The United Kingdom and Ukraine have announced a significant extension of their tariff-free trade agreement in a bid to support Ukrainian businesses impacted by the ongoing Russia-Ukraine conflict.
This move, hailed as the most generous tariff break offered by any country, aims to provide much-needed economic support and certainty to Ukraine's economy in the face of supply chain disruptions caused by the war, a press release by the government of the UK said.
The agreement, which was originally established two years ago, saw the UK becoming the first country to remove tariffs on all its trade with Ukraine.
Now, with this extension, most UK-Ukraine trade will remain tariff-free until at least 2029. This extension comes at a crucial time as Ukraine grapples with the economic fallout from Russia's full-scale and illegal invasion, which has severely impacted its ability to export goods.
UK Trade Minister Greg Hands and Ukraine's First Deputy Prime Minister Yuliia Svyrydenko are set to sign the extension in a virtual ceremony.
Minister Hands pointed out the necessity of providing long-term economic support to Ukraine, stating: "This agreement provides much-needed long-term economic support to Ukraine, its businesses and people – critical to its recovery from Putin's illegal invasion."
The extension of zero tariff trading terms for a further five years has been welcomed by industry experts. William Bain, Head of Trade Policy at the British Chambers of Commerce, described it as a vital development that will ease supply chain access for Ukrainian businesses under immense pressure.
He highlighted the significance of the extension in boosting opportunities for Ukrainian businesses in key sectors such as oils, grains and other agri-foods.
Bain said: "Alongside the Digital Trade Agreement, which aims to bolsters e-commerce trade between our countries, this extension will boost opportunities for Ukrainian business in key sectors such as oils, grains and other agri-foods."
Under the terms of the agreement, tariff-free trade will be extended on all goods for five years, except for eggs and poultry, which will enjoy an extension for two years. Notably, Ukraine has also agreed to reciprocate the UK's approach, allowing British businesses to benefit from tariff-free exports to Ukraine.
The extension of the tariff-free trade agreement underscored the UK Government's commitment to supporting Ukraine on multiple fronts, including military, humanitarian and economic aid, the release mentioned.
It builds on previous commitments, such as the UK's pledge of £2.5 billion in military aid to Ukraine in 2024/25, including the largest delivery of drones to Ukraine from any nation.
The signing of this agreement marks another step in strengthening international support for Ukraine's recovery and reconstruction efforts.
Last year's Ukraine Recovery Conference held in London raised over $60 billion towards Ukraine's recovery, demonstrating the global community's solidarity with Ukraine in its time of need.
The original tariff-free trade agreement, established in May 2022, was offered by the UK on a nonreciprocal basis, with no expectation of similar concessions from the Ukrainian Government.
However, Ukraine insisted on reciprocity, leading to a mutual agreement benefiting both nations. The extension announced today builds on this foundation, providing a framework for continued economic cooperation and support between the UK and Ukraine.
As both countries navigate the challenges posed by the ongoing conflict, the extension of the tariff-free trade agreement stands as a testament to the enduring partnership between the UK and Ukraine, united in their commitment to fostering economic growth and stability in the region.
Additionally, the UK and Ukraine partnered last month to launch a new initiative aimed at improving the tech sectors and further protecting Kyiv from Russia's full-scale invasion.
This initiative, named the 'UK-Ukraine TechBridge,' was part of the broader UK-Ukraine Digital Trade Agreement and sought to support Ukraine in its economic recovery and resilience against the financial collapse it experienced during the conflict's first year.
During the initial phase of the conflict, Kyiv suffered a substantial economic downturn, losing up to 35 per cent of its GDP. This collapse marked the largest recession in Ukraine's history. The 'UK-Ukraine TechBridge' initiative aimed to address these challenges and foster economic growth in Ukraine's tech sectors.
