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Analyzing trade opening in Ukraine: effects of a customs union with the EU

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  • Oksana Harbuzyuk

    ()

  • Stefan Lutz

    ()

Abstract

This paper analyzes the possible a customs union between and the European Union. The GTAP multi-country simulation model of Purdue University's Center for Global Trade Analysis is applied. The welfare measure evaluated is the change in equivalent variation (EV). As all incomes in the model accrue to a representative household, EV fully assesses possible welfare benefits for Ukraine from a bilateral tariff elimination on trade with the EU. As the model includes Ukraine in the aggregated „Former Soviet Union“ region (FSU), EV is estimated for the FSU and then disaggregated on the industry level proportionally to trade shares. The results of our simulations suggest that Ukraine’s EV is particularly sensitive to the inclusion of the agricultural sector into a customs union. Due to the highly protected nature of this sector within the EU, Ukraine would be better off if agriculture were excluded from liberalization. If this scenario is assumed, Ukraine's monetary gain would be in the order of $40 million. --

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File URL: http://hdl.handle.net/10.1007/s10644-008-9050-8
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Bibliographic Info

Article provided by Springer in its journal Economic Change and Restructuring.

Volume (Year): 41 (2008)
Issue (Month): 3 (September)
Pages: 221-238

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Handle: RePEc:kap:ecopln:v:41:y:2008:i:3:p:221-238

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Web page: http://www.springerlink.com/link.asp?id=113294

Related research

Keywords: Ukraine; Trade; Integration; GTAP; F02; F15; O19; O52;

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  1. Harrison, Glenn W. & Rutherford, Thomas F. & Tarr, David G., 1997. "Economic implications for Turkey of a Customs Union with the European Union," European Economic Review, Elsevier, vol. 41(3-5), pages 861-870, April.
  2. Sulamaa, Pekka & WidgrÉn, Mika, 2002. "EU-Enlargement and the Opening of Russia: Lessons from the GTAP Reference Model," Discussion Papers 825, The Research Institute of the Finnish Economy.
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  4. Paul Brenton & Natalia Tourdyeva & John Whalley, 1997. "The potential trade effects of an FTA between the EU and Russia," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(2), pages 205-225, 06.
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  7. M. Ayhan Kose & Raymond Riezman, 2000. "Small Countries and Preferential Trade Agreements "How Severe is the Innocent Bystander Problem?"," CESifo Working Paper Series 253, CESifo Group Munich.
  8. Michalopoulos, Constantine, 1999. "The integration of transition economies into the world trading system," Policy Research Working Paper Series 2182, The World Bank.
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  11. Alexander Alekseev & Natalia Tourdyeva & Ksenia Yudaeva, 2003. "Estimation of the Russia’s trade policy options with the help of the Computable General Equilibrium Model," Working Papers w0042, Center for Economic and Financial Research (CEFIR).
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Cited by:
  1. Miriam Frey & Zoryana Olekseyuk, 2011. "The EU-Ukraine trade liberalization: How much do the costs of tariff elimination matter?," Working Papers 308, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies), revised Feb 2013.

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