IMPORTS AND EXPORTS OF SERVICES IN UKRAINE

Abstract

Foreign trade in services means transactions of intangible products and activities between residents and non-residents. The basic rules for foreign trade in services are set in the World Trade Organization General Agreement on Trade in Services (GATS). Unlike trade in goods, where the role of intermediaries is quite high, trade in services is generally based on direct economic relations between producer and consumer. Production and consumption of services usually occurs simultaneously, since services can’t be stored as goods. Export of services occurs when a resident of one country provides services to individual or company from another country, e.g.: local universities provide special scholarships for international students. Unlike goods, services never cross any physical boundaries. Each industry has its own type of services, e.g: transportation services, construction services, financial services, insurance services, etc. According to State Statistics Service of Ukraine, Ukraine’s trade balance in services increased continuously and reached 8.7 bln USD in 2019 (50.3% increase compared to 2016). In 2019, the biggest partners of Ukraine in trade in services were European Union and Russian Federation (Table 1). Ukraine has also significantly increased trade with USA, Switzerland, Germany and Turkey (Tables 1-4). Russian Federation remains the largest importer of Ukrainian services. The main trigger of trade growth between Ukraine and EU is Deep and Comprehensive Free Trade Agreement (DCFTA) applied by both parties since 1 January 2016, which means that parties will mutually open their markets for goods and services based on predictable and enforceable trade rules (Tables 2, 3). According to National Bank of Ukraine, Ukraine’s shift to EU markets led to loss of Russia’s position as Ukraine's largest trading partner among individual countries for the first time in both trade in goods and services in 2019 [1]. At the beginning of 2019, the general trade turnover between Ukraine and Russia dropped to 9.7% of Ukraine’s total trade turnover (11.5% in 2018) and continued to fall: -36.3% in 2019 compared to 2018 (Tables 1, 3). On the contrary, exports of Ukrainian services to EU and USA were growing steadily (Table 3).