Author(s): Mark Hellyer, Valeriy Piatnytskyi, Galyna Piatnytska
The purpose of the article is to investigate the impact of EU tariff liberalization under the DCFTA on Ukraine’s extensive margin of trade and to capture the effects of tariffs at a disaggregated product level. The effects of tariff reductions on the extensive margin of trade (zero exports pre DCFTAthat subsequently increased) are examined. Through examining the probability that firms start exportinga product under different conditions and linking this to the tariff reductions, it shows some of the increase in new exports of Ukraine to the EU post DCFTA were due to tariff liberalization. The resultsshow that the liberalization of the tariff has increased the probability of firms exporting and increasedUkraine’s extensive margin of trade. This effect is much greater when examining relative margins ofpreference rather than absolute tariff changes suggesting the market access of competing suppliers in the EU market. There is also a slightly bigger effect on nonagricultural exports. However, these the impact on the extensive margin of trade of tariff liberalization (standard or relative) is extremely small and therefore, has had little influence on overall trade performance.