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A compromise to support Ukraine's exports

Svitlana Taran

Date: 19/06/0023
The EU has recently adopted several important decisions that will shape EU-Ukraine trade over the coming year. All import duties, tariff-rate quotas and trade defence measures, and permits for Ukrainian road freight carriers were suspended for another year – until June 2024. Trade liberalisation measures and alternative export routes via Solidarity Lanes (transporting about 50% of Ukraine’s grain exports) are critical for Ukraine’s export-oriented economy as its capabilities to export have been significantly hampered by Russia’s blockade of Ukraine’s seaports and large-scale destruction.

This decision required a prior solution to concerns of neighbouring EU member states - Poland, Hungary, Slovakia, Bulgaria, and Romania - about logistical problems with handling Ukraine’s surged agri-food transit and import flows. Yet, unilateral measures adopted by these countries were highly questionable - they immediately banned imports of a wide range of agri-food products from Ukraine (and their transit in Poland) causing losses, and uncertainty for Ukrainian exporters. These measures were poorly justified and incompliant with EU Single Market legislation and created a precedent for further protectionist pressure.

The Commission suggested a compromise – namely, to impose temporary import bans on four major Ukrainian products (wheat, maize, rapeseed and sunflower seed) in these countries as exceptional safeguard measures in return for the lifting of all unilateral restrictions towards Ukraine. At the request of five EU countries, these safeguards have been prolonged until 15 September 2023, while an additional EUR 100 million will be allocated to support local farmers in these countries. Besides, the safeguard mechanism of the new Autonomous Trade Measures Regulation has been amended to allow for the accelerated reintroduction of customs duties on Ukrainian imports “in case they adversely affect the EU market”.

Although the EU’s decisions signal its ongoing trade support for Ukraine, risks of prolongation or the introduction of new import restrictions in the EU creates uncertainty for Ukrainian agri-food exporters before the new harvest. To reduce these risks and avoid a repetition of crisis situations, efforts from all sides should be intensified to improve the capacity of Solidarity Lanes and enhance EU-Ukraine connectivity during and beyond the war. In this respect, the recently established Joint Coordination Platform led by Executive Vice-President Valdis Dombrovskis should foster regular consultations and coordination between the Commission, Eastern European countries, and Ukraine to address concerns of all sides and resolve any potential or actual holdups.

The Commission should ensure that all decisions are made after proper consultations with the Ukrainian side and be grounded on evidence-based assessments of the impact of Ukrainian products in the EU market. EU neighbouring countries should stay consistent in their solidarity with Ukraine and avoid any measures causing sudden trade disruptions during this exceptional wartime situation. Non-neighbouring EU members should also be prepared to absorb greater volumes of reoriented Ukraine’s agri-food flows. Considering Ukraine's status as an EU candidate country, EU-Ukraine trade and integration into the EU supply chains are expected to advance after the war, and further trade liberalisation on a permanent basis will remain a priority for the EU-Ukraine agenda.

Svitlana Taran is a Ukrainian Research Fellow in the Europe in the World programme at the European Policy Centre.

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