TRADE CREATION EFFECT FOR AGRICULTURAL MARKETS AS A RESULT OF THE EU-UKRAINE FREE TRADE AREA AGREEMENT
Abstract
The paper attempts to investigate the impact of trade liberalization on agricultural markets in framework of the Deep and Comprehensive Free Trade Area between the EU and Ukraine as a part of the Association Agreement. Accuracy estimation of the dynamics of the EU-Ukraine trade in agricultural products was carried out by comparing the trade flows in pre- and post-integration period, and the results indicate an extraordinary constant growth of trade and economic relations due to international economic integration. In general, the period since the DCFTA entry into force can be considered as a short period, so the study focuses on the short-term consequences of Ukraine's trade liberalization with the EU, based not only on theoretical research but also on real situations in agricultural markets. It is emphasized that the development of trade in agricultural products between Ukraine and the EU in the long- or even medium-term future is influenced not only by economic integration but also by other factors, in particular in 2020-2022 the market situation was affected by restrictions related to the COVID-19 pandemic, and since February 2022, shocks and changes in agricultural markets are caused by the military invasion of Russia into Ukraine. The author analyzed comparative advantages and estimated the conditions of access of Ukrainian agricultural producers to the EU Common Market and, conversely, European producers to the Ukrainian market. The main conditions of access to markets are determined, including not only the tariff elemination, but also the adoption of European technical regulations, rules and requirements by Ukraine, compliance with technical, sanitary and phytosanitary requirements of the EU, obtaining the relevant certificates by Ukrainian exporters, which allowed to get access to the EU agricultural market. The positive and negative effects of the EU-Ukraine Free Trade Area for agricultural markets are identified. It is proved that the functioning of the free trade area between the EU and Ukraine has caused the effect of trade creation as one of the effects of international economic integration.
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