Trends in economy development

KROK Economics and Law University

International Relations Faculty

 

International Economics and Business Department

Research Paper:

„The role of foreign trade for the Ukraine’s economy”

 

4nd year student of “International Economics  KROK Exclusive” Programme:         Anna Posikera       _____________________ (signature)       KYIV - 2012

Scientific advisor:   _________________       Alkhovitska Olena Evgenivna   _________________   _____ (resolution „For defense”)   __________  ___________ (date)  (signature)

PLAN

Introduction................................................................................................................3

CHAPTER 1. Foreign trade as system of economic relations...................................5

1.1. Essence and theories of foreign trade........................................................ ......5-8

1.2. Government control of foreign trade...............................................................9-10

Conclusions to Chapter I……………………………………………………….......11

CHAPTER 2.The position of Ukraine in modern foreign trade…… …….....….…12

2.1. Factors of Ukraines foreign trade development…………………………...12-15

2.2. Evaluation of import and export potencial of Ukraine …………………...16-19

2.3. Trade of Ukraine at the international markets………………………….....20-31

Conclusions to Chapter II…………………………………………………..…..…32

CHAPTER 3. The problems of Ukraine's foreign trade development.…………...33

Conclusions to Chapter III……………………………………………………..…35

Conclusion…………………………………………………………………....…...36

References…………………………………………………………………….…..37

 

 

 

 

 

 

 

Introduction

 

Foreign trade is a major driver of economic growth in any country of the world. From the value of net exports depends not only the state of the balance of payments of the country, the situation in its foreign exchange market, the dynamics of the exchange rate and gross international reserves, but the country's ability to maintain economic independence, maintain external public debt at a safe level for the country, preventing the achievement of critical value of borrowings the global financial market. Therefore, effective management of export-import activities of economic actors at the macro level in order to maintain its rational structure and commodity trade balance at an optimum level for the economy is an urgent task of economic policy.

Background in modern terms is quite important, because that foreign trade is the basis of trade between countries. The general form of international trade is the means by which countries can develop specialization, to improve the productivity of their resources and thus increase total production. Sovereign state, as some regions of the country, can benefit through specialization of products, what they can do with the greatest relative efficiency and the subsequent exchange of goods that they are not in a position to effectively do.

The subject of the course work is foreign trade as a factor in economic development.

The object of study is an export-import operations in Ukraine.

The aim is to identify ways of improving Ukraine's foreign trade.

The urgency of the work is that at this time in our country, the real prospects for a truly open economy, its effective integration into the world economy. Active use of external factors contributes to overcoming the negative processes in the economy and further development of market relations.

The work consists of three parts, which consistently explored the role of foreign trade in economic development of Ukraine.

In the first chapter I will tell you about “Foreign trade as system of economic relations”. After that I will move on to “Analysis of the role of Ukrainian foreign trade at the present stage”. And then I will give you some background about “Trends and problems in development of Ukraine's foreign trade”.

To conclude I would like to say that today the issue of foreign trade of Ukraine is very important and needs special attention, that is why I chose the topic for my course work, named „The role of foreign trade for the Ukraine s economy ”.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAPTER 1

Foreign trade as system of economic relations

1.1. Essence of foreign trade

Foreign policy of any state concentrates on such questions: what goods to export and import that with which further improve information: what products to export and import that with which countries to trade and to what extent, if you want the state to intervene in free flow of goods, and if so, to what extent?

Today, developed two types of trade theory, which in many ways answer these questions. According to the theories of the first type of state is be involved in trade. These theories and study explain which products and to what extent the country and who will traded without any government restrictions. These theories include: the theory of absolute advantage, comparative advantage, country size, proportion of production, product life cycle, similarity of countries' international competitiveness of nations and so on. The second type of theories involves government intervention in the free flow of goods between countries to change the volume, composition and direction of trade.       The purpose of theories of international trade was and is to help companies and governments in choice of specialization and the most expedient option strategies to promote deliberate use of national resources.[12]

Theory of absolute advantage

The founder of classical school of economic thought was Adam Smith (1723-1790). He declared that the basis of wealth nations and peoples is an international division of labor and an appropriate specialization of different countries in producing those goods for which they have absolute advantage.

