According to research, the new rules for access of Ukrainian goods to the European Union market are expected to lead to an annual decrease in exports by about 1.1bn dollars compared to the figures for 2024. The updated trade regime, which is part of the revision of mutual access conditions under the association agreement, will enter into force at the end of October. About this reported [[link_local link_article_id="1823542 "]] Dengi.ua [[/link_local]].
A study conducted by Veronika Movchan, research director of the Institute for Economic Research and Policy Consulting (IED), and Ricardo Giucci, managing director of Berlin Economics, as part of the German Economic Team (GET) project, notes the dual effect of the implementation of the new trade rules.
Short-term losses vs. long-term benefits
Compared to the temporary Autonomous Trade Measures (ATMs), which provided mostly duty-free exports to the EU from June 2022 to June 2025, the transition to a tariff quota system will lead to a sharp decline in shipments.
Analysts forecast Ukrainian exports to the EU to fall by $1.144 billion annually relative to the 2024 level. Ukraine's exports to the EU will drop by 1 .144bn dollars annually against the level of 2024. The main contribution to this decline will be the reduction of wheat exports - by about 894 million dollars a year, which is about 80% of the total volume of losses. Shipments of sugar, barley, poultry, eggs, apple juice and honey will also decline.
Nevertheless, when comparing the new quotas to the tariff restrictions in place until June 2022 and returning in June 2025, the changes can be considered a significant step towards trade liberalization.
Four tariff quotas have been eliminated entirely, while 26 others have been expanded. The most notable quota increases are for honey, sugar, barley groats and bran. This opens up the possibility to increase duty-free exports by 630 million dollars a year (35% more compared to the previous conditions) and saves up to 165 million dollars on import duties.
Importantly, the new tariff quotas are permanent, creating more certainty for long-term investment decisions - unlike ATMs temporary measures.
Compensation through export diversion
Despite the expected decrease in supplies to Europe, Ukrainian exporters will be able to partially compensate for the losses by redirecting some of their products to other markets. Of the total $1.144 billion decline in exports to the EU, about $891 million is estimated to be recovered through shipments to countries outside the EU.
Thus, the total decline in Ukrainian exports will amount to a more moderate $253 million per year. The losses are mainly due to:
- higher transportation costs, especially for wheat shipments outside the EU;
- lower prices on alternative markets for poultry, sugar and apple juice.
As a result, the total volume of losses will amount to about 0.6% of Ukraine's total exports by the end of 2024.
