EU Extends Tariff-Free Access for Ukrainian Food Amidst Russian Invasion

Legislation will renew temporary suspension of import duties and quotas on Ukrainian agricultural imports for another year.

A combine harvester gathers wheat in a field near the village of Hrebeni in Kyiv region, Ukraine, on July 17, 2020. Valentyn Ogirenko/Reuters

European Union lawmakers approved on Thursday granting Ukrainian food producers tariff-free access to EU markets for another year, rejecting amendments that could have increased restrictions.

The International Trade Committee of the European Parliament approved on Thursday the extension of trade liberalization to support Ukraine amidst the Russian invasion, according to a statement.

The legislation, proposed by the European Commission, will renew the temporary suspension of import duties and quotas on Ukrainian agricultural imports for another year until June 2025, the statement said.

The bill also stipulates that tariffs would be re-imposed on particularly sensitive agricultural products, namely poultry, eggs, and sugar, if their imports exceed the average 2022 and 2023 volumes, the statement said.

The legislation empowers the commission to impose any necessary measures should Ukrainian imports cause significant disruptions to the EU market or to the markets of EU member countries, the statement said.

The commission, the EU’s executive arm, estimated that the imports from Ukraine in excess of the annual duty-free quota that was in effect in 2021 would cost the union a loss of 33.4 million euros ($36.6) of customs revenue annually.

The bill was approved by the committee by 26 votes, with 10 against and one abstention, according to the statement. To enter into force, the bill must be passed by the parliament and approved by the Council of the EU, another legislative body. The EU parliament is expected to vote on it next week, the statement said.

The EU originally instituted the liberalization of trade with Ukraine in June 2022 to mitigate the negative economic consequences of Russia’s invasion, in particular, the destruction of Ukrainian production capacity and the Russian blockade of Black Sea transportation routes.

Polish farmers and truckers have blocked Ukrainian border crossings since February and say they have faced unfair competition from cheaper Ukrainian imports.

Kyiv has repeatedly said Ukraine has stopped exporting sensitive agricultural goods to Poland and that about 95 percent of its agricultural exports go via the Black Sea.

Amendments

Lawmakers had proposed several amendments, which were rejected, such as adding cereals or wheat, oilseeds, and honey to the list of products subject to an emergency brake that will trigger tariffs.

Another discarded amendment provisioned using 2021 instead of 2022 and 2023 as a reference year in the safeguard mechanism used to determine duty-free import volumes. The year 2021 was before Russia’s invasion when tariffs and quotas curbed Ukrainian exports to the EU.

The amendments were put forward by lawmakers from center-right and right-wing parties, notably from Romania and Poland.

Another excluded amendment, introduced by Italian and French lawmakers from right-wing parties, required Ukrainian agricultural products imported to the EU to comply with the bloc’s quality standards, especially in terms of toxic traces.

French right-wing lawmaker Thierry Mariani unsuccessfully tried to add an amendment to ensure that the revenues from these imports “do not benefit Ukrainian oligarchs who hold the largest share of the country’s agricultural market.”

Left-wing German lawmaker Helmut Scholz tried to revise the provision that tariff suspension is conditional on Ukraine’s respect for democratic principles, human rights, the rule of law, and effort to fight corruption and organized crime by adding a clause demanding collecting taxes from companies benefitting from the measure.

To justify his revision, Mr. Scholz said that some agri-food exporters are notorious for tax avoidance, e.g., they shift their companies’ addresses to tax havens such as Cyprus or the British Virgin Islands, but his revision was not included.

Farmers Interest Group Disappointed

The EU Farmers’ interest group COPA-COGECA said in a statement that EU lawmakers have failed EU farmers and food producers by dismissing improvements to Ukraine’s trade liberalization law.

Polish farmers protest near the border with Ukraine over price pressures, taxes and green regulation, grievances shared by farmers across Europe, in Hrubieszow, Poland, Feb. 9, 2024. Jakub Orzechowski/Agencja Wyborcza.pl via Reuters

The group was particularly concerned with the impact of relaxed trade rules on cereal, sugar, poultry, eggs, and honey producers, who “are being asked to carry the disproportionate burden” of this policy and whose concerns are being ignored, the statement said.

COPA-COGECA called on the EU parliament to include final amendments in the legislation during the next plenary session, the statement said.

“We once again call for a real show of support and understanding that doesn’t stop at words!” the group said.

Ukraine Agrees Conditionally to Restrictions

Ukraine’s Deputy Minister of Economy Taras Kachka told the Financial Times on March 6 that Kyiv is open to new EU restrictions on Ukrainian agri-food exports but called on the union to impose a ban on Russian grain imports.

“Perhaps we all need a managed approach to trade flows between Ukraine and the EU during a transition period of this kind. As for wheat, it is not Ukraine that creates problems for Polish farmers but Russia,” Mr. Kachka said, as reported by the portal Online.ua.

Polish Prime Minister Donald Tusk said on March 4 that he would ask the Polish Parliament to enact a resolution calling on the European Commission to impose full sanctions on agricultural and food products from Russia and its ally Belarus.

Latvia has already introduced a ban on agricultural and feed products from Russia and Belarus, and other third countries, if the product originates from Russia or Belarus, according to a statement. The ban will take effect on March 8.

Reuters contributed to this report.