Impact of the geopolitical changes on the EU foreign trade relations with selected territories: Implications for the Slovak economy

SAINT PETERSBURG STATE UNIVERSITY
IMPACT OF  
THE GEOPOLITICAL CHANGES 
ON THE EU FOREIGN  
TRADE RELATIONS 
WITH SELECTED TERRITORIES
IMPLICATIONS FOR THE SLOVAK ECONOMY
ST PETERSBURG UNIVERSITY PRESS

UDC	339.5
BBC	66.4(4/8)
	
I-56
Authors:	
Elena Kašťáková, Kristina Drieniková, Ľubica Zubaľová
Reviewers:	T
. M. Isachenko, Ph.D. (Economics), prof.  
(MGIMO University, Moscow);  
P
. Baláž, Ph.D. (Economics), prof.  
(University of Economics, Bratislava)
Science editor: S. F
. Sutyrin, Ph.D. (Economics), prof. (Saint Petersburg 
State University, St. Petersburg)
I-56
Impact of the geopolitical changes on the EU foreign trade 
relations with selected territories: Implications for the Slovak 
economy / E. Kašťáková, K. Drieniková, Ľ. Zubaľová; eds E. Kašťáková, S. Sutyrin.  — SPb.: Saint Petersburg University Press, 
2019. — 248 p.
ISBN 978-5-288-05988-9
The current geopolitical changes taking place in the world economy 
exert great influence on the EU (and Slovakia’s) foreign trade relations. 
This monograph examines the impact of geopolitical changes on the 
EU foreign trade relations with the countries of the Western Balkans, 
Ukraine, Russia and Kazakhstan, assesses the impact of the mutual EU 
and Russia sanctions on the EU foreign trade with the countries selected, and points out the potential for development of Slovakia’s foreign 
trade relations with these countries. The uniqueness of this monograph 
lies in the primacy and complexity of the EU foreign trade relations with 
the countries under consideration and the impact of the mutual EU and 
Russia sanctions on the EU and Slovakia’s foreign trade with Russia. 
The outcomes of the conducted research can be of great use to business 
and government institutions, as well as to European institutions and 
organizations, teachers, scientists or R&D agencies and others.
The monograph was prepared within the project of the Ministry of Education,  
Family and Sports of the Slovak Republic VEGA 1/0546/17 — Impact of  
the geopolitical changes on enforcement of the EU strategic foreign trade interests  
(with implications for the Slovak economy).
Publised with financial support of  
the Univesity of Economics in Bratislava, Slovakia 
Copyright © 2019 by St Petersburg State University
Copyright © 2019 by E. 
Kašťáková, K. Drieniková, Ľ. Zubaľová

In memory of Professor Peter Baláž, 
 
long-term Head of the Department of 
 
International Trade and 
 
the reviewer of this monograph. 

Contents
Introduction	
9
1  
Impact of the geopolitical changes on enforcement of  
the EU strategic foreign trade interests with  
focus on Slovakia
1.1	 Geopolitical changes affecting the EU foreign  
trade relations	
16
1.2	 Geopolitical changes affecting the strategy of external  
economic relations of the Slovak Republic 	
19
2 
EU trade policy towards selected territories
2.1	 EU trade policy towards the Western Balkans	
25
2.1.1 	Western Balkan region characteristics	
26
2.1.2 	EU — Western Balkans relations development 
Relations during the conflict in the Balkans	
31
2.1.3 	EU foreign trade policy instruments towards  
the Western Balkans	
36
2.1.4 	The positions of Russia, China and Turkey in  
the region	
44
2.2	 EU trade policy towards the post-Soviet countries	
49
2.2.1	 EU trade policy towards Russia	
54
2.2.2	 EU trade policy towards the Eastern Partnership  
countries 	
61
2.2.3	 EU trade policy towards the Central Asian region	
68

3  
EU foreign trade relations with  
selected territories
3.1	 European Union foreign trade development	
85
3.2 	 EU foreign trade with the Western Balkans	
90
3.2.1	 EU trade with Montenegro	
93
3.2.2 	EU trade with the Republic of North Macedonia	
95
3.2.3 	EU trade with Serbia	
96
3.2.4  	
EU trade with Albania	
98
3.2.5  	
EU trade with Bosnia and Herzegovina	
101
3.2.6  	
EU trade with Kosovo	
103
3.2.7 	Trade presence of Russia, China and Turkey on  
the Western Balkans markets	
105
3.3 	 EU trade relations with Ukraine 	
109
3.3.1	 Legal framework	
111
3.3.2  	
Mutual trade relations	
112
3.4	 EU foreign trade with Russia	
115
3.4.1	 The evaluation of the EU trade with  
Russia based on the analysis of selected indices 	
119
3.4.2 	Impact of falling raw energy materials prices on  
their import from Russia to the EU	
124
3.4.3 	Impact of the Russian embargo on its agri-food  
trade with the EU	
132
3.5	 EU trade and economic cooperation with Kazakhstan	
144
3.5.1  Economic policy of Kazakhstan	
145
3.5.2  Legal framework of EU-Kazakh relations	
149
3.5.3  Economic cooperation 	
151
3.5.4  Trade relations	
154

