Without a trade deal with the EU, Ukraine loses $1.5 billion in exports. But Europe promises support
21 April 17:37
Ukraine, in close cooperation with the European Commission, is making efforts to prevent a return to the trade regime that was in effect until 2022. This was reported by the Yevropeiska Pravda publication, according to Komersant ukrainskyi.
As wrote, in the absence of a new decision of the European Union by June 5, 2025, the previous provisions of the Association Agreement will automatically be restored. Experts warn that such a development could lead to a significant decrease in the export of Ukrainian goods to the European market.
According to an analytical study conducted by Veronika Movchan of the Institute for Economic Research and Ricardo Giucci of Berlin Economics, potential economic losses for Ukraine could reach USD 1.5 billion, which is approximately 4% of the country’s total exports.
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Europe shows support
However, the European Commission has demonstrated a clear position on maintaining and improving trade relations with Ukraine. During the talks on April 9, European Commission President Ursula von der Leyen assured Ukrainian Prime Minister Denys Shmyhal:
“The new parameters of trade between Ukraine and the EU will be better than those that were in place until 2022.”
But, obviously, they will be worse under the “preferential trade regime” that is currently in place.
The Ukrainian side emphasizes that the format of the future agreement is not a matter of principle. The main priority is to ensure that Ukrainian goods maintain and expand access to the European market.
“For us, it does not matter much what kind of cover the future trade regime between Ukraine and the EU will be written under. Whether it will be autonomous preferences, as it has been until now, or a free trade regime expanded in accordance with Article 29, we care about the principled result, not the “checkers”,
– representatives of the Ukrainian government said.
The preferential trade regime and its enemies
The decision to allow the free import of Ukrainian goods into the EU was made by the EU at the beginning of the full-scale Russian invasion as a gesture of support for the Ukrainian economy, as well as in response to the Russian naval blockade of Ukrainian ports. During the two years of its operation, the simplified regime has gained a lot of opponents in the European Union. In particular, the governments of Bulgaria, Poland, Hungary, Romania, and Slovakia demanded to restrict imports of Ukrainian products (later France joined this position). They claim that cheap agricultural products from Ukraine are swallowing up their markets.
Six major European farmers’ associations also protested strongly against Ukrainian products. Polish farmers have even organized a border blockade, not only with Ukraine but also with Germany.
Nevertheless, after fierce debate, the simplified trade regime with Ukraine was extended until June 5, 2025. However, at the request of these countries, it was severely restricted.
Thus, the provisions on duty-free trade were amended to include new “safeguards” to protect European producers.
In particular, the European Commission may apply any measures it deems necessary if imports from Ukraine cause “significant disturbances” on the EU market or the markets of one or more EU Member States. In such a case, the European Commission may launch an “emergency brake” for particularly sensitive agricultural products. This list includes the following products:
- poultry
- eggs
- sugar
- oats
- cereals
- corn;
- honey.
However, the European Commission has not only options but also responsibilities. If imports of these goods exceed the average import volumes recorded in the second half of 2021 and for the entirety of 2022 and 2023, customs tariffs must be restored within 14 days.
Thus, the EU has practically returned import quotas for many Ukrainian goods, albeit at a rather high level.
The next agreement will be worse. If there is one at all.
