Imports of Ukrainian agricultural products: EU solidarity vs National interest
04 May 2023 /
The starting point
As it is well known, in February 2022, the Russian Federation initiated an unprovoked invasion of Ukraine. The Russian army started to destroy most of the cities in the regions which were unilaterally annexed to Russia, as well as bombing other areas , such as Kyiv. As such, the country started to suffer significant loss of life, destruction and flows of millions of people leaving their homes to find a safer place to stay. However, not everyone was willing to leave their home, even when facing a significant disruption in the supply of all main basic goods or services. In fact, the Russian army has provoked a substantial destruction in Ukraine, regardless of the military or political relevance of the targeted infrastructure.
The Kyiv School of Economics suggests that over $6.6 billion in agricultural infrastructure has been destroyed which in turn has affected several farmers’ production, as well as their survival. An article from the University of Illinois states that the war has imposed an additional $36.2 billion in indirect costs to agriculture, mainly in the form of foregone production and higher logistics costs for continuing agricultural exports. Maritime exports were significantly disrupted for over four months since Russian military vessels have been blocking Ukrainian ports in the Black Sea.
This caused an increase in prices of agricultural products and fears about shortages, since Ukrainian agricultural production was, before the war, of global significance, especially for what regards the exports of grains (corn and wheat) and oilseeds. According to a study by the University of Illinois, before the war, Ukraine exported roughly two-thirds to three-quarters of its corn and wheat.
The EU and UN measures
In order to assist Ukraine with the different issues caused by the unprovoked Russian invasion, the EU institutions promptly adopted several economic measures. On 30-31 May 2022, the Council strongly condemned the destruction and illegal appropriation by Russia of agricultural production in Ukraine and called on Russia to: (i) end its attacks on transport infrastructure in Ukraine; (ii) lift the blockade of Ukrainian Black Sea ports; (iii) allow food exports, in particular from Odessa. At the same time, the International Trade Committee of the EU Parliament approved a proposal including the full removal of import duties on industrial products, entry duties on fruit and vegetables, and anti-dumping duties and safeguard measures on steel imports for one year to support Ukraine’s economy.
Furthermore, on 20 June 2022, the Council adopted conclusions on the Team Europe response to global food insecurity. It was stressed that Russia’s unprovoked and unjustified war of aggression against Ukraine had disastrous consequences for the Ukrainian people, and globally, dramatically also affecting food security. Thus, the decision was made to try to tackle global food insecurity via four strands of action: (i) solidarity through emergency relief and support for affordability, (ii) boosting sustainable production, resilience, and food system transformation, (iii) facilitating trade by helping Ukraine export agricultural via different routes and (iv) supporting global trade effective multilateralism and strong support to the central role of the UN Global Crisis Response.
On 22 July 2022, an agreement was reached with the intervention of the United Nations and Türkiye, to open a safe maritime humanitarian corridor in the Black Sea (the Black Sea Grain Initiative). The deal allowed exports from Ukraine of grain, other foodstuffs, and fertiliser, to resume through a safe maritime humanitarian corridor from three key Ukrainian ports: Chornomorsk, Odessa, and Yuzhny/Pivdennyi, to the rest of the world. To implement the deal, a Joint Coordination Centre (JCC) was established in Istanbul, comprising senior representatives from the Russian Federation, Türkiye, Ukraine, and the United Nations. Since then, over 900 ships full of grain and other foodstuffs have left three Ukrainian ports.
In March 2023, one year after the beginning of the invasion, a letter was sent to the European Commission by the prime ministers of five eastern European countries, regarding the suspension of import duties with Ukraine. The letter stated that the scale of the increase in products like grains, oilseeds, eggs, poultry, and sugar had been unprecedented, and said that tariffs on Ukrainian agricultural imports should potentially be reconsidered. Following this, in April 2023, Poland and Hungary, and after a few days Slovakia, decided to ban imports of grain and other foodstuffs from Ukraine to protect the local agricultural sector. According to their Government’s positions, the main reason to justify the ban was that the increase in agricultural imports from Ukraine was depressing prices and causing hardship for their farmers. Bulgaria, Romania, and the Czech Republic may also join these three countries in banning Ukrainian agricultural products.
The reactions of the EU institutions were immediate, as, first of all, the imposition of import duties is an exclusive competence of the EU. Furthermore, the suspension was a temporary measure to support Ukraine and is supposed to end in June 2023.
EU solidarity or National interest?
Reuters.com reports a speech made by the Polish leader of the Law and Justice party about the ban: “We are and remain unchanged friends and allies of Ukraine. We will support her, and we support her […] But it is the duty of every state, every authority, good authority in any case, to protect the interests of its citizens.”
This dilemma raises some questions: How do we balance EU solidarity with National needs/interests? How can we manage these two objectives that have opposite outcomes? Should one prevail over the other? And if yes, which one?
There is no flawless answer to those questions because, of course, everything needs to be balanced and well-weighted on a case-by-case basis. It is unconditional that the EU had to support Ukraine to (i) try to end this unjustified invasion and (ii) recover from all the destruction and economic losses. Nevertheless, the EU does not have to do that at the expense of its citizens. As just mentioned , this is not an easy task to fulfil, yet it is something from which nobody can evade . It seems to me that , sometimes, the best approach to resolve the antagonism between two important and contrasting objectives is in the way we approach and try to achieve them.
For example, the reason utilised by Poland, Hungary, and Slovakia for imposing the ban can be interpreted as legitimate, since these countries had real protests and complaints from their citizens. However, it is, how they enforced them that is wrong, due to three main reasons: first, as said earlier, (i) import duties are an exclusive competence of the EU, and as suchMSs cannot legislate on that matter; (ii) by imposing this measure they only mitigate the situation in the short term, exposing themselves to infringement procedures; and last, (iii) a negative reputational effect at international level. To be noticed, also, that the European Commission offered restoration payments to these countries, to mitigate the negative effects on their economy. Nonetheless, after the ban the European Commission announced that it will provide a further €100 million support package to five EU ‘frontline’ countries in an attempt to alleviate pressure on their farmers. Hence, the EU Institutions were aware of the problem, and they were trying to resolve it.
Personally, this is only the latest example of how these two above-mentioned objectives are clashing with each other. Since the creation of the European Community, this bickering between EU countries has been taking place, most of the time because Member States prioritise their interests. However, it is crucial to remember that the European Communities were founded with a solidarity purpose, after the atrocity of two world wars. As observed in my previous articles, it appears that Europeans leaders are not learning from past mistakes and consequently the story keeps repeating itself.
I conclude with the reasoning that the only way to reach the most efficient and effective solutions is through cooperation and collaboration, evaluating each time what is at stake and balancing it in the best way possible.