The theory of absolute advantage is based on two assumptions: 
1) the only factor of production is labor;

2) full employment, that all available labor used in producing goods;

3) global economy has two countries, so international trade involved only two countries that produce and sell with each other only two goods;

4) production costs - permanent and their reduction increases demand for goods;

5) the price of one good expressed in amount of labor required to produce other;

6) transportation costs of transportation of goods from one country to another is zero; 
7) foreign trade is free from restrictions and regulations.

The advantage of the theory of absolute advantage is that it is based on labor theory of value and confirms the advantages of division of labor not only nationally but also internationally.

The disadvantage of this theory to explain international trade is that it does not answer the question why countries trade among themselves even the absence of absolute advantage in producing certain goods, is when one country has absolute advantage in producing all goods.

The theory of comparative advantage

The theory of absolute advantage A. Smith, David Ricardo developed (1772-1823), proving that absolute advantage is only a partial case of general rules.

Advantages of the theory of comparative advantage:

1) first described the balance of aggregate demand and aggregate supply. Although It was envisaged that the cost of goods determined by the amount of work, necessary for its production, the theory of comparative advantage showed that the cost really depends on the ratio of aggregate demand and offers the goods on the domestic and foreign markets;

2) proved existence of gains from specialization and trade for all member countries, not just one country due to the fact that others suffer losses;

3) allows you to conduct scientifically based foreign policy;

Shortcomings of the theory of comparative advantage resulting from these assumptions, the which it is based.

Therefore, applying it to analyze foreign economic relations should take into account that it:

1) No takes into account transport costs.

2) Ignores the impact of foreign trade on income distribution within countries, fluctuations in prices and wages, inflation and international capital flows.

3) Based on the assumption existence of only one factor of production - labor.

4) Ignore existence of such important conditions of international trade, the differences in the provision of inputs.

5) Based on the premise full employment, which means that one industry workers freed can immediately find jobs in other, more productive. In other words, an assumption about fixed costs and therefore ignored law costs are rising.

6) Do not explain trade between approximately equal in economic development, none of which has relative advantage over another.[23]

Current theories of international trade

Current theories of international trade can be grouped in two main areas: Keynesianism and Monetarism (neoclassicism).

Keynesianism - macroeconomic theory, which emerged as a response 
economic theory on the Great Depression in the United States. Of this work was work “General Theory of Employment percent and Money” by John Maynard Keynes.

The essence of Keynesianism. The market is characterized by balance, which provides full employment. The reason is - a tendency to keep some profits which leads to the fact that the total demand less than the total supply.

Keynes proposed the following output. If the mass consumer is not able revive the total demand in the scale of national economy, it should make state. If the state will do (and pay) great entrepreneurs order that will cause additional hiring labor. Getting salaries cost, past unemployed will increase their spending on consumer goods and this will increase overall economic demand, and this in turn will increase total supply of goods and services and economic recovery.

Monetarism - macroeconomic theory, one of the main areas neo-conservative economic thought. It appeared in 1950 as a series empirical research in the field of currency circulation.

Key provisions

1. Regulating role of state in the economy should be limited to control over monetary circulation.

2. Market economy - self-regulatory system. All the negative signs related to stay overweight state in the economy.

3. Money supply to affect the consumers' firms. Increase 
money supply leads to the growth of production, and after full 
loading of opportunities - to inflation and prices.

4. Inflation must be overcome by any means, including a 
by reducing social programs.

5. When choosing a money growth rate should rule "Mechanical" money supply growth, which would reflect two factors: level of expected inflation and the growth rate of public product.

According to the views of monetarist money is the main area which sets the movement and production development. The demand for money is constant tend to increase and to ensure consistency between the demand for money and their proposal to conduct a course for gradual increase money in circulation. State regulation should be limited to control over money turnover.[2]

 

 

 

 

 

 

 

 

 

 

 

 

1.2. Government control of foreign trade

Foreign trade policy subdivided into following basic groups: tariff (custom duties) and non-tariff (quantitative restrictions, other non-tariff methods, trading - political methods of stimulation of export, trading contracts and agreements).

Tariff regulation    

 Custom duties are a list of the customs duties with which the goods are assessed at their import and export. The customs duties represent some kind of the tax raised at crossing by the goods of customs border the one who these goods import or take out. The customs duties raise goods cost as the exporter (importer) it is compelled to compensate the expenses on payment of the duty at the expense of increase in the price at the goods. High import duties make foreign goods noncompetitive in home market and used for protection of national manufacturers of the similar goods.    

