Why is the EU reluctant to import ‘sensitive products’ from Ukraine?

Although the latest deal among EU negotiators to extend trade incentives for Ukraine for another year has been projected as a major win for the war-ravaged exporter of agricultural and steel products, there’s an elephant in the room.

A closer look at the agreement points to a rift between EU countries and the European Parliament, which is the EU’s only directly elected institution. The deal has caveats, which serve to “reinforce the protection of sensitive agricultural products” within the European Union.

A new automatic safeguard will also be added for certain sensitive products, such as poultry, eggs, sugar, oats, maize, groats, and honey, to protect the EU market, according to a statement by the European Council.

There are no gloom and doom predictions for Ukraine’s export industry yet. The provisional agreement will let Kiev export goods to the European Union without duties and quotas until June 2025, thus allowing the $190 billion economy to sustain itself amid a drawn-out war with a much stronger adversary Russia.

In simpler words, the deal enhances the “safeguards” or protections by taking into account possible adverse impacts on the market of one or several member states, rather than the EU as a whole.

What the deal entails

Trade between the European Union and Ukraine was already taking place under the Deep and Comprehensive Free Trade Area (DCFTA) before the start of the Russia-Ukraine war.

The events of February 2022 prompted the EU to lift all tariffs that weren’t covered under the DCFTA to help support the Ukrainian economy in times of war.

The latest deal renews that regulation, which will be effective until June 5, 2025, to ensure the “continued suspension” of all outstanding customs duties and quotas.

The issue became contentious as farmers across Europe, particularly in Poland, Romania, and France, started organising massive demonstrations three months ago. They used tractors to block highways while calling for restricting agricultural imports from Ukraine.

Their protests worked. The new deal includes import caps on four additional products (oats, maize, groats, and honey). In addition, the deal allows the European Commission, which is the EU’s executive arm, to reimpose tariffs quicker – in two instead of three weeks – in case Ukrainian imports register a sudden surge.

As for wheat, a major Ukrainian export, the European Commission will be allowed to take immediate measures as and when it detects any market disruption.

A recent Politico story quoted an anonymous diplomat as saying that the change in the renewed regulation would cost Ukraine $1.3 billion in trade revenue – a significant sum for a country that’s in desperate need of money after two years of non-stop war.

The real culprit: climate change

Speaking to TRT World, European Centre for International Political Economy (ECIPE) Senior Economist Oscar Guinea said Ukraine’s agricultural imports may be impacting some farmers but the EU is largely self-sufficient in many agricultural products.

Imports make up a relatively small portion of EU agri-food consumption, he says. “However, if the negative impacts are concentrated on specific products and certain EU countries, it might be more cost-effective to compensate the affected farmers directly rather than limiting overall imports from Ukraine,” he says.

The main reason for complaints from farmers across the EU is not necessarily imports from Ukraine, but rather environmental restrictions and tight product margins that have squeezed the income of smaller farms, he insists.

To reinforce his point, Guinea gives the example of Ukrainian poultry, which has been cited as undercutting EU producers. But data shows the EU produced enough fresh and frozen poultry in 2023 to cover 108 percent of its consumption. As much as 14 percent of the EU’s poultry production is exported while only seven percent of consumption is met through imports.

“Larger EU agriculture exporters have more resources to cope with climate change and claim support from the state. However, smaller farmers, also close to retirement and with poor digital skills, struggle to complete the bureaucracy necessary to receive support,” says Guinea.

Referring to a recent research that shows the EU agri-food sector benefits from free trade, he says a strategy of gradually integrating Ukraine's economy, including its competitive sectors like agriculture, into the EU is the right approach.

“Restrictions placed on Ukrainian farmers are simply a way of delaying the inevitable. If the EU is serious about accepting Ukraine, the Ukrainian farming industry will eventually become part of the EU single market.”