Meanwhile, Ukraine Wrestles with EU Tariff Changes: A Multi-billion-Dollar Question
Overnight, Ukraine no longer enjoys EU tariff exemptions.
Get ready for some major shifts in Ukraine's trade relations with the European Union, as the EU's waiver of import duties for Ukrainian goods has bid its farewell. With no victor in sight, this regulation has expired, leaving Kyiv facing a potential multi-billion dollar loss. A German EU politician considers this a swift kick in the teeth for Poland.
The EU has been paving the way for trade preferences for Ukraine, evidently under siege by Russia for three long years. As per the EU Commission, new transitional rules have set in, effective as of midnight German time, aiming to last until negotiations for a fresh trade agreement are finalized.
Ukrainian agricultural organizations are painting a gloomy picture. They predict that these changes could cost Ukraine up to 3.3 billion euros in lost foreign exchange earnings, along with a slump in economic performance of approximately 2.5 percent in 2023.
A Smack in the Face for Many: The Controversy Over Concessions
The aid provided to Ukrainians through tariff exemptions didn't go down well with many European farmers, particularly those in Poland and Hungary. They felt the pinch due to unfair competition from cheaper agricultural imports from Ukraine. France even clamored for more rigorous customs rules. National interests, as shared with EU diplomats, played a significant role in the ongoing discussions about the expiry of trade facilitation measures.
The chairman of the trade committee in the EU Parliament, Bernd Lange, deemed it unforgivable that a consensual solution couldn't be cobbled together before the expiry of the trade facilitation measures. Lange viewed the loss of tariff exemption as an unnecessary sacrifice for Poland's sensitivities. The victory of the right-wing conservative EU skeptic Karol Nawrocki, who campaigned on anti-European platforms, was set in the Polish presidential election held on the 10th of July 2023.
Rules of the Game: What's Changed and What's Next?
Starting from midnight, the EU Commission has reinstated the tariff quotas from the 2016 agreement. Owing to the fact that over half the year has already passed, this means that until 2025's end, seven twelfths of the annual quantities acknowledged in the old trade deal are still up for grabs. The Commission promises to tirelessly push for a new agreement, addressing the concerns raised by European farmers and some EU member states.
Negotiators from the EU and Ukraine are currently discussing the prospects of a long-term, new agreement. With the expiration of the previous easements, the pressure on Ukraine to reach a resolution has intensified. The length of negotiations remains uncertain, but trade politician Lange hopes for quick results.
Sources:
- ntv.de
- mdi/dpa
Trivia:
- In light of the stakes, Ukraine's agricultural sector, which was responsible for over 7% of total output in 2023, might feel the heat.
- It's not only agriculture that's facing challenges; Ukraine's steel industry is grappling with broader trade dynamics and potential tariffs from other countries.
- The EU is wrestling with a tough call. Balancing support for Ukraine while addressing the plight of its farmers is no walk in the park.
- With a narrow win, Karol Nawrocki, the anti-European Polish presidential candidate, has exacerbated the situation. How this shifts the dynamic in Poland and its dealings with the EU remains to be seen.
- The expired tariff waiver for Ukrainian goods by the EU has sparked a heated debate on the EU policy, particularly in regards to employment policy. European farmers, especially those in Poland and Hungary, face uncertainty due to increased competition from cheaper imports from Ukraine.
- Meanwhile, various EU trade politicians, including Bernd Lange, the chairman of the trade committee in the EU Parliament, are expressing concern over the consequences of the washout of trade facilitation measures on employment policy within the EU member states.
