A free trade deal could anchor Ukraine’s postwar recovery

What’s the issue with Ukraine’s postwar reconstruction?

The war with Russia has inflicted severe damage on Ukraine's infrastructure, economy, and productive capacity, leaving the country facing reconstruction costs estimated at $500 billion over a decade. While this challenge is often framed as a financing problem, the deeper obstacle is that institutional, official aid and multilateral lending alone cannot sustain long-term growth. Private investment must play the leading role. Yet private decision-makers currently face profound uncertainty about regulatory consistency, property rights, corruption, and the durability of any peace agreement.

A new policy brief authored by Robert Lawrence, the Albert L. Williams Professor of International Trade and Investment at Harvard Kennedy School, and Sergii Telenyk MPA 2024 and LL.M. candidate at New York University School of Law, argues that a free trade agreement (FTA) between the United States and Ukraine could help resolve these concerns and do so faster than the decade-or-more timeline required for full European Union (EU) membership.

What does the research say?

Lawrence and Telenyk argue that a U.S.-Ukraine FTA would function primarily as an institutional commitment device, rather than just a tariff-cutting exercise. By embedding Ukraine's domestic policy commitments within an enforceable international legal framework, an FTA would raise the political and reputational costs of policy reversal, the same dynamic that helped lock in reforms in Mexico under North American Free Trade Agreement (NAFTA) and in Central and Eastern Europe during EU accession.  

The authors identify several concrete benefits and considerations:

• For Ukraine, an FTA would deliver stronger investor protections, regulatory transparency, and anticorruption and dispute settlement mechanisms, giving Ukrainian firms better access to the U.S. market than EU-based competitors while anchoring the private investment reconstruction demands.
• For the United States, Ukraine offers a strategically valuable partner with a large skilled workforce, an established industrial base, and significant reserves of critical minerals and agricultural inputs essential for energy transition, defense, and supply chain resilience. An FTA would convert U.S. aid into self-sustaining economic engagement, turning taxpayer-funded assistance into investment that generates American exports and profits.  
• The agreement would also serve as a security anchor as a dense web of trade ties and joint industrial projects would give the United States a direct economic stake in Ukraine’s sovereignty, converting security guarantees from abstract promises into concrete economic interests.
• Passing a comprehensive FTA through Congress could be difficult, as it would bundle the most contentious issues in U.S. trade politics into a single vote. A more feasible path may be to advance narrower agreements first, on customs facilitation, critical minerals, or regulatory cooperation, building political momentum toward a comprehensive deal over time.
• Any FTA should be designed to complement, not compete with, Ukraine’s EU accession path, deferring to EU standards where possible and avoiding commitments that could complicate accession negotiations.

The authors conclude that trade integration could prove as important to Ukraine’s long-term security and sovereignty as any military guarantee. By binding the two countries together in a durable economic partnership, a U.S.-Ukraine FTA would demonstrate a strategic commitment that goes well beyond short-term aid, transforming Ukraine’s reconstruction from a foreign policy obligation into a shared economic opportunity.