UK signs digital trade deal with Ukraine

The UK government has extended tariff-free imports from Ukraine as part of a digital trade agreement, which will make the country’s IT sector more attractive to UK businesses.

Ministers also used The Road to Ukraine Recovery conference in London to encourage UK businesses to engage with Ukraine on future rebuilding projects.

Business and trade secretary Kemi Badenoch MP said the digital trade agreement, which will see tariff-free trade on imports from Ukraine extended to early 2024, provides much-needed support to Ukrainian businesses.

“...initiatives will help protect jobs, livelihoods and families now and in Ukraine’s post-war future,” said Badenoch.

The government said UK negotiators had been working on the deal with their Ukrainian counterparts since June 2022.

The deal gives Ukraine guaranteed access to the financial services crucial for reconstruction efforts and means Ukrainian businesses will be able to trade more efficiently and cheaply with the UK through electronic transactions, e-signatures and e-contracts.

The minister of economy for Ukraine, Yuliia Svyrydenko, said the deal illustrated that Ukrainian IT companies were in demand around the world despite the challenges of war.

“The digital trade agreement has enshrined core freedoms for trade in digital goods and services. Ukraine believes that an open and free framework for the digital economy is the best investment in future-oriented development,” added Svyrydenko.

The IT services sector is an important source of export revenue for Ukraine. Some IT services and software development companies in the Ukraine already serve large businesses in the UK and other western countries.

It is a resilient sector, which has continued to grow during Ukraine’s war with Russia and the massive disruption it brought.

According to a report from the IT Ukraine Association, the value of IT exports in the time from Russia’s invasion in February last year to the end of December was $6bn, some 10% more than the same period in 2021.

Konstantin Vasyuk, executive director at IT Ukraine Association, writing in the organisation’s Do IT like Ukraine report, said: “These results were made possible due to the effective implementation of business continuity plans, timely relocation of teams, and diversification of development centres in Ukraine and abroad.”

Nearly 290,000 people in Ukraine are employed in the tech sector, and IT exports were worth 3.5% of Ukraine’s GDP and 37.8% of total services exports in 2021.

Ukrainian IT suppliers have praised their customers in countries such as the UK for not abandoning them during the disruption caused by the war.

Speaking to Computer Weekly earlier this month, Maxim Ivanov, CEO at Ukraine-based software development supplier Aimprosoft, said customers were understanding of any service interruption given the scale and global significance of events in Ukraine.

“All of our customers understood the situation, and many even paid for the days developers missed because they were on the move. The help from our customers was unbelievable and no contracts have been cancelled due to the war,” added Ivanov. “We rely on support from other countries, but if this continues, we will win and rebuild Ukraine.”

Stuart Senior, a member of the supervisory board at property and construction consultancy Gleeds, said: “As international construction consultants, Gleeds has had a presence in Ukraine for many years. We welcome this new agreement which strengthens UK-Ukraine relationships and helps Ukraine’s increasing development as a modern, open economy.

“The [trade deal] removes barriers to digital trade and enables partnership initiatives and collaborative working to be delivered more effectively.”