Ukraine’s Parliament Ratifies Free Trade Deal with Turkey: What It Means for Trade and Economy.

Free Trade Agreement with Turkey Gets Green Light from Ukraine’s Parliament

According to Espreso.tv: Ukraine’s Verkhovna Rada has officially approved a free trade zone agreement with Turkey, originally signed on February 3, 2022. The ratification came after a long delay caused by the ongoing war in Ukraine, finally taking place on July 14, 2023. This marks a major step forward in strengthening economic ties between the two nations.

Under the terms of the deal, Turkey will open its market to:

• over 93% of Ukrainian industrial goods;
• nearly 8% of Ukrainian agricultural products.

In return, Ukraine will eliminate tariffs on more than half of Turkish industrial goods. Analysts estimate that ratifying this agreement could cost Ukraine roughly 1.5% of its GDP. This is the third free trade pact Ukraine has signed in the last two years, following similar agreements with the United Kingdom and Israel.

Trade Volume and Potential Risks of the Deal

The projected trade volume between Ukraine and Turkey was set at $10 billion. As of December 2023, Turkey ranked among Ukraine’s top three trading partners, underscoring the importance of this market for Ukraine’s economy. In May 2024, the Ukrainian government backed the ratification bill, signaling a serious commitment to expanding international economic partnerships.

Ukrainian Prime Minister Denys Shmyhal called the event 'a historic milestone that Ukraine has been working toward for nearly 20 years.'

President Volodymyr Zelenskyy also expressed readiness to ratify the document, reflecting Ukraine’s drive to deepen cooperation with global partners.

However, the agreement carries certain risks. Some industries may suffer under the new trade conditions. These vulnerable sectors include:

• light industry;
• vehicle manufacturers;
• cement producers;
• fertilizer makers;
• construction materials;
• elevator manufacturers;
• electrical equipment producers.

These factors require careful analysis as the agreement is implemented, particularly regarding its impact on the national economy.

Ratifying the free trade zone with Turkey represents a significant move for Ukraine, opening access to new markets and boosting the competitiveness of Ukrainian goods. Amid the ongoing war and the urgent need to strengthen the economy, such deals are increasingly vital. Still, successful implementation demands a thorough approach to assessing and mitigating potential negative effects on specific industries, calling for a well-rounded national economic strategy.