Agricultural exports to the EU: the scheme
European Commission (EC) is mulling over reconsidering the special suspension of all tariffs and quotas on Ukrainian agri-food exports. The reason was complaints from EU member states that an influx of agricultural goods from Ukraine is putting EU farmers at a disadvantage, Euractiv reported.
The current temporary trade liberalization scheme was introduced in May 2022 for a one-year term following Russia’s full-scale invasion of Ukraine.
The measures have proven successful: in December, a total of three million tons of grain were exported. However, this success proved a double-edged sword as the significant influx of grain caused tensions in neighboring EU countries.
Thus, back in September, Romanian grain producers warned that an influx of Ukrainian grain via the solidarity lanes initiative was pushing them close to bankruptcy, while more recently, similar complaints have also been heard from Poland. Hungary also voiced its concerns.
While the Commission representative stressed the importance of aid to Ukraine, they acknowledged that this arrangement has presented a "challenge for our farmers".
The EU executive will be debating possible measures over the coming weeks, and the forthcoming EU-Ukraine Summit, taking place on February 3, will be an "opportunity" to discuss adjustments in the cooperation.
The EC representative also proposed to use the EU’s Common Agricultural Policy’s (CAP) crisis reserve to aid farmers in countries struggling with an influx of grain from neighboring Ukraine.
The crisis reserve is a €450 million fund included in the CAP scheme that can be used to finance exceptional measures to counteract market disruptions affecting production or distribution.
Its activation requires the agreement of all EU agriculture ministers. At their meeting on January 23, a number of countries, including Finland, Latvia, Hungary, Estonia, and the Czech Republic, welcomed the activation of the agricultural reserve "as soon as possible". Meanwhile, Slovakia said it was open to the idea but that it had to be carefully considered. However, a number of others voiced their opposition to the idea, including France, the Netherlands, and Denmark, while Italy remained "skeptical" and Malta voiced concerns that the sum was insufficient for the challenge.
The Commission representative advised member states to proceed with caution, noting that it is still early in the year and, as such, EU countries should be "mindful and leave sufficient resources for the rest of the year considering the potential issues."
Context. The temporary trade liberalization scheme between the EU and Ukraine was adopted in 2022 to last until June 2023. The agreement provided for zero customs rates for a number of goods from Ukraine, the suspension of all tariffs and quotas, as well as anti-dumping duties on goods originating from Ukraine.
Nearly half of Ukrainian agricultural products were liberalized in 2016, after the deep and comprehensive free trade agreement (DCFTA) with the EU became effective. The rest of the goods were subject to a transitional period of trade liberalization lasting until May 2023.