Duties: ad value - raised in percentage of goods cost; specific - raised in the form of a certain sum of money from weight, volume or goods piece; mixed, a simultaneous application ad value and specific duties.

According to this law the Custom duties of Ukraine are systematized according to the Ukrainian classification of the goods of foreign trade activities - the list of rates of the import customs duties raised from the goods which are imported on customs territory of Ukraine.

The Ukrainian classification of the goods of foreign trade activities (national variant of the qualifier of the Commodity nomenclature of foreign trade activities) which is based on Harmonized system of the description and coding of the goods of 2007 is put in a basis of the commodity classification scheme of Custom duties of Ukraine (the commodity nomenclature).

The duty which is subject to payment, pays off customs body under the rates of the tariff operating at date of giving of the customs declaration.

The custom duties rates of  Ukraine are divided as follows:

• Preferential rates, including clearings of duty payment, are applied to the goods occurring from the countries, entering together with Ukraine in the customs unions or forming special zones or to which the special mode according to the international contracts is given, and also an origin from a number of developing countries;
• Preferential rates are applied to the goods occurring from the countries, using on Ukraine by a most favored nation treatment;
• Full rates are applied to other goods. [8]

Non-tariff regulation

Quantitative restrictions, other non-tariff methods, trading-political methods of stimulation of export, trading contracts and other non-tariff methods of regulation of foreign trade activities. Quantitative restrictions include quota and licensing.

Quotas are limiting volumes of the certain goods which are authorised for importing to (export) on territory of the country during certain term. Quotas are individual, limiting import (export) in one concrete country; group, establishing volume of import (export) in certain group of the countries, and also global when import (export) is limited without instructions of the countries on which this restriction extends.

Licences are permissions to import (export) of the goods during any time, given out by competent bodies (Ministry of Economy).

Licences are general which represent permissions to import (export) operations with the certain goods during all period of validity of a mode of licensing. Besides, licences are individual, resolving to one subject of enterprise activity realisation of one import (export) operation on the licensed goods. Licences establish volumes of the imported (taken out) goods in quantitative expression when it is authorised to import to (take out) certain quantity of the goods, or cost expression when under the licence it is possible to import to (take out) the goods for the certain sum.

Quotas and licenses limit independence of businessmen concerning a choice of the market and trade volume, however, these kinds of the external economic regulation have gained now the greatest distribution. [3]

 

 

 

 

Conclusions to Chapter I

 

According to the results of theoretical studies determined that foreign trade is the relationships between the trade community sailing of goods, capital, labor and services.

Foreign trade includes all metabolic activity in both goods and other products of human labor. Moreover, foreign trade covers items that are not created by people, and sometimes not at all accessible to people (eg, land on the moon). That whole foreign trade can be defined as a system of exchange relations issues (sales) that arise and exist between the trade community and based on the international division of labor.

The current mechanism of foreign relations in Ukraine, reflecting the social, economic, socio-political and other interests (which create incentives for change, or vice versa, saving previous state) is inefficient both in terms of compliance with the challenges of globalization and economic development in general. This means that Ukraine today is not hurt does not show obvious need for quality economic development. Social, technological attractiveness living standards of the leading countries not transformed the economic demand for institutions and mechanisms for the development of these standards. Ukraine seeks declaratory development, but maintaining the existing traditions and practices.

 

 

 

 

 

 

 

 

CHAPTER 2. The position of Ukraine in modern foreign trade

2.1. Factors of Ukraines foreign trade development

First of all, unlike the fall of 2008, Ukraine is still excluded from the economic crisis that struck the European Union and other Western countries and is already beginning to have a negative impact on China and other East Asian countries. 
According to the Cabinet of Ministers, Ukraine's GDP growth in 2011 will be 5%. IMF and European Bank for Reconstruction and Development in October predicted 4.5%, but it is quite good results compared to most of our neighbors, such as the European Union (1.6%) and Russia (4,1-4,4%).

