Figure 9 presents the main result of the paper. First, the actual trade of Ukraine is far below its potential, compared with performance of both CU
countries and FTA EU countries. Based on 2011, the export of Ukraine would have been 98 billion US dollars under the EU scenario, 91 billion US
dollars under the FTA EU scenario, and 72 billion US dollars under the CU scenario. All these numbers should be compared with the actual 68 US
dollars of Ukrainian export in 2011. Second, the differences between the CU scenario and the FTA EU scenario are small in the beginning, but start
to diverge very rapidly over time.
Figure 9 Actual and potential exports of Ukraine in 2009-2011
actual
over
exports
exports
actual
actual
exports
160
30.4
69
-16.3
82.1
0.7
Foodstuffs
62.7
41.7
52.8
Mineral Products
-5.5
-4.6
-2.8
72.8
81.1
94
65.8
87.8
103.7
-5.9
30
36.8
42.2
76.8
84.2
Textiles
19.1
119.5
124.9
-30.7
1.1
8.8
31.6
65.1
73.7
Metals
-16.4
6.1
7.2
66.3
153.5
178.8
Transportation
-23.8
54.9
83.3
Miscellaneous
32.8
100.3
118
Total
17.9
36
46.1
Sector
Actual
CU
FTA
EU
0.4
0.091
0.674
0.114
0.67
0.113
0.60
0.10
1
Foodstuffs
0.269
0.338
0.372
0.36
5
Mineral Products
Chemicals & Allied Industries
0.214
0.157
0.184
0.177
0.181
0.206
0.18
0.19
1
0.293
0.243
0.285
0.27
5
0.579
0.538
0.52
1
Wood
Furs & Wood Products
0.286
0.306
0.336
0.32
5
Textiles
0.189
0.258
0.245
0.24
3
0.172
0.2
0.194
0.19
1
0.296
0.359
0.386
0.37
4
Metals
0.081
0.095
0.1
0.09
5
0.245
0.272
0.303
0.29
5
Transportation
0.587
0.518
0.636
0.62
6
Miscellaneous
Total
0.211
0.184
0.257
0.198
0.304
0.216
0.28
8
0.209
8
Conclusion
Ukraine would be better off by signing a deep and comprehensive trade agreement with EU and
integrating into production chains. Right now, Ukraine severely under-perform by exporting far below its
potential. Moreover, Ukraine should be interested in moving the integration process even further, because
the EU accession would bring even better results. Based on 2011, the export of Ukraine would have been
98 billion US dollars under the EU scenario, 91 billion US dollars under the FTA EU scenario, and 72
billion US dollars under the CU scenario. All these numbers should be compared with the actual 68 US
dollars of Ukrainian export in 2011.
Any integration scenario predicts that Ukraine severely underperforms in its trade with both CIS
and EU countries, while its export to the rest of the world is in line with the prediction of the model.
These results are consistent with the theory that the unresolved trade policy uncertainty in trade
relationships with the CIS and EU countries severely hurts the Ukrainian export potential to those
countries.
The expected long run gains in Ukrainian exports to all countries under the CU scenario are equal
to 17.9 percent, under the FTA EU scenario 36 percent, and under the EU scenario 46.1 percent. CU
integration would be more beneficial for Ukrainian agriculture and food industry, while FTA EU and EU
integration would be more beneficial for textiles, metals, machinery and electrical goods, and
transportation. Conditional on not worsening its market access to Russia,
Ukraine would have expanded its trade in these sectors to all countries, including Russia and other
members of CU.
The CU integration would lead to a small increase in the share of capital goods from 17 percent to
20 percent of total exports. FTA EU would increase the share of capital goods to 28 percent, while EU
would increase it to 29 percent. In all scenarios, the share of raw materials would decline from 16 percent
to 10-12 percent. The share of intermediate goods would decline from 48 percent to around 40 percent
under the two EU scenarios and would only marginally decrease under the CU scenario. The share of
consumer goods would remain stable around 20 percent.