4  
Slovakia’s foreign trade relations with  
selected territories
4.1	 Slovakia’s foreign trade development	
161
4.1.1	 Territorial structure 	
163
4.1.2	 Commodity structure 	
165
4.1.2	 Revealed comparative advantages of Slovak export	
168
4.2	 Slovakia’s foreign trade relations with Western Balkans 	
172
4.2.1	 Slovak republic trade with Montenegro 	
174
4.2.2	 Slovak republic trade with the  
Republic of North Macedonia 	
176
4.2.3	 Slovak republic trade with Serbia	
178
4.2.4	 Slovak republic trade with Albania	
181
4.2.5	 Slovak republic trade with Bosnia and Herzegovina	
183
4.2.6	 Slovak republic trade with Kosovo	
185
4.3	 Slovakia’s foreign trade with Ukraine 	
189
4.3.1	 Development of mutual foreign trade 	
190
4.3.2	 Mutual intra-industry trade 	
194
4.3.3	 Prospects of Slovakia’s foreign trade relations with 
Ukraine	
196
4.4	 Slovakia’s foreign trade relations with Russia 	
198
4.4.1	 Development of mutual foreign trade	
200
4.4.2	 Intensity of mutual foreign trade	
203
4.4.3	 Mutual intra-industry trade	
204
4.4.4	 Prediction of the development of mutual foreign  
trade and perspective areas of mutual foreign trade  
cooperation	
206
4.5	 Slovakia’s foreign trade relations with Kazakhstan 	
211
4.5.1	 Foreign trade of Kazakhstan	
212
4.5.2	 Foreign trade between Slovakia and Kazakhstan	
214
4.5.3	 Intensity of mutual foreign trade 	
216
4.5.4  Perspectives of the development of Slovakia’s foreign 
trade relations with Kazakhstan	
217

Conclusions	
219
Selected bibliography	
226
Internet database sources	
237
About the authors	
246

Introduction
A decisive factor in the current global economy is an increasingly active 
interference of the globalization processes that are directly or indirectly present in almost all types of economic activities. The development 
of the world economy over the past three decades has led to significant qualitative changes, the intensity of which is increasing today. This 
phenomenon also applies to the development of foreign trade relations between Slovakia and Russia. 
The current geopolitical situation is characterized by a high volatility. There are significant and often unexpected changes that affect the 
players involved in international trade in a globalized economy. The 
EU, as one of the most important integration groupings in the world, 
has a significant impact on the enforcement of its foreign trade interests, but their implementation is difficult because of the changing geopolitical situation.
These changes are also strongly reflected in the Slovak economy 
which is characterized by a high degree of openness. The need to 
increase the external competitiveness of countries is therefore pressing. 
In the Slovak economy foreign trade has a significant position as 
it contributes a lot to the economic growth of the country, the gross 
domestic product, and at the same time it forms a substantial part of the 
foreign exchange reserves of the state.
The economic recession in Russia, the rouble devaluation, the state 
support of domestic producers, the introduction of phytosanitary 
measures for food imports, especially from the EU countries, have 
limited the export of goods to this market from the EU countries, which 
has also influenced Slovak enterprises. At the same time, the current 
stabilization of world oil production and its prices on world markets 
is influencing Slovakia’s foreign trade relations with third countries. 
An important role in the development of trade and economic relations 
between Slovakia and Russia is played by interregional cooperation. 
Such mutual relations are of great importance in mutual Slovak-Russian 
foreign trade cooperation.
9

The Russian-Ukrainian crisis, which occurred at the end of 2013, 
significantly affects Slovakia’s foreign trade relations with Russia. The 
EU, the US and other Western countries began to apply trade sanctions 
against Russia, and Russia introduced anti-sanction measures as well. 
The solution to such a situation is still out of the question, and the 
reciprocal application of sanctions damages bilateral foreign trade and 
economies of the players involved.
The current evolution of external economic relations strongly 
affected the development of the EU foreign trade policy and its 
negative impact on Slovakia’s foreign and investment relations with 
Ukraine and led to the destabilization in the region of Ukraine. These 
attributes respond to the development of the global economy that has 
a significant impact on both the developed and developing economies 
to which Ukraine belongs. These geopolitical risks and the war conflict 
which is Ukraine facing, pose an important threat to the recovery not 
only of the Ukrainian but also of the world economy. A very significant 
impact of these impacts is low direct foreign investment and rising 
unemployment causing a wave of migration. These phenomena have 
resulted in poverty and excessive indebtedness, as well as worsening of 
the regional and global security in Ukraine.
The eastern European region itself is very important for the EU’s 
foreign trade relations and for Slovakia as such. Natural wealth and a 
large unsaturated market represent great potential for foreign trade 
of the Slovak Republic. Slovakia’s foreign trade relations with Ukraine 
and other Eastern European and Central Asian countries will depend 
on the development of the EU’s strategic foreign trade and integration 
tendencies, but above all on the resolution and the end of the RussianUkrainian conflict in Eastern Europe.
On the other hand, the Western Balkans also plays an important 
role in the strategic development goals of the EU’s foreign trade relations. After years of hesitation, the EU launched the Stabilization and 
Association Process in 1999 offering the Western Balkans (Albania, Bosnia and Herzegovina, Croatia, North Macedonia, Montenegro, Serbia 
and Kosovo. Slovenia is considered a central European country, though 
it was a part of Yugoslavia until 1991, therefore, it did not take part in 
the process aimed at stabilisation and recovery of the post conflict countries of the former Yugoslavia plus Albania) a framework for promoting 
peace, stability and economic development with possibility to access the 
EU in the future. The Stabilization and Association Process specified 
political and economic targets and instruments for their achievement. 
The foreign trade policy is conducted by bilateral stabilization and association agreements creating a free trade area, financial instruments 
10