EBN: The EU extends tariff support for Ukraine's agricultural products by one year

By Anthony Marcus, for Eurasia Business News, on March 20, 2024 - The European Council and the European Parliament agreed to extend the abolition of customs duties and quotas on imports from Ukraine to the European Union by one year, until 5 June 2025. The duty-free trade regime was introduced in June 2022 for Ukrainian goods under the Association Agreement as one of the political and economic support measures to Kyiv in the context of the war against Russia.

The Council communiqué notes that the EU has decided to strengthen the protection of European "sensitive agricultural products" by strengthening the safeguards already included in the current regulation on duty-free imports from Ukraine. This is to " take into account any negative impact on the market of one or more EU Member States, and not only on the EU market as a whole, as is currently the case ". " The new automatic protection will be added for certain sensitive products such as poultry, eggs, sugar, oats, maize, cereals and honey ," the European Council explained.

The European Commission will reintroduce tariff quotas on Ukrainian products " if imports of poultry, eggs, sugar, oats, corn, cereals and honey exceed the arithmetic average of imports in 2022 and 2023".

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The extension of the duty-free regime for Ukrainian exports to the EU comes amid unprecedented protests by Eastern European farmers against cheap Ukrainian agricultural products. On 20 March, Polish farmers staged another nationwide action with the blocking of roads in more than 200 localities. In France, thousands of farmers blocked roads leading to Paris in January to protest against low selling prices for their agricultural products and competition from Eastern Europe.

In early March 2024, Polish Prime Minister Donald Tusk said that Warsaw was proposing to the European Union to cancel all trade preferences that Ukraine had enjoyed after the start of the Russian military operation. In response, Ukraine's Deputy Economy Minister Taras Kashka said Kyiv was ready to limit food exports to the EU in order to allay the concerns of European farmers, who are subject to regulatory constraints unknown to Ukrainian farmers.

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In September 2023, Poland had already imposed an indefinite embargo on Ukrainian agricultural products, only allowing their transit to the West. Hungary had also adopted the relevant restrictions without specifying a time frame. Slovakia also used similar measures until the end of 2023 before extending them to February 2024.

This agreement by the Council of the EU and the Parliament on the conditions for economic support in principle to Ukraine is a kind of concession to farmers and their lobbyists, especially on the eve of the European Parliament elections, which will be held from 6 to 9 June. Ukraine can continue to export its agricultural products, but these exports are regulated.

So far, the European Commission's actions have been aimed at balancing the parties to the conflict in the agricultural market. But the result is obvious: everyone is unhappy. On 20 March, the President of the European Commission (EC), Ursula von der Leyen, who is running for re-election next June for a five-year term, will present possible changes to the rules for the accession of new members to the EU and the functioning of the Union in general.

In addition to replacing unanimity in the taking of important decisions by the principle of qualified majority, to the detriment of the "large" Member States (France, Germany, Italy), the EU will consider how to formalize the selective integration of countries awaiting accession to the European Union. Such an integration regime would include strict conditions for the import of Ukrainian agricultural products.

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The EU-Ukraine Association Agreement, including the Deep and Comprehensive Free Trade Area, has guaranteed Ukrainian companies preferential access to the EU market since 2016. In June 2022, in the aftermath of Russia's war of aggression, the EU introduced autonomous trade measures that allow all Ukrainian products duty-free access to the EU market. These measures have been extended for one year in 2023.

In January, the European Commission proposed to renew the suspension of import duties and quotas on Ukrainian exports for one year. Similar measures have been put in place for Moldova and have been extended for one year after their expiry until 24 July 2025.