Subchapters:
- Business Relationships
- Foreign direct investment
- FTAs and Treaties
- Development Cooperation
- Prospective fields of study (MOP)
Business relations
Trade relations with the EU
The EU is Ukraine’s largest trading partner with a 39.0% share of the total turnover of the UA’s foreign trade. More than 15,000 Ukrainian companies export their products and services to the EU.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from the EU (million EUR) | 19,837.90 | 21,548.50 | 24,152.70 | 23,119.30 | 28,290.50 |
| Imports into the EU (million EUR) | 16,239.40 | 17,435.60 | 19,127.50 | 16,328.90 | 24,073.60 |
| Balance with the EU (million EUR) | -3,598.5 | -4,112.9 | -5,025.2 | -6,790.4 | -4,216.9 |
Source: European Commission
Trade relations with the Czech Republic
Thanks to the active entry of Czech companies, mutual trade shows an essentially continuous growth trend. Since 2015, our exports have more than doubled (in 2015 they amounted to 1billion CZK and in 2021 already 3billion CZK) and its stable growth can be assumed in the following years as well. In 2021, trade exchange increased by 26.6% to CZK 7billion. The Czech Republic mainly exports to Ukraine communication technology, passenger vehicles and their accessories, agricultural machinery and consumer goods, etc. Raw materials such as iron ore, concentrates, ethyl alcohol are mainly imported from Ukraine to the Czech Republic, the share of food and agricultural products and also selected consumer goods is gradually increasing goods. The Czech Republic is gradually consolidating its position among the most important trading partners of Ukraine (the Czech Republic is the 12th largest importer and the 10th most important exporter for Ukraine).
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from the Czech Republic (billion CZK) | 23.3 | 33.1 | 35.1 | 32.6 | 34.8 |
| Imports to the Czech Republic (billion CZK) | 28.3 | 26.2 | 28.8 | 26.9 | 40.5 |
| Balance with the Czech Republic (billion CZK) | 5.0 | -6.9 | -6.3 | -5.8 | 5.7 |
Source: businesscarriers.com
Trade relations with countries outside the EU
Ukraine’s largest trading partner outside the EU is China, with a share of 12% of Ukrainian exports and 15% of imports, with Ukrainian exports to the Chinese market significantly increasing in 2021. An important trading partner with 5.1% of total foreign trade turnover UA is Russia. Exports to UA increased by 21.3%, imports increased by 24.0%. USA 2.4% export share and 4.6% import share; Turkey 5.9% export share and 4.5% import share.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Exports from countries outside the EU (million EUR) | 16,933.1 | 18,690.5 | 18,389.8 | 18,700.7 | 29,586.0 |
| Imports to countries outside the EU (million EUR) | 25,926.7 | 31 173.9 | 32,552.7 | 29,753.3 | 37,820.7 |
| Balance with non-EU countries (million EUR) | -8,993.6 | -12,483.4 | -14,162.9 | -11,052.6 | -8,234.7 |
Source: EIU, Eurostat
Foreign direct investment
Macroeconomic indicators, the introduction of incentives for investors, the effective support of foreign investments by the Ukrainian government, reforms aimed at increasing the transparency of the tax system, supporting entrepreneurship and strengthening investor protection – all this created a favorable investment climate in 2021. The inflow of foreign direct investment to Ukraine last year reached a record level in the last few years and amounted to EUR 5.53 billion. From a territorial point of view, the most investments were made in EU countries (EUR 4127.8 million). The largest investor is the Netherlands with EUR 1657.1 million, followed by Cyprus with EUR 84 million, Switzerland with EUR 738.0 million and Germany with EUR 718.1 million.
Direct investments from the Czech Republic in 2021 amounted to EUR 29.1 million (with a significant share in the energy and agricultural sectors). Traditionally, most investments were directed to the most economically developed regions – Kyiv, Kyiv and Lviv regions.
