The Czech Republic’s trade relations with Ukraine and Russia

This box aims to map out goods and services trade between the Czech Republic and Ukraine and Russia in 2013 and to identify the items that would be most affected by political and economic developments in Ukraine and Russia from the Czech Republic’s perspective.

Goods trade between the Czech Republic and Ukraine accounted for only 0.9% of the Czech Republic’s total goods trade turnover in 2013. In 2005–2013, the trade balance mostly showed slight surpluses. The surplus of CZK 8.7 billion achieved in 2013 was due mainly to a surplus on machinery (especially telephones, including mobile handsets). However, the machinery surplus was largely offset by a deficit on inedible non-energy crude materials, linked mainly with iron ore and concentrates (see Table 1). As in the case of goods, services trade between the Czech Republic and Ukraine accounted for a low share of the Czech Republic’s total services trade turnover (1.0%, or CZK 8.6 billion in 2013). The services balance with Ukraine recorded modest surpluses in 2005–2013, reaching CZK 6.7 billion in 2013. This was due almost solely to a surplus on travel stemming from revenues from business travel by non-residents.

Table 1 (BOX)  Foreign trade between the Czech Republic and Ukraine in 2013
The machinery surplus was largely offset by a deficit on inedible non-energy crude materials
(SITC commodity structure; CZK billions; cross-border statistics)

SITC   Exports Imports Balance
0 Food and live animals 0.7 0.3 0.4
1 Beverages and tobacco 0.1 0.0 0.1
2 Crude materials, inedible, except fuels 0.3 13.5 -13.2
3 Mineral fuels, lubricants and related materials 0.1 3.2 -3.0
4 Animal and vegetable oils, fats and waxes 0.0 0.2 -0.2
5 Chemicals and related products, n.e.s. 3.7 0.6 3.1
6 Manufactured goods classified chiefly by material 3.5 2.2 1.2
7 Machinery and transport equipment 21.4 2.9 18.5
8 Miscellaneous manufactured articles 2.3 0.6 1.7
9 Commodities and transactions n.e.c. in the SITC 0.0 0.0 0.0
  Total 32.1 23.4 8.7

Compared to Ukraine, goods trade between the Czech Republic and Russia accounted for a much higher proportion of the Czech Republic’s total goods trade turnover (4.5% in 2013). Russia was the Czech Republic’s seventh largest trading partner country as regards exports and the fifth largest importer into the Czech Republic. The trade balance showed marked deficits in 2005–2013, although these were trending downwards thanks to rapidly rising exports. In 2013 the trade deficit was CZK 39.2 billion, owing chiefly to a deficit on mineral fuels relating to oil and natural gas. However, the mineral fuels deficit was largely offset by a machinery surplus, mainly in the subcategory of cars (see Table 2). Services trade between the Czech Republic and Russia totalled CZK 21.9 billion last year, accounting for 2.7% of the Czech Republic’s total services trade turnover. In 2005–2013 the services balance with Russia recorded small surpluses alternating with small deficits. The overall balance was associated mainly with a stable surplus on travel (mainly due to income to the Czech Republic from private travel by non-residents) and with developments on the other services balance, driven chiefly by merchanting. In 2013 the balance of services ended in a deficit of CZK 4.2 billion.

Table 2 (BOX)  Foreign trade between the Czech Republic and the Russian Federation in 2013
The mineral fuels deficit was largely offset by a machinery surplus
(SITC commodity structure; CZK billions; cross-border statistics)

SITC   Exports Imports Balance
0 Food and live animals 1.6 0.3 1.3
1 Beverages and tobacco 0.6 0.1 0.5
2 Crude materials, inedible, except fuels 0.5 5.1 -4.6
3 Mineral fuels, lubricants and related materials 0.3 129.1 -128.8
4 Animal and vegetable oils, fats and waxes 0.0 0.0 0.0
5 Chemicals and related products, n.e.s. 8.9 5.5 3.5
6 Manufactured goods classified chiefly by material 11.8 9.8 2.0
7 Machinery and transport equipment 82.5 5.1 77.4
8 Miscellaneous manufactured articles 10.0 0.5 9.5
9 Commodities and transactions n.e.c. in the SITC 0.0 0.0 0.0
  Total 116.2 155.4 -39.2

Any further escalation of the geopolitical tensions between Ukraine and Russia leading to a reduction in trade between the Czech Republic and Ukraine, a tightening of the visa regime and the introduction of a trade embargo on Russia would therefore be directly connected with a fall in Czech machinery exports and travel revenues. On the import side, it would simultaneously necessitate a re-direction of supplies and an increase in imports of oil, gas and iron ore and semi-finished products from alternative territories. The impacts of a contraction in trade between the Czech Republic and Russia would be much larger than those of a downturn in trade between the Czech Republic and Ukraine.