The decision to temporarily extend trade restrictions of some agricultural products across five EU member states brought ‘irritation’ to Ukraine, which is demanding the issue to be ‘depoliticised’ and the extension not be prolonged again.
The safeguard measures on wheat, maize, rapeseed, and sunflower seeds were due to expire on Monday (5 June) and have now been extended to 15 September, a few hours before their original expiration date.
For Taras Kachka, Ukraine’s deputy minister of economy and main negotiator in Brussels on trade, it is time to sit down and “talk rationally because we do not want to extend this [situation] forward”.
“The problem is not a trade restriction as such,” he told reporters on Tuesday, pointing out that increased trade relationships could create ‘irritants’ between trading partners.
“The biggest source of irritation is the fact that the foundations of these limitations are not well justified as they are based on the general assumption that increasing trade causes some problems,” he said.
According to these measures, the four agricultural goods cannot currently circulate in Bulgaria, Hungary, Poland, Romania, and Slovakia – the five ‘frontline’ countries neighbouring Ukraine – unless for transit to other EU or non-EU countries, as part of a political package deal agreed upon by the five member states and the EU executive.
The deal came after temporary trade liberalisation, intended to help Ukraine export agricultural commodities, led to an influx of goods in Eastern Europe. This pushed prices down and put a strain on local farmers, leading some of these countries to enforce unilateral bans on all Ukrainian agriculture imports.
The message to Poland, which is perceived as the leading proponent of the trade restrictions, as well as to the European Commission is to “depoliticise the problem to actually find the solution”, Kachka said.
“We’re still convinced that the problem is rather political than an economic or a trade one,” Kachka said, adding that if the problem will not be handled properly, “then we will come back to square one with an almost trade war situation I personally want to avoid”.
A platform to calm things down
In efforts to de-escalate the situation, the Commission set up a joint coordination platform bringing together the five ‘frontline’ countries and Ukraine to hash out any future issues.
The kick-off meeting of the platform was on Friday (2 June), in the presence of EU vice-president and trade Commissioner Valdis Dombrovksis.
Kachka said he is “moderate” about the expectations from the platform as most of the problems it will deal with have not been resolved for many years.
“But at least it will give us an opportunity to understand how we can minimise the perception of eventual damage [from increased trade with Ukraine],” he said.
Ukraine’s government expects the Commission to come in September with calculations on technical aspects, such as storage capacity in Poland or optimal timing for selling Ukraine’s goods in Europe without disrupting markets, in a bid to reorganise the trade relationship with the EU.
“But the assumption is that there is no way for the continuation of these measures [beyond September],” the vice minister said.
While Ukraine trusts the Commission on the ‘political promise’ that the trade restrictions will not be prolonged, “we cannot guarantee that Poland will not demand to do so”.
‘Stress test’ for future trade talks
As tension between the two partners mounted on Friday, Kachka said that Ukraine was “on the verge of a trade war, ready to go to the World Trade Organisation (WTO) and take some measures on Polish goods as well”.
“But we really want to avoid these kinds of situations,” he continued, adding that this will be a ‘stress test’ on how the EU and Ukraine will frame their future trade talks.
“This is some sort of early training before the negotiations, that’s why we want to move as much as possible into pragmatic discussions about figures,” Kachka said.
Although considered ‘a very minor topic on our bilateral agenda’, Ukraine negotiators are afraid that this beef with the EU on trade restrictions could turn into “something like a long-term fuel [to the fire] between Ukraine and Poland, because after all, we really rely on Polish support politics, in defence, in asylums, and everything”.
[Edited by Nathalie Weatherald]
