Ukraine, Japan start to negotiate free trade agreement

Ukraine has started negotiating a free trade agreement with Japan with the aim of abolishing most import duties to strengthen their economic ties.

“The scale of the financial assistance provided by the Japanese government since the declaration of independence is impressive. As of today, it is more than $3 billion,” said Deputy Foreign Minister Yevhen Yenin at a forum titled “Asia Strategy in Action. The Role of Ukraine-Japan Cooperation.” The Ukraine-Japan forum took place in Kyiv on Feb. 16 with speakers mostly participating remotely because of the coronavirus.

“But I would like to note,” Yenin went on, “that Ukraine would like to consider itself not only a recipient of assistance. We have something to offer our Japanese partners.”

Yenin thinks Ukraine and Japan can help each other: Japan is more advanced in the scientific and technological spheres, while Ukraine has natural resources and closeness to the European Union.

It’s unknown, however, when exactly the two countries will sit at the table to discuss the concrete conditions of such an agreement.

The latest free trade agreement Ukraine has ratified was with Israel. It came into force in January 2021. According to the agreement, Israel canceled 80% of import duties for Ukrainian industrial goods and over 9% for agricultural products. In turn, Ukraine dropped 70% of import duties for Israeli industrial products and over 6% for agricultural products.

In 2020, the trade between the countries amounted to $1.3 billion. Ukraine imported goods worth $1.1 billion, while it exported only about $200 million worth of products.

Transport-related equipment takes the lion’s share of what Ukraine imports from Japan — Ukraine bought $700 million worth of such equipment last year. Ukraine’s biggest export good to Japan is tobacco products — $84 million.

For five years, Ukraine has also been trying to start selling more agricultural products to Japan. For that, it has received permits for exporting dairy products, meat and fresh eggs.

According to the Embassy of Ukraine in Japan, Japanese companies are actively interested in participating in privatization in Ukraine and to invest in numerous economic sectors of Ukraine, including the construction of new infrastructure and modernization of power plants.

Japan, a a G7 member of industrial democracies, is also a strong supporter of sanctions against Russia and has made major political and financial commitments to Ukraine since the EuroMaidan Revolution in 2014. 

Yenin is confident that Japan will maintain the sanctions against Russia until Russia returns the Ukrainain territories it invaded in 2014 — parts of Donetsk and Luhansk oblasts as well as Crimea.

Sergiy Korsunsky, Ukrainian ambassador to Japan, said that Ukraine and Japan “are constantly maintaining dialogue on a wide range of issues” including sanctions over the Russian war in eastern Ukraine.