Fig.1. Import and export of Ukraine in 2012

The increase in industrial production in Ukraine is forecasted at 7.5%, with the best performance, according to Goskomstat made in areas that produce products with high added value: machinery, petroleum and chemical industries. Ukrainian exports in the first ten months of 2011 increased by more than a third as compared with the same period a year ago, and in Europe and the CIS - more than 40%. 
Government and the National Bank of Ukraine has managed to maintain the stability of the national currency. Exchange rate against the dollar remained constant throughout the year. Thus, the foreign exchange market did not arise nor excitement, no serious panic. Inflation is estimated to Cabinet fell to its lowest level during the existence of independent Ukraine and should be in 2011, about 5% (although the value deflator GDP in January-November amounted to 13.5%, so not everything is so simple). 
External debt can keep under control. For the first three quarters of its gross was $ 123.1 billion, less than 78% of GDP. Much, of course, but by world standards, not worst. 
In 2012 Cabinet promises budget deficit not exceeding 2.5% of GDP (in 2011 it was 3.5%), increased the minimum wage by 14% and pensions by 11%. Despite the rise in imported natural gas, the government has repeatedly stated that the cost to the public, as well as utility rates in the near future will not rise.[9]

Thus, the current position, according to official communiques and figures pretty good. However, any process should be considered in the dynamics, but here the situation is not so good.

Another refrain entire year took issue talks about lower prices for Russian gas. Thus, the Ukrainian side has repeatedly made statements that coveted deal "is about to be concluded." As a result, in 2012 Ukraine begins with the prices of imported gas in excess of $ 400 per 1 thousand cubic meters most worryingly, expect lower gas prices due to "natural" causes, however. Despite the crisis in Europe, the price of oil on the world market is held at around $ 100 per barrel (if you want to get the price of gas for Ukraine after 9 months, multiply that number by about four) and lowered obviously will not. Firstly, the high cost of oil is determined by growing demand from China and other emerging market countries. Secondly, it is necessary and Western oil and gas corporations, forced to develop less accessible deposits of high cost of production. For the Ukrainian economy expensive natural gas - is a serious problem. Firstly, a further increase in trade deficit is larger for the first eleven months of 2011 totaled nearly $ 12.8 billion in long term chronically scarce trade - is a sure way to increase the foreign debt and the devaluation of the hryvnia.

Second, a sharp increase utility bills for households. While the government supports "Naftogaz of Ukraine" afloat by constant infusion of funds and foreign loans, but sooner or later the government will have to either raise gas prices for industry to openly exorbitant $ 520-550 per 1 thousand cubic meters to keep subsidizing public and utility companies or raise rates for the last 3-5 times.

Thirdly, a decline in the competitiveness of Ukrainian industry. Expensive gas significantly increases the cost of Ukrainian metals, chemicals, cement, sugar and many other commodities. This will reduce the already small share of profits of Ukrainian enterprises, which is to modernize and create new jobs. However, high gas prices - this is not the only problem that full-length to face the Ukrainian economy in 2012. 
The growing trade deficit Ukraine caused not only a rise in gas. In our country have forgotten how or never really could not do many things that are needed for everyday life.

For Ukraine's success in international markets required a significant adjustment of foreign policy in the following strategic areas:

• To develop the export potential of the country in the international specialization, which would organically combined with beneficial for Ukraine in structural transformations in the economy (of course). According to the balance between domestic and external demand for Ukrainian goods and services).
• To increase efforts in the most promising sectors of the world economy (electronics, energy, materials with predetermined properties, biotechnology, scientific, technical, engineering, consulting services, international tourism, etc.).
• Creating competitive transnational corporations to develop global marketing strategies, technologies major international cooperative projects.
• Diversify heohrafichnuu structure of foreign trade, minimize critical dependence on individual countries (markets) under increasing economic security of Ukraine.
• To ensure the balance of exports and imports, trade and current account balance of Ukraine. Ukraine 20 years already exist as an independent state. However, the only reasonable program of socio-economic development, which would be focused its attention on priority areas of international and thus stimulated the use of market benefits of domestic production has not yet been developed. This negatively affects the development of international commercial relations Ukrainian enterprises blurs the boundaries between the political and marketing factors of international cooperation. In order to accelerate the process of economic self-determination, the application is really marketing tools and approaches that are inherent in the global market, you must:
• To determine the sectoral priorities export activities and to provide state support actor precisely the Ukrainian companies whose products have a perspective on the world market;
• Specify and significantly reduce the list of countries and regions that can claim to be a strategic partner of Ukraine, export enterprises should focus efforts on the most promising geographic areas;
• Significantly improve the protection and rights of domestic producers;
• Improve the management and marketing of foreign trade activities;
• Develop a system of macro-and microeconomic indicators and quality standards that promote the organization and development of modern marketing. [21]

