Possible economic consequences of the free trade area creation between the European Union and Ukraine for the agri-food sector

Key words

agricultural products liberalization free trade area European Union

Abstract

This paper investigates the possible development of Ukrainian agriculture in terms of creation of a free trade area (FTA) with the European Union. Prospects for export-import relations between Ukraine and the EU as well as the competitiveness of domestic agricultural goods in domestic and foreign markets are analyzed. An economic-mathematical model was used for determining negative and positive consequences of the FTA formation for grain, dairy and meat industries. It is expected that the current positive Ukrainian trade balance in agri-food products will decrease significantly as a result of the trade liberalization. The analysis also shows possible changes in the gross domestic product, trade, level of economic activity, human welfare etc. Suggestions how to avoid the negative effects of the FTA on agricultural markets in Ukraine have been developed.