A Preliminary Analysis of the Impact of a Ukraine-EU Free Trade Agreement on Agriculture
Agriculture including food products is of particular interest for Ukraine. However, in free trade agreements involving the European Union, agriculture is always given special treatment and subject to less and slower liberalization than other sector...
| Main Authors: | , , |
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| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100406083430 http://hdl.handle.net/10986/3750 |
| Summary: | Agriculture including food products is
of particular interest for Ukraine. However, in free trade
agreements involving the European Union, agriculture is
always given special treatment and subject to less and
slower liberalization than other sectors. This paper employs
the standard Global Trade Analysis Project model in order to
assess how World Trade Organization accession affects
agriculture in Ukraine, and how potential bilateral tariff
cuts may interact with potential productivity gains within
Ukrainian agriculture. The results indicate that, due to
trade liberalization, Ukraine can expect gains from a more
efficient allocation of its resources in line with
comparative advantage, leading to an increase of production
and exports of wheat, other grains, and oilseeds, but also
of several processed food products that benefit from less
expensive intermediate inputs. However, Ukraine's
exports are concentrated on a small number of destinations,
especially Russia and some other Former Soviet Union
countries because they fail to meet quality standards
elsewhere. When Ukrainian production of these products
increases due to increased allocative efficiency, exports to
Russia increase further and prices there fall, generating
negative terms of trade effects that largely offset the
allocative gains. Ukrainian imports of agricultural products
increase as well, partly because Ukrainian consumers switch
to higher quality imported goods even though domestic
production increases. Regarding free trade agreement
negotiations with the European Union, these results
highlight for Ukraine the fact that improved agricultural
productivity will help to get most out of improved market
access. However, the results also highlight for Ukraine the
great importance of adopting internationally accepted
quality standards in order to diversify its export structure. |
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