In the first ten months of 1998, the commercial turnover between Slovakia and Ukraine reached USD 386 million. Since the record year - 1997. in which the turnover exceeded USD 500 million, the mutual trade has a decreasing tendency. In 1998, Slovak exports to Ukraine decreased by 16 percent, while the Ukraine exports to Slovakia decreased by 10 per cent. We inquired Andrij Statyvko, Counsellor of the Ukraine Embassy to Slovakia, about the reasons for the stagnation.

Mr Counsellor, it is generally known that during their discussions, the Slovak and Ukraine Premiers always concur on stating two facts when evaluating the bilateral economic relations. They maintain that the commercial potentials of both countries are not sufficiently used and that that the mutual trade could "soon" exceed the magic limit of USD1 billion. The truth is, however, that the bilateral trade suffers from hard strokes. The last of them is the Ukraine act on protecting domestic consumers, which de facto stopped Slovak exports to this country. Do you think this is the main reason for the stagnation of mutual trade?

It is true that in 1998 the commercial relations developed less intensively than before. In my opinion, there are several facts influencing this stagnation. They are of political as well as economic character and can not be separated from each other.

When speaking about political reasons, we have to realize that in 1998, general election took place both in Slovakia and Ukraine. Due to them, regular meeting of both countries' premiers did not take place and the session of joint commission for economic co-operation was not called either. The Slovak Government has not appointed its representative to this commission so far.

Another problem is that mutual trade still depends on political relations. As relations between companies have not sufficiently developed so far, I think that the commercial turnover is going to be dependent on the agreements between state bodies. So far it worked in such a way that after the session of the joint commission the ministries were supplied with certain hints and proposals which were subsequently implemented. Last year confirmed that it is not possible to work without using this system. However, I think that it is necessary to develop the contacts in such a way that they be independent from politics and from the state bodies.

Which development tendencies do you expect in 1999?

This year has to become a turnaround year and a year of activating the mutual trade. We know that the current Slovak Government really cares about serious relations with Ukraine and that Ukraine considers Slovakia to be its strategic partner. Slovakia improved its international position and its concept of national safety is closely connected to that of good relations between neighbours. We feel that the Slovak Government has a political will, too. The visit of Slovak Parliamentary Chairman Jozef Migas to Ukraine Parliament is prepared, as well as the visit of Slovak Foreign Minister Eduard Kukan to Kiev and that of Ukraine Premier Pustovojtenko to Bratislava.

As far as economic co-operation is concerned, we have to realize that Slovakia as well as Ukraine have to cope with complicated economic and social situations. In 1998, Ukraine registered a production decrease by 1.5 per cent, which some politicians consider to be a success, since it is the lowest decrease in the past ten years. The situation is still very complicated and the Ukraine Government is forced to accept unpopular measures in order to provide for an increase in production. One of these is also the act on protecting domestic producers and consumers.

Could you give us more details concerning other economic measures taken by the Ukraine Government?

They are not Governmental measures, but decisions and regulations issued by the Ukraine President. In May, 1999, the three-year transitional period is to conclude in Ukraine. According to our law, the president has the right to accept and promulgate economic regulations in compliance with economic acts, accepted by the Parliament so far. They are mainly taxation measures such as decreasing the income tax in small enterprises and agricultural companies, creating free economic zones, which are to keep the taxes instead of their being delivered to central bodies. These zones, mainly those in Transcarpathian Ukraine, can be attractive also for Slovak investors.

Measures were also taken in order to strengthen the banking sphere, to make the currency stable, to decrease the payments deficit and to revive light and food industries.

As far as relations with Slovakia are concerned, signing of a package of several agreements is prepared. Agreements on social welfare, cross-border co-operation, mutual aid in natural disasters, on ship transport on the Danube, in the field of information, on co-operation between central banks and ministries of finance, justice and education were prepared.

Development of passive balance of trade between Slovakia and Ukraine (USD million):

Slovak Trade FORUM