A free trade agreement between Ukraine and the European Union: potential effects on agricultural markets and farmers' revenues

Ukraine and the EU are currently negotiating a deep and comprehensive free trade agreement (FTA). Such a FTA can be expected to comprise opportunities as well as challenges for both the EU and Ukraine and to have an impact on agricultural markets. This article provides a model-based quantitative ass...

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Bibliographic Details
Published inPost-communist economies Vol. 24; no. 3; pp. 351 - 363
Main Authors Nekhay, Olexandr, Fellmann, Thomas, Gay, Stephan Hubertus
Format Journal Article
LanguageEnglish
Published Abingdon Taylor & Francis Group 01.09.2012
Taylor & Francis Ltd
Subjects
Agricultural commodities
Agricultural industry
Agricultural policy
Agricultural sector
Commodity market
Eastern Europe
Economic models
Economic theory
Europe
European Union
Farm income
Free trade
International agreements
Simulation
Studies
Trade agreements
Ukraine
Western Europe
Europe
Ukraine
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Summary:Ukraine and the EU are currently negotiating a deep and comprehensive free trade agreement (FTA). Such a FTA can be expected to comprise opportunities as well as challenges for both the EU and Ukraine and to have an impact on agricultural markets. This article provides a model-based quantitative assessment of the potential impact of a FTA on agricultural commodity markets and farmers' revenues in the EU and Ukraine. For the quantitative analysis the dynamic, partial equilibrium model AGLINK-COSIMO has been adapted and applied. The analysis focuses on the bilateral trade positions and not on the effect on other countries. The simulation of a FTA between the EU and Ukraine was done through the elimination of import tariffs for the main agricultural commodities. The results of the simulation indicate a positive change in producer revenue of EUR 393 million (+2.6%) in Ukraine and EUR 860 million (+0.4%) in the EU. So this FTA entails benefits for the agricultural sectors of both trading partners. However, gains from a FTA are not distributed homogeneously and vary significantly among commodities. Ukrainian agricultural producers should also be prepared to meet the challenges involved in the necessity to comply with the quality and sanitary standards of the EU.
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ISSN:1463-1377
1465-3958
DOI:10.1080/14631377.2012.705469