Date of publication: 17 April 2025
In a world where global economic and political processes are constantly changing, international trade faces new challenges and uncertainties. Olena Omelchenko, Partner and Head of International Trade Practice at Ilyashev & Partners Law Firm, spoke to Yurydychna Praktyka about the latest trends in international trade, the impact of the Russian-Ukrainian war, and the development of Ukraine’s trade relations with key partners, in particular with the EU.
– How has the situation in international trade changed recently and continues to change?
– We are currently living in an era of profound transformation of global trade. These are not just incremental changes, but rather pivotal shifts that are re-shaping the very architecture of international economic relations. And it is not just about changes in trade flows or customs policy, but the fundamental concept of globalization itself, its values, boundaries, and underlying principles.
The first key trend is the retreat of globalization and the rise of regionalization. New economic blocs are emerging increasingly preferring cooperation among countries with shared values, security interests, or production standards. For example, the countries of Southeast Asia (China, Japan, Korea, and ASEAN) are deepening their integration in the Regional Comprehensive Economic Partnership (RCEP) format. At the same time, the United States is intensifying its partnerships in North America and the Indo-Pacific region, while the EU is also reinforcing the role of the internal market and strategic autonomy.
The second trend is a decline in the effectiveness of global institutions, in particular the World Trade Organization. Its dispute resolution mechanisms are partially blocked, and its ability to moderate global rules is limited. Increasingly, countries are resorting to unilateral or bloc decisions – tariff, non-tariff, and sanctions.
The third major trend is the intensification of geoeconomic tensions. The trade conflict between the US and China, which began in 2018, is taking on new forms, including restrictions on technology exports, government subsidies for strategic sectors, and elevated tariffs. The latest steps by the United States to raise duties not only for China, but also for other key trading partners, including the EU, highlight the growing primacy of national interests, often at the expense of long-standing multilateral commitments.
The fourth important trend is the restructuring of global supply chains. After COVID-19, the full-scale war in Ukraine, and the escalation of security risks, companies are looking for greater resilience, not just efficiency. The concepts of friendshoring (transferring production to politically friendly countries), nearshoring (bringing production facilities closer to the consumer), and China+1 (reducing dependence on a single source) are emerging. This is a challenge, but also an opportunity for countries that can offer stability, logistical convenience and an attractive regulatory environment.
The fifth trend is the green course and digitalization of trade. The EU, as a leader in environmental regulation, is already implementing CBAM, a carbon adjustment mechanism for imports. This is not just about taxes, but also about revising business models, measuring carbon footprints, and full transparency of supply chains. For Ukrainian exporters, this is a chance to modernize production, but also a challenge due to the complexity of adaptation. At the same time, digital trade is gaining momentum: electronic platforms, blockchain in logistics, and smart contracts. New rules are also being formed here, and it is very important not to be left behind.
As a result, international trade is no longer the “free market” space it was 10-15 years ago. It is an arena of strategic competition, technological rivalry, and regulatory battles. Adapting to this new reality is a challenge for both companies and governments.
– Is the “US factor” the main one in the current turbulence? Who else is interested in changing the rules of the game and why?
– The United States remains a dominant force in the international trade system, but it is no longer the only architect of the global economic agenda. The United States initiated a wave of protectionism during the first Trump presidency, and it continues to this day, with a sustained emphasis on returning production to national jurisdictions, protecting strategic industries, and revising the terms of participation in multilateral agreements. New duties, trade restrictions, and sanctions, which cover not only China but also NAFTA partners and even the EU, are indeed causing turbulence
However, this is not just the “US factor”. China has been playing its own game for a long time – the One Belt, One Road initiative is not only about infrastructure, but also an attempt to build its own trade architecture in Asia, Africa, and partly Latin America. At the same time, the role of India is growing, as it is gradually moving away from the status of a mere consumer market and is striving to become a centre of alternative production and high technology.
The EU, in turn, is changing the “rules of the game” through regulatory instruments, such as the introduction of environmental requirements (such as CBAM), sanctions policy, and increased control over supply chains and trade ethics. This is a soft but strategic change – the formation of “economic sovereignty”.
And, of course, the countries of the so-called Global South – Brazil, South Africa, Indonesia, and Turkey-are trying to gain more influence in regional trade configurations while remaining outside of large geopolitical blocs. They often balance between global centres of power, which also affects the structure of world trade.
Thus, the United States is indeed a catalyst for change, but the current transition period is multifactorial: it involves a change in the balance of power, revision of market access rules, new technical barriers, and a shift toward regionalization. International trade is gradually shifting to a multipolar regime with blurred centres of influence.
