REGULATION OF SERVICES TRADE IN THE CONTEXT OF UKRAINE–CANADA FTA EXPANSION

Abstract

As it is widely emphasized in the scientific circles, the era of hyper-globalization is probably over, especially for goods trade. World trade in goods as percentage of GDP peaked in 2008, while world trade in services continues to grow and has significant potential. According to the data taken from the State Statistics Service of Ukraine, during 2016-2021, the balance of trade in goods has been negative, while the balance of trade in services has been positive. Ukraine’s turnover of goods reached 140.91 bln USD while that of services – only 22.77 bln USD in 2021. Meanwhile, Ukraine’s Free Trade Agreement with Canada entered into force on August 1, 2017 and has been covering only goods. The results of calculations show that the integration relations between Ukraine and Canada are strengthened primarily due to the exports: in 2016 the exports of goods and services – 105.6 mln USD, and in 2021 – more than 281.0 mln USD, i.e. increased 2.7 times, while the imports of goods and services in 2016 – 257.3 mln USD, and in 2021 – 282.8, i.e. grew 1.1 times. In 2021 the exports of goods rose by 49%, and the exports of services – only by 12% compared to 2020. The share of exports of services in all exports of goods and services of Ukraine to Canada has been decreasing throughout the analyzed period and in 2021 it reached 43%, while in 2016 this indicator was 73%. The study focuses on the analysis of trade in services between Ukraine and Canada and substantiates the need to increase the exports of services as one of the key factors for the successful fulfillment of Ukraine’s integration potential as a candidate country for the EU membership in the context of Ukraine-Canada FTA expansion to the services sector. The EU is the world’s largest trader of services and all the EU’s bilateral trade agreements typically cover trade in services. The EU has concluded the Comprehensive Economic and Trade Agreement with Canada which covers services. The key objectives in EU agreements on trade in services are to ensure that EU service providers are allowed to supply services in foreign markets, and are not discriminated against compared to national operators or other foreign operators. The paper presents the dynamics of exports, imports, balance of trade in services during the period under review. The analysis of the types of exported and imported services demonstrates that the state policies of Ukraine should aim at their both quantitative and qualitative reconsideration and improvement. The country should focus on high-tech services, which requires the industrial development through the rational use of attracted investments, the transition to innovative model, and the introduction of incentives to increase the competitiveness of the processing and high-tech industries of the national economy.