EU-Ukraine Agricultural Trade Tensions: Political Focus versus Economic Relevance

Abstract

Tensions between Ukraine and frontline EU member states (MSs: Poland, Slovakia, Hungary, Romania, and Bulgaria) over agricultural imports from Ukraine fundamentally started when Russia invaded Ukraine and blocked its Black Sea ports in February 2022. As Russia disrupted Ukraine’s seaborn agricultural exports and the EU facilitated alternative trade routes by rail, truck, and barge through its western borders, the frontline EU MSs faced a surge of imports and transits of agricultural products from Ukraine. These first resulted in huge truck ques at the border with Poland and other frontline MSs, farmers’ protests escalated then the situation to the point when the frontline EU MSs individually introduced import bans on Ukraine’s agricultural imports in April 2023. European Commission (EC) reacted with two financial compensation packages and with a temporary limit of imports of four agricultural products (wheat, maize, rapeseed, and sunflower seed) from Ukraine till September 15, 2023. After the expiry of the temporary import ban, however, Poland, Hungary and Slovakia continued their unilateral import bans and their farmers continued the protests, cross-border and roads’ blockade. In January 2024 the EC proposed to continue free-trade imports from Ukraine, but under the pressure of farmers’ protests and associations and of a coalition of five frontline EU MSs supported by France, the EC has also agreed to implement safeguard provisions for a list of ‘sensitive products’ (poultry, eggs, sugar, oats, maize, groats, and honey) to guard against import surges. The final decision is to be reached in late April 2024 and farmers continue to protest and block shipments from Ukraine. A glaring lack of economic evidence on the key arguments that are framing the whole discussion, however, might prevent informed and rational decisions. We hope that summarizing and structuring these arguments and rationalizing them will help the EU institutions to strike a rational and win-win decision for further free-trade regime with Ukraine.

Keywords: Ukraine, EU, agricultural trade, war, Russia, Solidarity Lanes, ATM, free-trade

JEL Classification: F51, F53, F13, F15, Q17, Q18