EU might suspend Ukraine tariff exemption over competition complaints
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The European Commission considers suspending the previous agreement to help the Ukrainian economy by removing tariffs on its agri-food products.
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Illustration of Ukraine's flag covered with Ukrainian grain taken May 9, 2022 (Reuters)
Some European countries have been raising complaints recently regarding the tariff-free Ukrainian agri-food products flooding the EU market, as domestic producers and farmers are facing disadvantages and struggling to compete, Euractiv news website reported
The complaints pushed the European Commission to weigh up reconsidering the suspension of tariffs on Ukrainian commodities that was announced earlier last year following the beginning of the war in Ukraine.
"The current one-year temporary trade liberalization scheme – which involves suspended tariffs and quotas on agri-food imports from Ukraine – is up for review in June 2023," said the news site.
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In 2016, an agreement between the EU and Ukraine, the deep and comprehensive free trade agreement (DCFTA), allowed almost half of Ukraine's agricultural products to enter the union free of duty, however, the rest of the products were liberalized last year, knowing that the current one-year temporary trade liberalization scheme is up for review in June 2023.
"At the time, the unprecedented proposal of suspending import duty on all agricultural products was justified as crucial to both boost Ukraine’s economy and contribute to the country’s gradual integration into the EU internal market," the report claimed.
"Growing pressure" from member states is forcing the Commission to reconsider the decision, said the reports, citing a "source inside a preparatory meeting on Monday (23 January)" that took place before a meeting of EU agriculture ministers.
Read more: Ukraine sending grain to EU, not developing nations: Putin
Last May, the EU introduced the solidarity lanes initiative, which ensures the passage of Ukrainian agri-food products into the union to help the eastern European country export its agricultural products through every possible route.
Nearly one year after the agreement went into force, an EU executive said the initiative facilitated almost three million tonnes of Ukrainian grain through the solidarity lanes.
"However, this success proved a double-edged sword as the significant influx of grain caused tensions in neighboring EU countries," said the site.
Some of Ukraine's neighbors demand reconsidering the tariff agreement
Romanian grain producers raised the alarm last September that they are close to bankruptcy due to the tariff-free Ukrainian grain flooding the markets.
"While more recently similar complaints have also been heard from other neighboring countries such as Poland," added the website.
Read more: Support for Ukraine bringing 'hard times' for Europe: Stoltenberg
A delegation from some of Ukraine's neighboring countries, such as Poland, Hungary, and Romania, stressed that the negative impact of Ukrainian duty-free products must be fixed.
The delegation mentioned the negative "impact on their farmers’ competitiveness, with some calling for compensation."
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"They also voiced support for the idea of reconsidering the custom agreement for some cereals imported from Ukraine, especially with regard to checks for sanitary and phytosanitary (SPS) measures," stressing the possible risk of importing contaminated grains.
The Commission representative, despite highlighting the importance of the lanes initiative, confirmed that the agreement created a “challenge for our farmers."
The discussion on the matter, according to the representative, will take place on February 3 during the EU-Ukraine scheduled summit.
No unanimity on crisis reserve
The Commission representative tested the waters with member states during the meeting on the idea of aiding the impacted former using the crisis reserve fund included in the EU’s Common Agricultural Policy (CAP).
The €450 million crisis reserve fund can be used to provide exceptional financial assistance to the market following disruptions that impact distribution or production.
EU Agriculture Commissioner Janusz Wojciechowski has already suggested the idea, however, all EU agriculture ministers must approve for the scheme to go into effect.
Read more: War in Ukraine: A conflict that will decide the global system's fate
Some countries, including "Finland, Latvia, Hungary, Estonia, and the Czech Republic – welcomed the activation of the agricultural reserve 'as soon as possible,'" said the report citing a source present at the meeting.
"Meanwhile, Slovakia said it was open to the idea but that it had to be carefully considered," the report added.
On the other hand, France, the Netherlands, and Denmark, among other countries, opposed the suggestion, while Italy said it is "skeptical" and Malta stated that the sum [crises reserve fund] might be insufficient.
"The Commission representative advised member states to proceed with caution," said the site.
The Commission called on EU countries to ration their consumption as it is still early in the year, adding that they [EU states] should be “mindful and leave sufficient resources for rest of the year/potential issues."
