Priority directions of development of multilevel trade integration of Ukraine

Source: calculated and constructed by the author on the basis of [2-5; 7; 15].

Regarding the direction of Ukraine-CIS cooperation, it is worth mentioning in this context that Ukraine is not a member of the integration association, but a founding country. The agreement establishing the CIS provided for cooperation in such areas as foreign, economic and financial policy as well as security and defense policy. However, integration processes in the Commonwealth of Independent States are controversial due to different perceptions of the goals of unification by different member states.

The largest projects within the CIS are the development of multilateral cooperation in the military-political and economic spheres. However, Ukraine has participated only in agreements related to the development of economic cooperation. In February 2021 Ukraine withdrew from the Agreement on the Coordination of Interstate Relations in the sphere of Postal and Telecommunication, [25] Ukraine also intends to withdraw from the Agreement on Civil Aviation and the Use of Airspace and from other agreements. The Free Trade Agreement, which came into force in 2012, is currently in force [16]. In general, Ukraine refrains from any action within the CIS, if it does not correspond to the course of our state for integration into the European political, economic and legal space. Despite the European vector of integration, the share of CIS countries in Ukraine's foreign trade is quite high. Thus, the share of exports of goods is 13.4 %, imports -- 19.4 %; exports of services -- 41,7%, imports -- 7.5 %.

The Organization of the Black Sea Economic Cooperation is quite interesting in terms of its economic potential, due primarily to the strategically successful geographical location of the countries of the union, which creates opportunities for trade and economic relations with Central Asia and the Middle East, the European region and the Mediterranean and also determines the rich natural resource potential. The share of trade turnover in world trade is higher than in the CIS, and is 8.4 %. The same can be said about the growth rate of GDP, which is 3.3 %, GDP per capita is 9.63, which exceeds the level of the CIS and GUAM. The share in exports of goods of Ukraine is 19.09 %, imports -- 19.08 %; share in exports of services 43.16 %, imports -- 0.83 %. The share of Ukraine's trade turnover within the BSEC is less than 1 %. It is worth noting the low-tech structure of exports of most countries of the union, the low level of involvement in the value chain, as evidenced by the lack of vertically integrated production structures.

In the context of Ukraine's interests in the sectoral economic partnership, such areas of cooperation as transport, economy, energy, information and communication technologies, tourism, etc. [1; 21] should be noted. Within the framework of the BSEC cooperation the project of the Eurasian Oil Transport Corridor (EOTC), aimed at diversifying the sources and routes of oil supply to Ukraine and its transit to the EU [19] deserves particular attention. Thus, in 2020 a meeting of the Ukrainian- Azerbaijani Working Group on Cooperation in the Energy Sphere was held to discuss important issues, in particular regarding gas supplies to Ukraine and further cooperation in the implementation of the EOTC project [26]. Cooperation within the BSEC is of interest to Ukraine also from the point of view that EU and NATO members are among the member countries of the union and the successful implementation of regional projects will allow Ukraine to take advantage of such cooperation and take a worthy place in the world economic system.

Ukraine has always considered the development of cooperation with GUAM in the strategic dimension of foreign trade policy superficially, without focusing on trade and sectoral issues. However, it should be noted that recently the issue of development of integration processes in this direction has gotten some attention. Thus, in 2020, the intentions to implement new key projects within GUAM, related to the development of the transport corridor, the conclusion of an agreement on a free trade area and the creation of a digital trade hub were announced [14].

Currently, GUAM countries account for 0.8 % of the total population, the countries of the union have the highest GDP growth rates among the CIS, BSEC and EU countries -- 3.5 %. But if one estimates the level of GDP per capita, it is the lowest among these associations -- 3.73 thousand US dollars. The share of trade turnover in world trade is 1.6 %, with the share of exports exceeding the share of imports of goods and services. Despite the intentions to deepen the integration processes within GUAM, their share in the structure of exports and imports of goods is the lowest -- 3 % and 1 %, respectively. The share in exports and imports of services is also quite low and equals 0.8 % and 1.4 %. The share of Ukraine's trade turnover in GUAM is only 0.55 % of Ukraine's gross exports. The structure of exports of GUAM member states is mainly raw materials, as in most post-Soviet countries, which again limits the inclusion of states in subregional value chains.

The European vector of integration is a priority for Ukraine. It is assumed that it will modernize the economy, strengthen the competitiveness of domestic exports, due to overcoming technological backwardness and compliance with technical standards of EU countries, attracting foreign direct investment and innovative technologies, etc. [10]. The EU is the largest integration group among the above mentioned ones in terms of population -- 510 million people, or almost 7 % of the total population of the world; the level of GDP per capita 35.76 thousand US dollars, which is also the largest among the studied integration associations. The average annual GDP growth rate is almost 1.5 %, the share in Ukraine's trade structure is also quite significant and reaches over 40 %. The share of Ukraine's exports of services to the EU is almost 25 %, which is much less than the CIS and the BSEC (42 % and 43 % respectively). However, Ukraine's imports of services from the EU are the most important and reach about 45 %.

