The European Union is preparing to drastically reduce duty-free imports of Ukrainian agricultural products as early as June, under pressure from its member states. This could deal a serious blow to Ukraine’s economy, which is at war with Russia.
According to the Financial Times, the EU does not plan to extend the special trade preferences introduced for Ukraine after Russia’s full-scale invasion in 2022, starting 6 June. Kyiv estimates potential budget losses of €3.5 billion annually.
The temporary cancellation of duties allowed Ukraine to export most agricultural products to the EU without restrictions. This was a financial lifesaver for Ukrainian farmers and the budget amid the war. However, pressure from Poland, France, Romania and other countries, where farmers complained about falling domestic prices, prompted Brussels to reconsider its approach.
Trade support is in question
The new “transitional measures” proposed by the European Commission include:
- A sharp reduction in duty-free quotas for Ukrainian agricultural products (grain, honey, sugar, poultry);
- Dividing annual quotas into monthly limits to stem the flow of goods during negotiations;
- Gradual transition to an updated trade agreement, which is not yet ready.
“This is a very bad signal for Ukraine,” said Bernd Lange, chairman of the European Parliament’s international trade committee. According to him, the decision will be made no earlier than October.
Politics and elections
Poland played a key role in changing the EU’s position, as it was keen not to irritate the agricultural electorate before the presidential election. Warsaw has repeatedly resorted to unilateral bans on imports of Ukrainian grain, despite EU rules.
“This is a step backwards and an example of a lack of understanding,” said Mykhailo Bno-Airiian, a representative of the Ukrainian business community.
The European Commission has confirmed that the current arrangements will not be automatically extended as the terms of the free trade agreement with Ukraine are being renegotiated.
