A vision for Ukraine in the world economy : defining a trade policy strategy that leverages global opportunities

Abstract

A trade policy that is global in perspective and the lowering of trade costs are critical for Ukraine. Two regional trade agreements are at the center of attention in Ukraine. One is the Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU that Ukraine has, at least temporarily, recently rejected; the other is an invitation to join the Eurasian Customs Union (ECU) with Russia. We argue that Ukraine should focus on addressing specific policy areas that negatively affect trade with both of its neighboring customs unions. In addition to intergovernmental trade agreements that center on deeper integration with both blocs, we suggest Ukraine put in place a number of “supply chain councils” (public-private partnerships that focus on the main sources of supply chain trade frictions) organized around the major export sectors for Ukraine, the ECU countries as well as the EU. The councils would have a mandate to identify the most important sources of supply chain inefficiencies as well as actions to resolve them. The recent proposal by Ukraine to establish a joint commission among Ukraine, Russia and the EU to promote trade could be used as a step in this direction.