Assessing the Impact of the Deep and Comprehensive Free Trade Areas on Foreign Trade: the EU-Georgia, EU-Moldova, and EU-Ukraine DCFTAs

Abstract

Assessing the Impact of Deep and Comprehensive Free Trade Areas on Foreign Trade: the EU-Georgia, EU-Moldova, and EU-Ukraine DCFTAs Abstract The Deep and Comprehensive Free Trade Areas (DCFTAs) are three free trade areas established between the EU and Georgia, Moldova, and Ukraine, respectively. This paper provides the estimates on the effects of the DCFTAs on foreign trade. Using gravity model on a sample of 178 countries during 2002-2019, we obtain the following results. First, the DCFTAs have significantly enhanced the trade between the EU and three countries, and also facilitated the exports of other countries to the EU and three countries, while the exports of the opposite direction have been restrained by the DCFTAs. Second, the positive influence of the DCFTA on the trade with the EU is significant for Ukraine, and not significant for Georgia and Moldova. Third, in terms of the Central European countries, the DCFTAs have promoted the trade with three countries for Hungary, Czech Republic and Slovakia, whereas the positive effect is not significant in cases of Austria, Germany, and Poland. For Slovenia, the impact is also insignificant but negative. Fourth, the full implementation of the DCFTAs has additional contribution to the trade between three countries and Hungary, Czech Republic and Slovakia....