Keep knowledgeable with free updates
Merely signal as much as the Warfare in Ukraine myFT Digest — delivered on to your inbox.
Ukraine has warned of “really damaging” penalties if a looming deadline halts unrestricted commerce with the EU, because the nation grapples with uncertainty over long-term assist from the US.
Emergency EU commerce measures that lifted duties and quotas on Ukrainian exports are as a result of expire on June 5, with restricted time left to increase them.
Launched after Russia’s full-scale invasion in 2022, the coverage was designed to assist Ukraine’s financial system. However some member states have since pushed again, citing issues over its home influence.
“The European Union is our key trade partner, and that’s why it would be really damaging for us if we [found] ourselves in a situation which we had before the war,” Ukrainian finance minister Serhiy Marchenko instructed the Monetary Occasions.
Ukraine is reliant on exports to earn important overseas forex to fund the warfare effort. Revenues from exports to the EU underneath the ‘‘autonomous trade measures’’ accounted for nearly a tenth of the nation’s $41bn export income in 2024, in response to authorities information.
These flows might be in danger if the EU doesn’t renew the measures in time. Ukrainian and European officers fear that the timeline is simply too tight for negotiations forward of the expiration of the ATMs scheme. Whereas Brussels and Kyiv agreed to broaden reciprocal market entry past the present scheme, no progress has but been made.
It could be a ‘‘very wrong signal’’ if we don’t attain some type of settlement with the EU,” Marchenko mentioned.
Some neighbouring nations are unwilling to broaden market entry for Ukraine, an agricultural powerhouse, afraid it could undercut their farmers and stoke resentment. Nonetheless, a excessive proportion of exports that Ukraine sends to its neighbours really transit to different patrons.
Low cost Ukrainian agricultural imports have turn into a political situation in Poland, the place Prime Minister Donald Tusk’s authorities is in search of the assist of farmers who’ve historically been a core citizens of the opposition Regulation and Justice (PiS) occasion.
Poland, Hungary, Slovakia and Bulgaria imposed unilateral bans on imports of Ukrainian cereals and different foodstuffs two 12 months in the past, in violation of the EU’s widespread commerce coverage.
Final time the EU commerce measures had been renewed, nations together with Poland, France and Hungary insisted on introducing an “emergency break” mechanism that will impose tariffs on Ukrainian shipments of merchandise together with eggs, sugar, oats and honey if volumes went above sure ranges, as a way to safeguard home costs and shield their farmers.
Ukraine’s agriculture minister on Friday referred to as for the Poland to make use of its EU six-month presidency to push by the commerce deal extension. “Ukraine needs to clearly understand the further conditions of access to the EU market,” Vitaliy Koval mentioned. Poland, he added, “has every opportunity to become a leader in this process”.
EU officers recognise that there’s little urge for food in Warsaw to broaden commerce liberalisation with Ukraine forward of Polish presidential elections in Might, and that Russia-friendly nations like Slovakia and Hungary would additionally possible oppose such a transfer.
Negotiations underneath Article 29 of the EU, which foresees reciprocal commerce liberalisation with third nations, haven’t progressed and it’s “too late for that now,” as it could require intensive negotiations that “would not be easy,” mentioned an EU official.
A brief renewal of the present settlement is the most probably fall again choice, and preferable to pre-invasion commerce phrases for Ukraine, the official added.
A European Fee spokesperson mentioned it’s going to “soon” current Ukraine with proposals to “advance reciprocal tariff liberalisation”.
“The message is very simple: our producers need predictability over exports, [the] EU can’t start negotiations one week before the current regulation expires,” mentioned a Ukrainian official.
The lack of commerce income would hit the nation at a time when uncertainty over forthcoming US army assist would require further budgetary efforts to make up for it.
“Without support from the United States we’d be in a very dramatic situation . . . because we cannot easily substitute” it, mentioned Marchenko.
Extra reporting by Raphael Minder in Warsaw and Andy Bounds in Brussels
