Effect of the Free Trade Agreement between Ukraine and the EU on domestic imports and exports

Abstract

The successful implementation of the national interests of Ukraine as a participant in international economic relations is impossible without the intensification of foreign trade and strengthening of national competitiveness in international markets. The development of international economic relations in the «Ukraine-EU» format is largely represented by the expansion of bilateral trade between Ukraine and the EU countries on the basis of trade preferences according to the Agreement on a free trade zone between Ukraine and the EU, as well as related documents. However, after five years of functioning of the Deep and Comprehensive Free Trade Area between Ukraine and the EU, the expansion of further cooperation requires identification of its effects on the national economy. By using modeling the paper defines the consequences of the Agreement on a free trade zone between Ukraine and the EU on Ukrainian exports and imports with EU member states. The impact assessment was carried out with four models: model 1 – the association impact on the merchandise export; model 2 – the association impact on the merchandise import; model 3 – the association impact on the services export; model 4 – the association impact on the services imports. As a result, it was established that the agreement was not significant for the import of goods and services from the EU to Ukraine. This is related with the continuation of the previous preferential import duty rates. The statistical insignificance of this indicator was established in the models for analyzing the impact of the association agreement on the import of goods and services from the EU to Ukraine. At the same time, the impact of the agreement on the enhancement of the export of goods and services to the EU was established.

Keywords

• free trade zone
• international trade
• exports
• imports
• foreign trade