Thus, Ukraine gradually take their rightful place in the world economy, spoke not as a raw materials appendage of the developed countries, but as an independent country with a modern economy that leverages its scientific and technical potential and acquired experience in management, including - Marketing, operations. Today Ukraine should actively identify its potential in economic terms.

 

2.2. Evaluation of import and export potencial of Ukraine

After years of strong growth, in 2009 Ukraine experienced one of the worst recessions in Europe. Growth rate decreased by -15%, under the joint effect of a decline in economic activity, drying up of foreign funding and a crisis in the global demand for steel. The country faced a collapse of its industrial production, a currency crisis, an inflation hike, and a weakening of its banking system and eventually had to be saved by the International Monetary Fund (IMF). Ukraine resumed growth in 2010 (3.7%), thanks to the recovery of international trade and a political stabilization following the March elections. [18]The new government elected in Mars has reestablished relations with the IMF (which had been suspended due to the country's failure to pursue the necessary reforms) and is committed to put in place the planned structural reforms: strengthen the competitiveness of the Ukrainian industrial sector, reform public administration, invest in regional development and deregulation and reform the financial system, fiscal procedures and public finances. The economic crisis had a deep social impact in Ukraine. Unemployment rose sharply, finally leveling off at just below 9% in 2010. Wage levels have also declined.  

Main Industry Sectors

The agricultural sector has a major role in Ukraine's economy. It employs around 17% of the population and contributes around 10% to the GDP. The main crops are cereals, sugar, meat and milk. Ukraine is the fifth biggest exporter of cereals in the world. Ukraine is rich in mineral resources, the main ones being iron and magnesium, and in energy resources (coal and gas).

Ukraine's three main suppliers are: Russia, the Commonwealth of Independent States (CIS), Germany, Italy, China, Poland, Turkmenistan and Turkey. Russia is a major supplier of oil and gas, almost a third of Ukrainian total imports. The Ukraine mainly imports fuels and oil, machinery, vehicles, electric and electronic equipment and plastics. Its main customers are Russia and the CIS (25%), Turkey and Germany, Italy and the USA. Main export goods are iron and steel, fuels and oil, nuclear reactors and boilers, machinery and machine tools (nearly 30% of exports), and cereals. [14]

	Exports		Imports		Balance
	thsd.USD	in % to Jan 2011	thsd.USD	in % to Jan 2011
Total	5326708,3	114,5	5385372,4	106,0	–58664,1
CIS countries	1847403,4	117,8	2618272,1	92,9	–770868,7
Azerbaijan	50060,1	100,6	5840,4	88,1	44219,7
Belarus	117670,3	75,4	305565,8	205,6	–187895,5
Armenia	7427,8	82,3	952,2	119,7	6475,5
Kazakhstan	205672,4	243,5	101455,5	168,9	104216,9
Kyrgyzstan	6082,4	155,7	366,4	86,1	5716,0
Moldova, Republic of	39084,4	97,9	7430,6	164,7	31653,8
Russian Federation	1350448,7	112,8	2190712,1	84,6	–840263,3
Tajikistan	2537,7	73,1	297,5	51,1	2240,2
Turkmenistan	53952,2	574,4	553,3	169,5	53398,8
Uzbekistan	14467,5	98,6	5098,3	54,4	9369,2
Other countries of the world	3479304,9	112,8	2767100,3	122,3	712204,6

 

 

 

Fig.2. Ukraine’s Foreign Trade in Goods

Currently the country's gross domestic product is an estimated 81.4 billion. Some 34.29 billion was made from Ukrainian exports last year alone. As things stand, Ukraine is seeing a lot of financial gain from exports. The country has immense agricultural, mineral and industrial resources which it continues to draw on and profit from. Despite suffering eight years of economic decline, Ukraine has emerged as a country of immense economical importance. Since the turn of the century the country's economic growth averaged 7.4% a year, but this dropped to about 2.6% last year. The high rate of poverty has begun to drop as personal incomes continue to rise. Ukraine's currency has remained fairly stable since its introduction in 1996 and, all in all, the country’s economy has improved in leaps and bounds. Ukraine is now recognized as having the potential to become a major European economy.[22]