The structure of domestic exports of goods to the EU is characterized, unfortunately, by raw materials and resources and consists of the following product groups: furniture, wood and wood products, seeds and fruits of oilseeds, ores, slags, cereals, fats and oils, electric machines. At the same time, the largest share falls on ferrous metals -13.5 % [12]. The structure of imports is characterized by the sale of goods with high added value and has the following form: paper and cardboard, various chemical products, plastics, polymeric materials, energy materials, pharmaceuticals, electrical machinery and equipment, overland vehicles (except railroad), nuclear reactors, boilers, machines -- 13.3 %. In the structure of exports of services, the lion's share belongs to services in the sphere of telecommunications -- almost 32 %, mainly due to active outsourcing activities of domestic IT companies. Structure of imports of services from the EU: services related to financial activities; telecommunications services; royalties and other IPRs; transport services; business services -- 22.4 % [13].

Deepening integration with the EU will enable Ukraine to join global value chains more efficiently and dynamically as EU countries are making a lot of efforts to develop these chains. Thus, the European Commission has made proposals to support the main sectors and technologies included in the global value chains for the EU Recovery Plan after the coronavirus crisis with a funding of 1.85 trillion euros for the period 2021-2027 [9]. The strategic directions of global value chain development include: autonomous and environmentally friendly vehicles; «smart» health; low- carbon industry; hydrogen technologies and systems; industrial internet things; cybersecurity [8]. Ukraine's active participation in global value chains will attract a significant amount of foreign direct investment, accelerate the exchange of technologies, help increase the competitiveness of national products, ensure the creation of additional jobs, and so on.

However, it should be noted that national enterprises of Ukraine already have a positive experience of inclusion in global value chains. An example is SCM, a group of companies that, using the full production cycle and foreign assets, becomes part of the global value chains, domestic companies in the IT industry, such as Softserve, Luxoft, Eleks, etc., engineering and design companies as well as the automotive industry enterprises[18]. Their successful experience can be implemented by other domestic companies for successful inclusion in the global value chains.

For example, Luxoft develops car control technologies for large German automakers, as well as creates ready-made software platforms for the energy market under the Alstom brand [18]. The advantages of including these companies in the global value chains consist, first of all, in the transformation of the requirements for education and personnel of the IT system of Ukraine, increasing their competitiveness. However, given the leadership positions in Industry 4.0, Ukrainian IT companies commercialize and export almost all of their experience. There is currently no evidence of its use to build the domestic market or modernize domestic corporations. Ukraine also has significant potential in the field of full-cycle aircraft construction. A striking example is the state enterprise «Antonov». However, the sector has a number of problems related to the involvement of innovative technologies, the negative experience of cooperation with Russia, problems in choosing effective management methods, and so on.

The potential for inclusion of Ukraine in the global value chain is largely determined by the effectiveness of customs formalities and procedures, in particular, the conclusion of agreements on the creation or accession to free trade zones, customs unions, etc., which contain provisions on trade facilitation. In this context, the deepening of Ukraine's integration with the EU is of great importance. Other instruments that allow Ukraine to intensify cooperation with third countries include the most-favored-nation treatment for trade, the establishment of a duty-free regime for labor-intensive enterprises, and the introduction of a common transit regime [20].

Thus, despite a number of problems related to the need to restructure production on the basis of innovative technologies of Industry 4.0 and change the structure of exports to trade in commodity groups of VI technological paradigm, chronically negative trade balance, attracting investment mainly in traditional industries, public debt growth, unstable political situation, etc., it is worth noting the positive aspects, such as Ukraine's active position on trade cooperation at various levels of trade and integration relations. That is, Ukraine is trying to be actively involved in integration processes not only regionally, but also bilaterally, networkually and globally.

In the light of identifying promising vectors of integration and finding promising vectors of diversification of the regional format it is important to expand the object of regional trade agreements to WTO + formats that include not only trade aspects of relations, but also investment protection, capital and intellectual property rights and «WTO-extra», which provides for the inclusion of innovation policy, energy, education and training, etc. For example, an extended free trade agreement has so far been concluded only between Ukraine and the EU. However, negotiations are under way to sign an expanded FTA agreement that will extend to the services sector with Turkey, Israel, and an FTA agreement that will include services and investment with Canada.

To deepen trade integration at the global level, Ukraine's national trade and economic interests must be clearly articulated, strategies for participation in the WTO Multilateral Negotiation Rounds must be developed, and participation in coalitions must be intensified, which can help achieve goals and protect one's own interests. According to international practice, participation in coalitions may not be beneficial to all countries [27] (in terms of financial costs and representation aspects). However, the benefits of participating in coalitions cannot be overlooked, even if the ultimate goal is not achieved. Thus, participation in such associations enables countries to clearly state their position in multilateral trade negotiations, improve the country's image and prestige, take a leading position in the region and improve or deepen bilateral trade and integration relations with other countries.

Conclusion

Ukraine's trade and integration cooperation is multi-vector and multilevel. Recognizing the importance of trade integration, the government seeks to develop and deepen relations with the countries of North and Latin America, Asian countries and, of course, European countries. Moreover, Ukraine is involved in trade and integration relations at the corporate (participates in value chains due to the inclusion of national enterprises), interstate (due to the conclusion of preferential and free trade zones, strategic partnership), regional (strategic vector of integration with the EU has been chosen, though cooperation takes place with a number of other organizations) and global (Ukraine is a WTO member, has a positive experience in resolving trade disputes, participates in the negotiating team of the World Trade Organization) levels. However, the priority is to expand and deepen trade and integration processes in order to get the most out of them.

References