The effects of EU–Ukraine free trade agreement on the world’s sunflower complex

Abstract

Abstract We analyse the effects of the Deep and Comprehensive Free Trade Area between the European Union (EU) and Ukraine on the world’s sunflower complex markets. We develop a spatial equilibrium model that incorporates the vertical and horizontal links between the primary commodity (seeds) and two final by-products (oil and meal). Our empirical analysis covers eight regions—the leading producers and consumers in the sunflower complex. This agreement causes EU’s sunflower oil price to decrease by USD 17.42 per metric ton, benefiting EU’s consumers by USD 81.4 million. However, EU’s total net welfare decreases by USD 10.3 million, while Ukraine’s increases by USD 32.7 million.