Ukrainian exports have certainly helped the country’s economy to stabilize over the past few years. Besides the country’s major exports mentioned above, the country is involved in many spheres of commerce. Crop farming, timber harvesting, coal, ironstone, complex ore and mineral deposit mining are major contributors to the country’s GDP. Grain, sugar and sunflower seeds are the main agricultural yields.

Besides metals and oil products the country is also involved in producing coke, fertilizer, airplanes, turbines, metallurgical equipment, diesel locomotives and tractors. Ukraine also imports energy, mineral fuel, oil, machinery and parts, transportation equipment, chemicals, paper and textiles.

Fig.3. Ukraine exports by month

Ukraine exports were worth 22.6 Billion USD in the second quarter of 2012. Historically, from 1998 until 2012, Ukraine Exports averaged 11331.8600 Million USD reaching an all time high of 27253.0000 Million USD in September of 2008 and a record low of 3587.0000 Million USD in March of 1999.

Ukraine exports mainly steel, coal, fuel and petroleum products, chemicals, machinery and transport equipment and grains like barley, corm and wheat.   More than 60% of the exports goes to other former Soviet Republics countries with Russia, Kazkhstan and Belarus being the most important. Others include Turkey and China.

Fig.4. Ukraine imports by month

Ukraine imports were worth 25.2 Billion USD in the second quarter of 2012. Historically, from 1998 until 2012, Ukraine Imports averaged 11876.4400 Million USD reaching an all time high of 29780.0000 Million USD in September of 2008 and a record low of 3287.0000 Million USD in June of 1999.

Ukraine imports mostly oil and natural gas, machinery and equipment, chemicals. Its main import partners are former Soviet Republics countries (Russia and Belarus are the biggest). Germany, China, and Poland have been also gaining importance in recent years. This page includes a chart with historical data for Ukraine Imports.[17]

2.3. Trade of Ukraine at the international markets.

Foreign trade in commodities. In the transformation of the market economy in Ukraine's foreign trade is one of the important means of filling the state budget. A key problem is the issue of foreign trade to improve the structure of Ukrainian exports and imports, increase in the share of products with high added value and products embodying achieve world NTP. The global economic recovery in early 2011, rising prices for steel products and raw materials contributed to the increase in the volume of merchandise exports in Ukraine.

The positive dynamics of export-import operations with the goods is gradually recovering after a sharp drop in the global financial crisis of 2008, and especially the process became noticeable in 2010-2011. So, in 2011, Ukraine's merchandise exports amounted to 68 billion dollars. U.S. imports - 82 billion dollars. USA. Compared to 2010, exports increased by 33.1%, imports - by 36%.

Fig.5. Ukraines foreign trade in agricultural goods

Merchandise trade deficit of Ukraine in 2011 amounted to 14 billion dollars. USA. Thus, the negative balance of foreign trade grew by 52%, compared with the 9.337 billion. U.S. in 2010 Export-import coverage ratio was 0.83 (-0.85 in 2010). After the global financial crisis of 2008-2009, there was a change of trends in geographical and commodity structure of foreign purchasing activity of Ukraine. In terms of key product groups the largest contribution to the growth of exports accounted for ferrous metals and products from them - 31.2% of total exports (up by 28.4% against 2010). Mineral products accounted for 15% (an increase of 52.4%), machinery and electrical machinery - 9.9% (an increase of 19.2%), vegetable products - 8.1% (an increase of 39.1%), products chemical and related industries -7.9% (an increase of 54.9%), ground transportation vehicles, aircraft, vessels and equipment - 7.1% (an increase of 49.3%), fats and oils of animal or vegetable origin - 5% (an increase of 29.8%).