– Can you assess the impact of the Russian-Ukrainian war on international trade in general? Is it mainly the sanctions consequences or is there another impact as well?
– The impact of Russia’s war against Ukraine on international trade is profound and systemic. It includes not only the sanctions dimension, but also a radical reconfiguration of trade flows, changes in supply chains, the energy market, food security, and even technological geopolitics.
First of all, energy. After the start of the full-scale invasion, the EU abandoned Russian energy supplies, shifting its priorities to importing LNG from the United States, Qatar, Algeria, and Norway. In turn, Russia has redirected gas and oil flows to China, India, and Turkey, largely at dumping prices. This provoked a new map of energy ties, and at the same time a restructuring of logistics routes, infrastructure, and insurance markets.
The second is food security. Before the war, Ukraine and Russia accounted for about 30% of global grain exports. The war, the blockade of ports, and strikes on logistics and infrastructure led to higher prices and grain shortages in Africa, the Middle East, and South Asia. The grain deal has partially stabilized the situation, but Russia’s withdrawal from it increases the risks again. The result is a new emphasis in global politics on food independence and national reserves.
The third block is sanctions. They are not limited to the energy sector. The bans include metallurgy, aviation, high technology, software, and financial services. Although Russia is trying to circumvent them through third countries (Kazakhstan, the UAE, China), the effectiveness of the sanctions is manifested in the degradation of Russia’s production capacities and the loss of technological sovereignty.
The defense component is also worth mentioning. The war has catalysed an increase in defense spending, not only in NATO but also in Asia. This creates a demand for new types of production, rearmament, and investment in the military-industrial complex, and thus creates new industries for trade.
As a result, the war has become a factor that has radically transformed the global trade landscape. It’s not just about temporary disruptions, but about long-term trends: reducing dependence on autocracies, friendshoring, energy transition, new logistics, and rethinking strategic goods. This is not just a local crisis – it is a turning point in the development of global trade.
– How do all these changes directly affect Ukrainian business and relations with key partners?
– The war and sanctions have dramatically transformed Ukraine’s trade relations with many partners. This has certainly affected production, imports and exports. Ukraine has lost access to a part of its domestic market, as well as to the markets of Russia and Belarus, which used to be important not from a political but from an economic point of view. Businesses focused on these markets have experienced the greatest difficulties, but are gradually adapting to the new realities.
At the same time, Ukraine has received unprecedented support from the European Union, the United States, and other allies. The EU is now our main trading partner. After the start of the full-scale invasion, the EU granted Ukraine temporary autonomous trade preferences, eliminating duties and quotas on Ukrainian products. These preferences are valid until June 5 this year.
Ukraine’s exports to the EU have grown significantly, particularly in the agricultural sector, metallurgy, and even the IT industry. At the same time, there have been complications. We have witnessed trade disputes with Poland, Hungary, and Slovakia due to the competition of Ukrainian products on their markets. So, despite the new opportunities, Ukrainian exporters have to take into account the risks and challenges of even preferential treatment.
As for the United States, it is a strategic ally of Ukraine, but not a key trading partner. Distance and logistical constraints do not allow us to significantly increase trade. At the same time, American military, financial, and humanitarian aid plays a critical role in supporting our economy. American companies are increasingly looking at Ukrainian sectors such as energy, defense, IT, and mineral exploration.
Turkey remains an important trading partner, despite the difficult geopolitical situation. It maintains economic ties with both Ukraine and Russia, trying to balance the interests of both sides. This creates both new opportunities and challenges. The Turkish market is interesting for Ukrainian exporters, but there are concerns about competition on the part of producers after the possible ratification of the free trade agreement, which is currently under consideration by the Verkhovna Rada.
China continues to be one of Ukraine’s main trading partners. Despite the decline in activity due to the war, it remains the largest buyer of Ukrainian grain, ore, and metals. At the same time, China’s position on Russia, including the absence of sanctions and indirect support, complicates the development of bilateral relations. At the same time, Ukraine seeks to maintain access to the Chinese market, as competition for it is intensifying.
In general, Ukrainian exporters and importers are cautious about China. On the one hand, there is a significant demand to protect the domestic market from Chinese imports, and on the other hand, many Ukrainian companies continue to actively work with China.
– Coming back to the EU. You mentioned both new opportunities and challenges. What is currently shaping the agenda of the government and business in the context of European integration?
– Adapting to EU standards remains one of the most important tasks for Ukrainian businesses. In addition to certification, compliance with technical regulations and environmental standards, which are certainly necessary to enter EU markets, new mechanisms such as CBAM are an important challenge. These are not just additional barriers, but part of a larger transformation in global markets that focuses on sustainability and environmental standards.
