Which group of Ukrainian goods to be most affected by new EU measures?
In January 2024, the European Commission proposed to extend the suspension of import duties and quotas on all imports from Ukraine to the EU for another year. In April, the European Council and the European Parliament reached an agreement to extend temporary unilateral trade benefits for Ukraine until 5 June 2025.
Thus, the free trade regime with the EU will be extended, but with certain caveats.
Read more to understand how the change in EU trade policy will affect Ukrainian farming export in the article by Iana Okhrimenko, senior economist at the Center for Economic Strategy – Free trade, but not really: What will change for Ukrainian farming exports to the EU.
The creation of the Deep and Comprehensive Free Trade Area, in effect since early 2016, has simplified access to European markets for Ukrainian exporters. Import tariff quotas though remained valid for most "sensitive markets" (specifically, farming products).
In June 2022, EU countries unilaterally removed administrative borders, fully opening their markets to Ukrainian products. In 2023, the free trade regime was extended for another year.
In January 2024, the European Commission recommended extending the autonomous trade preferences for Ukraine. However, protests by Romanian, Bulgarian, Slovak and (mainly) Polish and Hungarian farmers influenced politicians' positions, affecting the draft of the new regulation.
The new regulation will introduce quantitative restrictions (safeguard measures) – the application of a quota system if imports of certain Ukrainian goods exceed a limit calculated based on historical import values.
The safeguard measures will apply to seven groups of goods that could significantly impact the EU's most sensitive markets: poultry, eggs, sugar, oats, corn, cereals and honey.
The Commission will regularly assess the cumulative volume of imports of the seven specified goods and compare it with the arithmetic mean for the second half of 2021, as well as for 2022 and 2023 (i.e., the total volume of imports for this period, divided by 2.5).
If between the start of the new regulation and the end of December 2024, the cumulative import volume from the beginning of January 2024 reaches the limit, the Commission must reinstate tariff quotas within 14 days until the end of 2024.
Overall, the idea of the safeguard measures is to ensure that the duty-free import of the seven Ukrainian agricultural goods does not exceed the arithmetic mean over the past two years.
Available data for January and February of 2024 suggest that the export volume of all groups of products "under special scrutiny" by the Commission is likely to be adjusted by tariff quotas.
However, Ukrainian export revenue is unlikely to undergo significant changes despite the safeguard measures.
Of all the Ukrainian goods subject to the new restrictions, only corn has a significant share in the total value of Ukrainian goods imported into the EU.
Moreover, corn imports in 2023 are not much higher than the new limit. Even before Russia's full-scale invasion and the introduction of the duty-free trade regime, Ukraine exported significant volumes of this product to the EU.
The new measures will most noticeably affect the sugar market. Furthermore, imposing restrictions on importing Ukrainian sugar into EU countries will be quite painful for both sides.
Although the automatic safeguard measures will apply only to the aforementioned groups of goods, the Commission also commits to monitoring other markets to ensure they are not affected by Ukrainian exports – particularly, the markets for wheat, grains and oilseeds.