Fig.6. Structure of foreign trade in agricultural goods

Geographic structure of Ukraine's foreign trade in goods in the period 2010 to 2011 was noted by small fluctuations. The share of CIS countries in the Ukrainian export goods in 2011 amounted to 38.3% of total exports, Europe - 27% (including the European Union countries - 26.3%), Asia - 25.9%, Africa - 4.9%, America - 3.7%. The greatest export to the Russian Federation - 29% of total exports, Turkey - 5.5%, Italy - 4.4%, Poland 4.1%, India - 3.3%, China - 3.2% Belarus - 2.8%. Imports from CIS countries amounted to 45% of the total, Europe - 32.8% (including from the European Union - 31.2%), Asia - 16.1%, America - 4.7% Africa - 1.1%, Australia and Oceania 0.2%. In total imports most revenue from the Russian Federation - 35.3%, Germany - 8.3%, China - 7.6%, Belarus - 5.1%, Poland - 3.9%, USA - 3, 1% , Italy - 2.4%.

Fig.7. Geographic structure of foreign trade in agricultural goods

The volume of commodity exports in the first half of 2012. amounted to 889.9 million dollars. U.S. import - 2257.1 million, compared with the first half of 2011. exports increased by 19.6%, imports - by 20.5%.The negative balance of foreign trade was 1367.2 million, export import ratio was 0.39. Foreign trade operations in goods with partners from 132 countries. Exports to CIS countries amounted to 54% of total exports of goods to EU countries - 17.1%. Over a third of export region was carried to the Russian Federation. Significant also are export items to India, Kazakhstan and Germany.[15]

Increased compared with the first half of last year, exports of goods to India, Iran, Islamic Republic of, Japan, Belarus, Russia and Egypt. Decreased exports to Spain, Germany and Kazakhstan. The most important was the supply of fats and oils of animal or vegetable origin, paper and cardboard, cocoa and products thereof, grains, rubber, rubber, sugar and sugar confectionery, prepared foods from the grain. 
Compared with the first half of 2011. significantly increased exports of cereals, fats and oils of animal or vegetable origin, prepared foods from grain. Imports from EU countries amounted to 51.5% of total imports of goods, CIS countries - 25.4%.

Fig.8.Ukraine third largest corn exporter.

Receipt of goods from Russia, Germany, Belarus, China and Poland together accounted for more than half of the total volume of imports of goods. Significantly increased compared to January-June 2011. import supplies from Turkey, the Netherlands, China, Italy, Great Britain, Germany, Hungary, USA, Poland and Belgium. The basis of the commodity structure of imports of the region in the first half of 2012. were mechanical machines, surface vehicles other than railway, mineral fuels, mineral oils and products of their distillation and pharmaceuticals.

March 2012 became the most successful month for the export performance in the history of sugar beet industry in Ukraine. During March 2012 it was exported 16.42 tonnes of sugar, which is 50% more than in September-February 2011/12 marketing year (MY). In general, in the current marketing year, Ukraine exported 27.7 thousand tons of sugar.

The volume of sugar exports from Ukraine in March exceeded the volumes exported during the first six months of the current marketing year.

The industry, despite the surplus year, continues to evolve, and the major players are looking for all possible ways to continue to improve the efficiency of the sugar business and to prevent stagnation of the industry. On the other hand, the increase in sugar exports also indicates that the sugar producers is difficult to find a market at affordable prices in the domestic market, which makes contact to seek export markets. The main consumers of Ukrainian sugar for today are: Kazakhstan, Lebanon, Kyrgyzstan, the Syrian Arab Republic, Turkmenistan, Croatia, Slovakia, Georgia and others

At the beginning of 2012/13 MG in the absence of imports of raw sugar transient stocks of sugar will be about 550 thousand tons, taking into account the volume of sugar purchased by the Agrarian Fund. Production of sugar in the crop area of about 500 hectares and average yield of 2 million tons.[24]

The largest share of the total exports accounted for Myronivsky, Yagotinsky, Kiev Svyatoshinsky counties and cities Borispol White Church. The largest import entry in Kiev Svyatoshinsky, Boryspil, Myronivsky Brovarsky districts and cities Borispol Brovary Obukhov.

Foreign trade in services.

 In Ukraine, the trade surplus in services for 6 months in 2012 amounted to 3 billion 361 million dollars, reports the State Statistics Service (State Statistics). At the same time, the positive balance of foreign trade in services for the first half 2011 amounted to 3 billion 795.9 million dollars this way, foreign trade surplus in services of Ukraine in the first half of 2012 decreased by 11.4%.Exports of services for the first half 2012 amounted to 6 billion and $ 588.8 million, compared to the same period last year, up 99%, imports amounted to 3 billion and $ 227.8 million increased by 12.8% .

