateral trade turnover was $772 million, according to the Economy Ministry.
“The agreement is of great importance to both countries and their international relations,” Solovyova said. “In 2017, exports of goods from Israel to Ukraine amounted to approximately $125 million. After the agreement comes into force, Israeli exports will benefit in such areas as the chemical industry, plastic and rubber products, medical equipment and more.”
Ukraine exported $605 million worth of goods to Israel last year, according to the Israeli embassy. Once the agreement goes through, such goods as wheat, processed food, oils, steel and iron will also benefit.
The agreement is expected to “increase bilateral trade by about 15 percent within five years, so that total trade will exceed $1 billion,” Solovyova said.
The trade agreement will have an effect not only on trade dynamics but also on foreign direct investment inflows to Ukraine coming from other countries that want to export to Israel, Mykolska said.
“It also provides more opportunities in production cooperation between Ukrainian and Israeli businesses in sectors such as: hi-tech, engineering, telecommunications, and processing equipment for food industry.”
The Economy Ministry’s Export Promotion Office is planning a trade mission to Israel this summer.
