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Articles / 15 July 2013 | 16:00
Ukraine-Belarus: Friendship, tractors and candies

Ukraine-Belarus: Friendship, tractors and candies


In 2012 Belarus took the fourth place among world countries on the amount of trade turnover with Ukraine, which grew by 18.1% to $7.52 billion, including export - by 17.1% to $2.25 billion. Economy and trade minister Ihor Prasolov notes that such dynamics has been expected and will be preserved and developed. Starting with 2009 the turnover has grown more than twice. So, what do we deal in with the neighbor?

Metallurgic production is the leader of domestic export to Belarus market. Last year it made 14.6% of export supplies or almost $330 million in monetary terms, though it was by 7.4% less than the year before, economist and political scientist Vitaly Kulik informs. Leadership of metallurgy is not surprising, as it is one of the basic lines of industry in Ukraine, while in Belarus there is only one metallurgic plant - Belarus iron and steel works. Locomotive engines occupy the second position on export volumes (12.4% or $279 mln), which is also not surprising, because Ukraine has one of the biggest locomotive works of former USSR - "Luhanskteplovoz". In 2012 the supplies of engines to Belarus increased by 3.68 times. Finally, the third place is take by mineral fuels (11.8% of $265 mln), including oil refining production. Moreover, Belarus shows traditional interest for Ukrainian beer, wine and confectionaries.

As for Belarusian import to Ukraine, fuel materials are an absolute leader and make 76.6% of supplies on $3.88 billion. Last year fuel import grew by 32.4%. Thus, fuel and lubricants of Mozyrski oil refinery cover 30% of petrol market and 50% of diesel market of Ukraine, as until recently we had only one refinery functioning in the country  - Kremenchug plant. With the recovery of Odessa refinery, the market situation may change for the benefit of domestic suppliers. 

We also should not forget about popularity of Belarusian food products among Ukrainians, which resulted into boom of branded stores all over the country.

Bet on cars


As for promising sectors of cooperation, engineering industry is first to come to mind, as certain domestic machinery and equipment are in high demand on Belarusian market, and vice versa. Thus, in 2008 Kryukovsky Railway Car Building Works formed a joint venture with Gomel car-repair plant and started production of passenger rolling stock for Belarus. Ukrainian market, in turn, is interested in Belarusian field engines. According to experts, Ukraine loses about five tons of grain every harvest because of lack of agricultural machinery, especially tractors. "We need to upgrade about 31 thousand of worn-out tractors, but we cannot do on our own. If Ukraine sets a task to harvest up to 80 million grain annually, we must upgrade 3-5 thousand tractors every year," Prasolov says. It will be possible if Ukraine develops already existing cooperation between Minsk tractor plant and Ukrainian "Ukravtozapchast". For this Belarus is ready to produce 30-40% of production in Ukraine, first vice PM of Belarus Vladimir Semashko says.

"We are ready to offer at least three cost-cutting variants for machinery supplies, including leasing. Thus, we created an enterprise "Promagroleasing", which doubles turnover annually, and one and a half year ago it opened a filial in Ukraine. We are ready to provide inviting leasing rates for 5-7 years term and to supply machinery either to a concrete buyer or to plants assembling Belarusian machinery in Ukraine. The second variant provides for crediting an exporter or importer of equipment, as well as wholesale buyers, with 50% rate compensation by the state budget of Belarus.  Yes, it means additional budget expenses, but this is also a mechanism of production promotion," he told ForUm in a comment. The third instrument has been tried out in Russia: if a buyer wants to purchase a Belarusian tractor, Russian Saving Bank will take out a loan, but the buyer will pay only bank margin, while the refinancing rate of the Central bank of Belarus will be covered by the state budget.

Moreover, at the end of June Semashko announced that Ukraine was included into mechanisms of easy-term loans for agricultural machinery of Belarusian production. According to the official, soft schemes have shown good results in work with other counties of the Customs Union, and Kyiv can join them now. Belarus will compensate domestic banks for a part of the loan rate, given for purchasing Belarusian field equipment. In turn, Prasolov informed that Ukraine was ready for practical implementation of the agreements.

Semashko also specified that "agricultural machinery is only a part of the potential both countries can reveal. We should not lose common chances." Indeed, the sides also promote cooperation in car industry. Thus, on Kyiv's order Minsk car factory has worked out a new model of the grain transportation lorry. The vehicle is undergoing the run-in test, and the first lots may be purchased already in 2014.     

Moreover, Ukraine develops supplies of domestic cars to Belarus. Thus, the supplies grew by 9.7% ($30 million) last year and by 29.3% ($12.5mln) for the first four months of 2013. Export of electric machinery is also on the move: it grew by 16.5% ($67.4 mln) in 2012 and by 10% ($19.5 mln) for January-April period of 2013.

Constructive dialogue

For the last couple of months the countries have managed to solve a number of trade conflicts. For example, in spring Minsk started to detain Ukrainian confectionaries at the border motivating it by extended control, president of "Ukrcondprom" Oleksandr Baldyniuk tells. A number of exporters had to suspend contract deliveries and consequently suffered losses at the total amount of 50 million hryvnias. However, at the end of May the bilateral commission on economic cooperation managed to settle the issue and to resume stable supplies. "Strict position of the Cabinet on protection of national economic interests enabled to lift the economic siege," the specialists says. 

Having solved this problem, the sides do not have any other serious pending issues to settle, governmental commissioner on cooperation with CIS and other regional unions Valery  Muntiyan points out. According to his information, all issues on transit of Ukrainian goods to Baltic countries and northland have also been settled. "Arbuzov and Prasolov have received many thanks for rapid solving of the problem, and not only from Ukrainian business representatives," the official underlines. As a reminder, a couple of years ago Minsk banned import of Ukrainian beer, very popular in Belarus, and Kyiv limited import of Belarusian dairy production of no less popularity among Ukrainian consumers. Moreover, at the beginning of 2013 there were discussions on introduction of import duties against Belarusian fuel and lubricants in demand in Ukraine.

Results of the recent meeting of Presidents of Ukraine and Belarus also speak in favor of improvement of bilateral cooperation. The parties concluded ratification of the Agreement on state border, signed agreements between ecology ministries, border and forestry services, consumer inspections. During the meeting Aleksandr Lukashenko declared that he meets Ukrainian President Viktor Yanukovych rather often to discuss current issues. "We often meet without fuss to discuss out problems quietly. Those who believe it was our first meeting are very wrong. We carry out major preliminary work before presenting the results to public," Belarusian president said.

Well, following the above said we do hope for development of cooperation and minimum of mutual bans, considering that two countries have huge potential of teamwork not only in engineering industry but in other sectors as well - from supplies of domestic electric energy to Baltic countries to participation in the construction of the first nuclear power plant in Belarus, started in 2011.

Andriy Boyarunets


ForUm
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