Foreign trade operations services with partners 217 countries.The largest share in the total volume of Ukrainian exports of services were transport (65%), miscellaneous business, professional and technical (13.6%) services. Increased exports of computer services - by 97.5 million (42%) and auxiliary transport services - by 86.5 million (38.2%), travel services - by 85.4 million (at 48.9%), various business, professional and technical services - by 38.2 million (4.4%), insurance - 31.4 million (78%), air transport - 30 $ 6 million (4.5%) and construction services - $ 22 million (25.9%).While simultaneously reducing the volume of pipeline transportation services - by 314.6 million USD (15.7%), the railway - 59.6 million (6.8%), repair services - by 38.2 million (12.8%), financial - by 29.1 million (18.5%), communication services - to $ 28 million (16.8%) and other business services - by 7.2 million USD (9.9%).Services exports to CIS countries amounted to 45.6% of total exports, the European Union countries - 27.8%.The main partner countries in the export of services remains Russia, which accounts for 2 billion to $ 702.1 million (41% of total exports).That the services of the CIS countries, has increased, compared to the same period last year by 60.2 million (2%).The highest growth was observed in the volume of exports of services provided Kazakhstan - 33.9 million (up 57.2%), Turkmenistan - 27.1 million (45.8%) and the Russian Federation - 12 million (0.5%). This will reduce the amount of services provided to Belorussia - 25.3 million (32.6%).[11]

The volume of exports of services to other countries in the world has decreased, compared to the first half of 2011, to 129.5 million USD (3.5%). Reduction accomplished in the amount of services rendered in Switzerland - at 318.1 million USD (55.3%), Austria - 37.2 million (33.8%), Belgium - 21.1 million dollars . (14.7%) and the United States - 10.9 million (3.1%). Simultaneously, increased exports of services Marshall Islands - at 95.9 million dollars (9.8 times), and the UK - 45.1 million (14.8%), Estonia - 37.7 million ( 51.4%), Cyprus - 27.7 million (13.2%), Germany - 25.8 million (14.3%), the Netherlands - 24.8 million (55.1%), India - 15.7 million (95.6%), Virgin Islands (British) - 15.6 million dollars (12, 2%), Greece - $ 13.8 million (33.1%), Spain - 13.3 million (68.9%), Israel - 13.3 million (27.4%), France - to 12.8 million (23%), Poland - 11.3 million (19.3%), Latvia - 10.6 million (57.3%) and Finland - 10.3 million USD(46.3%).

The largest share in the total imports of services amounted to transportation services (24.9%), financial (14.7%), miscellaneous business, professional and technical (14.3%), public services, not elsewhere classified (9, 4%), and travel services (8.7%).

Imports of services increased, compared to the first half of 2011, to U.S. $ 365.6 million due to growth in the volume of construction services - by 80.1 million (2.8 times), services of travel - 71.2 million (34.1%), railway transport - by $ 61 million (24%), public services, which are not classified in the other categories - 51.7 million (20.6%), insurance - 35.7 million (56.4%), other business services - by 33.2 million (32.3%), royalties and license - 33.2 million ( 17.8%), auxiliary transport services - by 25.1 million (65.4%). This will reduce the volume of imports of financial services - by 45.9 million (8.8%) and various business, professional and technical services - by 38.2 million(7.7%). Imports of services from CIS countries amounted to 17.8% of total imports from the European Union countries - 55.2%. The volume of services received from the CIS countries increased, compared to the same period last year by 86.4 million (17.7%), including from the Russian Federation - by $ 62 million (15.5%) and Turkmenistan - 14.1 million (2.9 times). Imports of services from other countries increased by U.S. $ 279.2 million (11.8%) due to the growth of services received from the UK - by 74.6 million (24.6%), Turkey - 65.8 million USD (65.5%), Poland - 30.7 million (50.5%), Germany - 26.3 million (12.4%), Israel - 21.2 million (2.1 times), Estonia - 15.4 million (3.2 times), and Hungary - 14 million dollars (33.6%).