Kiev says it lost $100bn in trade war with Moscow

Heavy duty trucks standing in queue at the checkpoint "Armyansk", at the Ukraine-Russia border © Andrey Iglov
Trade restrictions by Russia have inflicted $98 billion in losses on Ukraine in 2012-2015, according to Ukraine's trade policy review report for the World Trade Organization.

“The volume of trade with the Russian Federation, earlier considered as the biggest trading partner, has been gradually declining from 2012 (from around 24.3 percent in 2012 to 12.7 percent in 2015) mostly due to the introduction of illegal and discriminatory trade restrictions, overall amounting for around $98 billion in losses for Ukraine,” said the report, published on the Ukrainian Economic Development and Trade Ministry’s website.

According to the report, metals and mineral exports from Ukraine to Europe have contracted, but the share of exports to the EU still increased from 22.3 percent in 2012 to 34.1 percent in 2015.

In March, the Economic Development Ministry downgraded its GDP forecast for the first half of 2016 from one percent to zero, saying Russian trade restrictions is one of the key factors.

Russian President Vladimir Putin signed a decree to suspend the free trade treaty with Ukraine from the beginning of this year. He said Kiev’s move to open its borders to the EU compromises Russian interests and economic security. Moscow is concerned that without such a barrier, Ukraine could illegally supply embargoed European goods to Russia.

The Kremlin also banned food imports from Ukraine in response to the country joining anti-Russian sanctions.

Moscow also changed transportation rules for Ukrainian goods exported to Kazakhstan through Russia. Ukraine must now transport goods to Belarus in sealed containers. The freight must have the GLONASS navigation system installed when the goods enter Russia. The tracking system is to be removed as soon as the cargo leaves Russian territory.

First Deputy Prime Minister Igor Shuvalov says such restrictions were introduced so that Ukrainian goods marked for transit, didn’t appear in the Russian supermarkets.

As a response, Ukraine also imposed an embargo against products from Russia, such as fish, chocolate, baby food, and vodka.