We can also mention the new EU regulation on general product safety, which came into force in December 2024 and sets new requirements for manufacturers. However, this regulation can be both an obstacle and an opportunity for Ukrainian producers, as its implementation opens up access to even more competitive European markets. If Ukrainian companies adapt to the new safety criteria, this will allow them to significantly strengthen their position in the European market and improve their reputation.
At the same time, tariff barriers are an important issue. The autonomous preferential access to the EU market is valid until June 5, 2025. Currently, the European Commission is actively working on new proposals for liberalization of the trade regime between Ukraine and the EU, and these proposals will replace the current regime of autonomous trade preferences.
– How would you assess the current state of Ukraine’s integration into the EU market, in particular in the context of the expected resumption of quotas?
– Ukraine is already integrated into the EU market through the Association Agreement, which defines the rules of trade between our countries and provides for the gradual liberalization of trade on both sides. The agreement sets out clear timelines and mechanisms, and all trade must take place within the framework of this agreement. Therefore, we already have certain preferences in trade with the EU, which give Ukraine better conditions than other countries that are members of the WTO.
After the outbreak of full-scale war, the EU unilaterally granted Ukraine temporary autonomous trade preferences. This decision was the result of the goodwill of the European Commission, which granted Ukraine access to the EU market on terms similar to those of EU member states. However, it is important to understand that these preferences were temporary and granted without ratification by all EU countries, which caused some problems with Poland, Slovakia and Hungary, as businesses in these countries were not involved in the negotiation process.
Negotiations on the restoration or expansion of quotas are ongoing, and although they are not yet finalized, there are already concrete signals of possible changes. It is expected that after the current regime of autonomous trade preferences expires, the European Commission will introduce new proposals that may create additional opportunities for Ukrainian businesses. However, it is important to understand that this process will take time and still needs to be agreed upon by all EU member states.
As a candidate for EU membership, Ukraine has much more political and economic capital to make progress. The opening of new business opportunities depends on the successful resolution of the political and economic issues that remain on the negotiating agenda.
– In conclusion, what recommendations would you give to Ukrainian business on how to act in the current realities of international trade?
– Ukrainian business is currently facing a very difficult environment: war, sanctions, restructuring of global trade chains and new regulatory requirements, especially in the EU and other regions. But despite all the difficulties, there are several key strategies that can help businesses adapt to the new realities.
First, it is important to diversify sales markets. Ukrainian exporters should not limit themselves to traditional partners in Europe. Expanding the geography of exports should be a priority. For example, free trade agreements with Canada and the UK, and new prospects for exports to Asia, Africa, and Latin America open up new business opportunities. The Middle East also remains an important destination, especially in the context of changing food chains due to the war. However, it is important to remember that opening up new markets is also a political issue. Opening markets with countries that do not support Ukraine politically remains a challenge. And while diplomacy has an important role to play in these matters, businesses can act more flexibly by focusing on specific markets and segments.
Further, Ukrainian companies should continue to work on meeting international standards and certifications, as this is the basis for entering new markets. European certification standards and environmental requirements, such as CBAM (Carbon Border Adjustment Mechanism), are important for steel, cement, and pipe exporters. Taking into account the new requirements will not only facilitate access to EU markets, but also ensure the competitiveness of Ukrainian products in the long run.
Optimizing logistics remains an important task for businesses. Given the ongoing instability in the Black Sea, Ukrainian companies should focus on alternative transportation routes. The seaports of Romania, Poland, and the Baltic States are becoming important, where new logistics hubs can be created. Multimodal transportation, which combines different modes of transport, is becoming increasingly relevant, reducing the risks associated with port blockades or armed conflicts.
And, of course, we cannot ignore the issue of digital technologies. E-commerce is a global trend, and many countries are actively working on its development. It is important to actively use electronic trading platforms to enter new markets, especially for goods that are suitable for sale through online channels. This allows not only to minimize risks but also to increase the competitiveness of Ukrainian goods. The WTO and other international organizations are actively working to develop a regulatory framework for digital trade, so businesses should be prepared for changes in this area.
With regard to trade defence issues, it is important to seek legal advice to comply with WTO rules and meet the requirements of European regulations. Increasing requirements for product certification and safety can be a serious barrier for companies that are not prepared for the changes.
In general, in order to operate successfully in the current realities of international trade, Ukrainian businesses need to be flexible, able to quickly adapt to new requirements and actively seek opportunities to enter new markets. The development of logistics, compliance with international standards, and the use of digital technologies are key factors that can help maintain competitiveness and ensure sustainable growth in the face of global change.
(Interview by Oleksii Nasadiuk, Yurydychna Praktyka)
