International Trade and the Defense of the Right to Ukraine’s Self-Determination

In this research, we estimate the net international trade effects of the EU-Ukraine Association Agreement and Russia’s contemporaneous war against Ukraine. To do so, we construct a dataset with annual, bilateral export and import flows for Ukraine and a set of comparator countries at the 6-digit level of the Harmonized Tariff Schedule for years 2000–2019. Using this data, we nest a difference-in-difference design within a series of econometric gravity models to estimate the net effects of the EU-Ukraine Association Agreement and Russia’s concurrent aggression on the sectoral and geographic composition of Ukrainian trade. Our results indicate a substantial contraction in Ukraine’s international trade. In 2019, the total value of lost exports was $24.4 billion. Imports fell by approximately $21.2 billion. However, the Ukrainian agro-food sector prevailed with a net export gain of $7.1 billion. In contrast, the industrial export sector faced a net loss. Net trade reduction effects were found not only in the trade with Russia, but also with the EU and major third-country trade partners, including the USA, China, and Turkey. We stress that our findings do not imply that the pursuit of Ukraine’s self-determination was ill-conceived. Our estimates are necessarily “short-term” net impacts and trade outcomes are only one of the many considerations that govern Ukraine’s pursuit of EU integration, while Russia’s unprovoked, illegal, and unjustified concurrent war against Ukraine has had destructive impacts on the net trade outcomes. The redirection of the trade with Russia to the EU and third countries in the agro-food and “other goods” export sectors and the strategic fuels import sector may signal that Ukraine had already become more resilient in the face of Russia’s punitive measures.