Belarus stops trade war with Ukraine

In April, the government in Belarus moved to introduce licensing of cement, glass, beer, pasta and confectionary supplies for the period of six months. But three months later, the government has decided to abolish the measure. Why?

The exports of Ukrainian beers and confectionaries were hit the most. As a result, the stocks of Ukranian beer and Roshen candies decreased significantly in Belarusian shops. Kiev did not wait too long to respond.

On July 16, the Ukrainian government issued an official statement:: “In respond to discriminatory and unfriendly actions by the Republic of Belarus towards the Ukrainian producers of bewerages and foodstuffs, Ukraine has introduced special duties on the imports of bulbs, fertilizers, refrigerators and tyres from Belarus.”

The cost of those 'special duties' is 50-60% of the customs cost depending on the type of product. It means a disaster for cheap Belarusian goods.

In 2013, Belarus suplied fertilizers worth of $140 million to Ukraine; tires worth of $90 million; milk and dairy products - $17 million, refrigerators and related equipment - $53 million. Ukraine sold beers and candies worth of $70 million to Belarus. It is obvious without a calculator that Belarus will be hit harder in this trade war.

But it is not right to assume that Minsk has suddenly realized it was wrong. Economist Siarhei Chaly reckons this is the result of negotiations.

"I think Minsk has changed stance due to Ukraine's measures in response. Negotiations were in progress for two weeks. Now they have ended," says economist Siarhei Chaly.

Belarusian MFA brings another nice official explanation:

"In the course of April-July, Belarus has conducted a permanent monitoring of the situation with the access of licensed goods... The results of the monitoring prove that thet negative trends at the domestic market at the time of the resolution have been eleminated. Thus, there is no more need to license the goods..."

Will the trade war branded by Ukrainian media as 'the second Belarusian front' be over now? Now Belarus is awaiting a reaction from Kiev. Let's wait together and see.