Unilateral import bans on Ukrainian grain challenge EU
April 19, 2023
The European Commission was somewhat taken aback by Polish Deputy Prime Minister Jaroslaw Kaczynski's move to ban imports of grain, oil seed, dairy products and meat from Ukraine.
Kaczynski, who is also leader of the ruling, ultraconservative PiS (Law and Justice) party, announced the ban at a party event on Saturday with the words, "We have to correct mistakes." Hungary was quick to follow suit with the drastic measure, followed in short order by Slovakia.
The European Commission's first reaction on the weekend was a rather threadbare statement. But on Monday, Commission spokespeople finally tried to explain what was what. "It is important to remind that trade policy is an exclusive competence. That means decisions can only been taken at the European level. That is why unilateral action is not possible," said Miriam Garcia Ferrer, the EU spokesperson for trade issues.
Free trade agreement with Ukraine
Because the European single market of 27 EU member states has no borders or customs duties for goods, Ukrainian grain can be traded freely within the EU — even if Poland, Hungary or any other country imposes an import ban. To be effective, an import ban would have to be approved by all 27 countries.
Ferrer stressed that there was a comprehensive free trade agreement between EU and Ukraine, to which Poland, Hungary, Slovakia and all other member states are, of course, party. Under the provisions of this agreement, customs duties on exports from Ukraine to the EU and through the EU have been largely dropped since the Russian invasion. This is meant to allow Ukraine to sell grain and other products abroad while avoiding the Black Sea ports being attacked by Russia.
Legal experts at the European Commission are currently scrutinizing the official reasons given by Polish, Hungarian and Slovakian authorities for the import ban. The latter have been presenting arguments about market distortion, disadvantages for their own farmers and violations of production procedures.
If there is no legal basis for these unilateral actions, the Commission could theoretically initiate proceedings against the three countries for breach of contract. Ferrer said that the Commission was in contact with all sides, including the Ukrainian one.
Solutions instead of penalties
"We are dealing with a war," said Eric Mamer, the spokesperson for European Commission President Ursula von der Leyen. He said the farmers and the general population in Ukraine were obviously suffering. "The European Union and its member states, among them Poland and all the countries that border with Ukraine, have been doing their utmost in order to help Ukraine. It is not our objective nor anybody's objective to impose difficulties on the population in the EU while they are supporting Ukraine. This is not about sanctioning anybody but about finding solutions based on EU law, in the interest of both Ukrainians and the EU."
Many politicians from countries on the EU's eastern flank are keen on the idea of reintroducing duties on Ukrainian exports as a solution. But the European Commission has proposed doing exactly the opposite: extending Ukraine's exemption from duties for another year while it is under attack. Ukraine's economic performance has fallen by a third since the war began, making exports essential for its survival. And transporting exports by ship over the Black Sea is dependent on Russian goodwill, making alternative land routes urgently necessary.
More money a solution?
Four weeks ago, five EU countries — Poland, Hungary, Slovakia, Romania and Bulgaria — wrote to the European Commission asking it to provide assistance to their farmers and food producers, who, they said, are suffering because of cheap imports from Ukraine. The EU thereupon put together an aid package worth €56 million ($61.4 million) to compensate their farmers. The countries in question can already source this money.
The European Commission is currently working on a second aid package whose worth is still unknown, trade spokesperson Ferrer announced. More money could encourage countries with import bans to fall into line with the EU again. After all, every EU member state approved the customs exemptions for Ukraine, as well as so-called solidarity routes for duty-free trade with all kinds of goods from and for Ukraine.
The grain that is now provoking anger in Poland, for instance, is actually meant to be exported again to third countries. But it often remains in the countries neighboring Ukraine and is sold there because of alleged logistical problems with the onward transport. In the past few weeks, the Polish government set up a commission to investigate possible cases of fraud. Among other things, these are cases in which the grain is alleged to have been imported under false source of origin labels.
Poland puts on the pressure
In early April, Poland's new agriculture minister, Robert Telus, reached an agreement with Ukrainian counterpart Mykola Solsky to enable ten thousand tons of Ukrainian exports to transit through Poland. That agreement appeared to have been voided when Warsaw banned transit over the weekend.
On Tuesday, however, following more talks, Telus announced that a deal had been reached with Ukraine enabling monitored and sealed transports.
In Brussels, too, experts and officials have been discussing ways to resolve the trade conflict.
The crisis, however, has not come entirely out of the blue. Even back in December 2022, politicians from Poland's PiS party had called for importing fewer agricultural products from Ukraine. And Polish farmers have been protesting for months against the cheaper competition from the war-torn neighboring country. Autumn will also bring elections in Poland and according to Polish media, the PiS' move can also be seen as a vote-catching gesture.
Other countries could follow Poland, Hungary and Slovakia's example. The Bulgarian government, for example, has announced it might join the import ban on Ukrainian grain. So far, the country has received €16 million from the EU for the losses it has incurred. Agriculture Minister Yavor Gechev is now calling for €50 million more.
This article was translated from German