The European Union has ended the duty-free regime for Ukrainian agricultural products effective June 6. It was introduced in June 2022, following Russiaʼs full-scale invasion, to help Ukraine offset rising export costs.
Reuters writes about this.
The duty-free regime extended to cheap Ukrainian poultry, wheat and sugar, much of which passed through EU countries to Africa and Asia. But farmers and politicians in Poland, France and other countries soon accused Ukrainian exports of lowering their domestic prices. This particularly bothered the Poles. They unilaterally banned the import of Ukrainian grain, thereby violating EU rules.
For example, before the war, Ukraine could supply only 20 thousand tons of sugar to the EU. And in 2023-2024, it imported more than 500 thousand tons.
So on June 6, the European Union and Ukraine returned to the pre-war quota regime in trade. Despite the formal end of the "trade visa-free regime", Ukraine still retains certain preferences in trade with the EU. Within the framework of the Association Agreement, a Free Trade Area operates, which allows duty-free access for many goods within quotas.
Negotiations on a new agreement between the EU and Ukraine began on June 2. EU Agriculture Commissioner Christoph Hansen hopes that the parties will be able to find a compromise this summer. In his opinion, restrictions on imports of Ukrainian goods should be somewhere between pre-war levels and the levels of June 2022.
Ukrainian Economy Minister Yulia Svyrydenko noted that the lack of concessions from the EU regarding the revision of quotas affects trade worth $3.5 billion and could reduce revenue by $800 million. But this is the worst and darkest scenario. In the world of trade, the final effect is always different, she emphasized.
What preceded
The decision to reinstate tariffs on Ukrainian imports came after Poland led efforts to protect the blocʼs farmers, the Financial Times reports, citing diplomats.
Ahead of the countryʼs presidential election, Warsaw has asked the European Commission to postpone trade talks with Kyiv to minimise the chances of nationalist opposition candidate Karol Nawrocki winning, diplomats have told the FT.
The head of the European Parliamentʼs trade committee, Bernd Lange, said it would take at least until October this year to "find a solution".
Ukraine had a quota under which it could sell a certain amount of goods to the EU duty-free during the year. Two EU diplomats told the Financial Times that there is a transitional measure, where they propose to divide this annual norm into 12 parts — one for each month. This means that they will not be allowed to sell a lot at once, but will have to be distributed evenly throughout the year. This is how they want to limit imports from Ukraine while the parties agree on new trade rules.
This will affect the sales of corn, sugar, honey, and chicken the most:
- instead of 4.7 million tons of corn per year, only 650 thousand tons will be sold;
- instead of 57 thousand tons of chicken — 40 thousand tons;
- instead of 109 thousand tons of sugar — 40.7 thousand tons.
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