UK and Ukraine digital trade deal comes into force

UK businesses and public sector organisations will have easier and lower-cost access to IT skills, products and services from Ukraine as the UK-Ukraine Digital Trade Agreement (DTA) begins.

The digital trade deal came into force on 1 September 2024, with the UK’s Department of Business and Trade describing the digital-only agreement as one of the first of its kind.

While Ukrainian tech businesses offer UK organisations IT outsourcing services as well as products and services around artificial intelligence and mobile apps, the UK can support the Ukraine’s transition to a digital economy to help its recovery amid the war with Russia.

The IT services sector is an important source of export revenue for Ukraine. Some IT services and software development companies in Ukraine already serve large businesses in the UK and other Western countries. IT is a resilient sector and it has continued to grow during Ukraine’s war with Russia and the massive disruption it brought.

In March last year, the UK and Ukrainian governments signed the DRA, extending tariff-free imports from Ukraine. 

Jonathan Reynolds, Business and Trade secretary, said that the modernised trade relationship with Ukraine is one of the world’s first digital-only trade agreements: “Greater digitisation of the economy is an important step in supporting Ukraine’s economy and their fight for independence. This government will continue to lead the way in our unwavering support for Ukraine and its people.”

Trade in goods and services between the UK and Ukraine was worth £1.6bn in the four quarters to the end of the first quarter in 2024. 

Mark Lewis, a specialist IT outsourcing lawyer at Stephenson Harwood, said that the UK and other governments can learn lessons from “Ukraine’s deployment of digital technology, communications and offensive and defensive cyber warfare”.

He added that, despite the significant talent pool in Ukraine, outsourcing IT there is a complicated decision for UK organisations, with major challenges for companies outsourcing IT services to Ukraine because “there are very real risks”.

Ukraine’s first deputy prime minister Yulia Svyrydenko said that the support of Ukraine from the UK is “unprecedented”, adding: “We have felt it from the very first days of the full-scale war. The digital trade agreement between our countries is another manifestation of solidarity and support.

“Implementing this agreement will deepen Ukraine’s participation in global supply chains, foster the development of small and medium-sized businesses, maintain free access for Ukrainian IT companies to the UK digital markets, and provide crucial support to our economy during the war and in the post-war reconstruction period,” she added.

The agreement and its focus on emerging technology and cooperation on regulation was welcomed by UK IT trade association TechUK.

Associate director of international policy and trade at TechUK, Sabina Ciofu, said: “TechUK is looking forward to working with our sister organisation IT Ukraine and both governments to deliver on the promises of this agreement, especially around regulatory cooperation and emerging technologies.”