FTAs and treaties
Treaties with the EU
Since September 2017, the EU-Ukraine Association Agreement has been in full force, with the fact that it represents a “guideline” for the implementation of political and economic reforms in Ukraine. As part of the integration efforts, the Ukrainian government adopted an action plan, a Communication Strategy and a “Roadmap” for the adoption of integration legislation. A Report on Implementation of the Association Agreement between Ukraine and the EU is regularly prepared. The Deep and Comprehensive Free Trade Area Agreement (DCFTA), which is part of the EU-Ukraine Association Agreement, has been in force since January 1, 2016. The agreement is intended to enable the connection of the EU’s internal market with the Ukrainian market, to bring Ukrainian standards closer to those that apply in the EU, and to support diversification and increase the competitiveness of Ukrainian exports and the Ukrainian economy as a whole. The agreement removed most trade barriers between the EU and Ukraine. According to the agreement, some tariffs and quotas in several categories of goods are to be gradually abolished. The EU is now proposing to temporarily lift these restrictions. On 19 May 2022, the European Parliament supported a one-year suspension of EU import duties on industrial products, import duties on fruit and vegetables, as well as anti-dumping duties and safeguard measures on steel imports.
Contracts with the Czech Republic
The Czech and Ukrainian sides are developing economic cooperation on the basis of the EU-Ukraine Association Agreement and its DCFTA, with the understanding that Czech companies will be able to benefit from the gradual full integration of the Ukrainian market with the EU internal market. Other agreements include the Agreement on the Promotion and Mutual Protection of Investments, the Agreement on the Avoidance of Double Taxation, the Agreement on Cooperation in the Nuclear Energy Sector, the Agreement on International Road Transport, the Agreement on Air Transport, etc. The list of valid agreements with Ukraine is at https:// www.mzv.cz/kiev/cz/vzajemne_vztahy/dvoustranne_smlouvy_s_ukrajinou/index.html.
Developmental cooperation
The Czech Republic has been implementing both humanitarian aid and development and transformation cooperation projects in Ukraine for a long time. After 2014, in connection with the reconstruction and democratic transformation of Ukraine, the activities of the Czech Republic were significantly expanded. In the framework of development assistance, attention is largely focused on the field of education – support for the development of mechanisms for ensuring the quality of education, Czech-Ukrainian inter-university cooperation, improving the material conditions of so-called resettled universities or B2B projects (ČRA). Through the so-called small development projects and the MEDEVAC program (Ministry of the Czech Republic), the Czech Republic helps to develop the activities of medical facilities and universities in terms of material and expertise. In addition, the Czech Republic implements security development cooperation projects in Ukraine (MV CR).
After the outbreak of the conflict in eastern Ukraine in 2014, the Czech Republic financed, for example, psycho-rehabilitation camps for children from war-affected areas, school repairs, supplies of medical equipment for institutions located in the immediate vicinity of the so-called contact line, and supported demining activities and the development of communities located in the conflict zone.
In response to the Russian aggression, which began on 24 February 2022, the Czech government approved the release of CZK 300 million for urgent humanitarian aid to Ukraine under the responsibility of the Ministry of Foreign Affairs and the Ministry of the Interior (CZK 150 million each). At the same time, both ministries confirmed the allocation of additional funds (MFA CZK 23.365 million, Ministry of Internal Affairs CZK 25 million) for assistance already underway. The projects include supplies of material aid from the Czech Republic (ČČK), earmarked donations for medical and sanitary equipment, humanitarian subsidies for Czech NGOs and donations for Ukrainian NGOs helping on the ground. According to estimates, there are more than 330,000 UA refugees in the Czech Republic. The vast majority of them have received special visas that give them access to healthcare, education, employment and social support.
Prospective fields of study (MOP)
As the war continues, domestic demand will decline, while consumption will be constrained by basic needs due to population displacement, supply disruptions, infrastructure destruction, and extreme insecurity. As long as the war lasts, there will be mainly temporary operational restoration of destroyed objects (e.g. pontoons at bridges, glass for windows, spare parts in the energy sector and temporary measures to support infrastructure) – these are some opportunities for Czech companies.
However, sooner or later the war will end and Ukraine will need to rebuild everything from infrastructure, industry to housing (U-24 reconstruction support program).
Special attention will be paid to the support of industries that directly support the livelihood of citizens and also strengthen the defense capability of the state. These are agriculture and the food industry, retail, public and energy products and services, industries working on mobilization-related orders.
There will be enormous interest in the Ukrainian market again. Given the validity of all the risks associated with doing business in Ukraine today, Czech companies should not, even in the event of a possible further escalation of the situation, completely leave the Ukrainian market (a possible return to abandoned positions will be very difficult, if not completely impossible), but they should adapt their trade relations to the current trade policy and to the future expected modifications of the Ukrainian economy.
Up-to-date information on sector opportunities will be gradually added within the Map of Global Sector Opportunities.
