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...

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Bibliographic Details
Main Authors:	von Cramon-Taubadel, Stephan, Hess, Sebastian, Brummer, Bernhard
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	AD VALOREM AGREEMENT ON AGRICULTURE AGRICULTURAL MARKETS AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTS AGRICULTURAL SECTOR AGRICULTURAL TRADE AGRICULTURAL TRADE LIBERALIZATION AGRICULTURE APPAREL APPLIED TRADE POLICY ANALYSIS AVERAGE PRODUCTION COSTS AVERAGE TARIFFS BARRIERS TO TRADE BASE YEAR BENCHMARK BILATERAL AGREEMENTS BILATERAL RELATIONSHIPS BILATERAL TARIFF BILATERAL TARIFF CUTS BILATERAL TARIFF REDUCTION BILATERAL TARIFFS BILATERAL TRADE BORDER PROTECTION CAPITAL ACCUMULATION CHANGES IN TRADE CIVIL SOCIETY COMMON MARKET COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES COMPETITIVE INDUSTRIES CONSTANT ELASTICITY OF SUBSTITUTION CONSTANT RETURNS TO SCALE CONSUMERS COUNTRY OF ORIGIN CURRENCY CUSTOMS CUSTOMS UNION DECISION MAKING DEMAND CURVES DEMOCRATIC REFORMS DEVELOPED COUNTRIES DEVELOPMENT ASSISTANCE DIFFERENTIAL TREATMENT DISPUTE SETTLEMENT DISPUTE SETTLEMENT PROCEDURE DOMESTIC INDUSTRIES DOMESTIC MARKET DOMESTIC PRICE DOMESTIC PRODUCTION ECONOMIC COOPERATION ECONOMIC INTEGRATION ECONOMIC SITUATION ECONOMIC STRUCTURE ECONOMIC WELFARE ELASTICITY EQUILIBRIUM EUROPEAN UNION EXPANSION OF TRADE EXPORT SECTOR EXPORT STRUCTURE EXPORT TAX EXPORT VALUE EXPORTERS EXPORTS EXTERNAL PROTECTION FACTORS OF PRODUCTION FINAL GOODS FOREIGN DIRECT INVESTMENT FOREIGN DIRECT INVESTORS FOREIGN FIRMS FOREIGN INVESTMENT FREE ENTRY FREE TRADE FREE TRADE AGREEMENT FREE TRADE AGREEMENTS FULL LIBERALIZATION GDP GENERAL EQUILIBRIUM GENERAL EQUILIBRIUM MODEL GENERAL EQUILIBRIUM MODELING GENERAL EQUILIBRIUM TRADE GENERAL EQUILIBRIUM TRADE MODEL GENERALIZED SYSTEM OF PREFERENCES GLOBAL NETWORK GLOBAL TRADE GLOBAL TRADE ANALYSIS GLOBAL WELFARE GROWTH RATE HUMAN CAPITAL IMPACT OF TRADE IMPACT OF TRADE LIBERALIZATION IMPORT BARRIERS IMPORT RESTRICTIONS IMPORT TARIFFS IMPORTED GOODS IMPORTS INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRIALIZED COUNTRIES INFORMATION SYSTEMS INTEGRATION AGREEMENTS INTERMEDIATE INPUTS INTERNATIONAL BANK INTERNATIONAL COMPETITION INTERNATIONAL TRADE LIBERALIZATION OF TRADE LOBBYING MARKET ACCESS MARKET INFORMATION MONETARY POLICY MONOPOLY MOST FAVORED NATION MULTILATERAL AGREEMENTS MULTILATERAL TRADE MULTILATERAL TRADE AGREEMENTS MULTILATERAL TRADE LIBERALIZATION NEGATIVE TERMS OF TRADE EFFECTS NON-TARIFF BARRIERS NON-TRADE CONCERNS NON-TRADE ISSUES PERFECT COMPETITION POLICY MAKERS POLICY RESEARCH PREFERENTIAL ACCESS PREFERENTIAL STATUS PREFERENTIAL TRADE PREFERENTIAL TRADE AGREEMENTS PREFERENTIAL TREATMENT PRODUCT MARKETS PRODUCTION EFFICIENCY PRODUCTION INCREASES PRODUCTIVITY QUANTITATIVE RESTRICTIONS QUOTA RENTS QUOTA SYSTEM QUOTAS RED TAPE REGIONAL AGREEMENTS REGIONAL TRADE REGIONAL TRADE AGREEMENTS REGIONALISM SAFETY ISSUES SAFETY STANDARDS SHALLOW INTEGRATION SPECIAL TREATMENT TARIFF BARRIERS TARIFF BORDER TARIFF CONCESSIONS TARIFF DATA TARIFF DISTORTIONS TARIFF LEVELS TARIFF LINES TARIFF POLICY TARIFF RATE TARIFF RATE QUOTA TARIFF RATE QUOTAS TARIFF RATES TARIFF REDUCTION TARIFF REDUCTIONS TARIFF SCHEDULES TERMS OF TRADE TRADE AGREEMENT TRADE AGREEMENT NEGOTIATIONS TRADE BALANCE TRADE BARRIERS TRADE CONCESSIONS TRADE COSTS TRADE CREATION TRADE DATA TRADE DIVERSION TRADE FACILITATION TRADE FLOWS TRADE IN GOODS TRADE ISSUES TRADE LIBERALIZATION TRADE LOSSES TRADE MODELS TRADE NEGOTIATIONS TRADE PARTNERS TRADE POLICY TRADE POLICY SIMULATION TRADE PREFERENCES TRADE RELATIONS TRADE RELATIONSHIP TRADE VOLUMES TRADING BLOCS TRADING SYSTEM TRANSPARENCY UNSKILLED LABOR URUGUAY ROUND VALUE OF OUTPUT VOLUME OF TRADE WAGES WELFARE IMPACTS WORLD MARKET WORLD MARKETS WORLD TRADE WORLD TRADE ORGANIZATION WTO ZERO TARIFFS
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

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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.

A Preliminary Analysis of the Impact of a Ukraine-EU Free Trade Agreement on Agriculture

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