Unilateral tariff cuts: a theory

Abstract

The research question consists of theoretical and practical implications of the Ukraine-EU trade in the context of modern trade theory. The purpose of study is to analyze both theoretical approaches and practical implicationsof unilateral tariff preference schemes. Research methods. In our study we used both comparative analysis and synthesis methods, and also a logical generalization of obtained results. Results. The article analyses modern theoretical and practical approaches to the non-reciprocal trade liberalization; also we examined current situation with tariff regulation in Ukraine-EU commodity trade. Scope of application. The obtained results could be applied in the process of external trade in goods. Conclusion. The provided analysis allowed us to substantiate that unilateral tariff reduction or elimination under these schemes could lead either to trade creation or trade diversion, depending firstly form the presence of market power of beneficiary country. The obtained results could be used for further estimation of impact of non-reciprocal reduction of tariffs by EU governments on Ukrainian export flows.

Keywords

• tariff preferences
• trade policy
• unilateral trade liberalization