Ukraine calls on EU to extend duty-free trade - FT

Ukraine calls on the EU to renew the free trade agreement, reports the Financial Times, writes UNN.

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Ukraine, as indicated, warned of "truly devastating" consequences if the approaching deadline stops unlimited trade with the EU, against the background of the country struggling with uncertainty regarding long-term support from the US.

The EU's emergency trade measures, which abolished tariffs and quotas on Ukrainian exports, are due to end on June 5, and there is little time left to extend them.

Introduced after the full-scale Russian invasion in 2022, this policy was designed to support the Ukrainian economy. But some member states, as indicated, have since opposed, citing concerns about its domestic impact.

"The European Union is our key trading partner, and that is why it would be very devastating for us if we [found ourselves] in the situation that was before the war," Ukrainian Finance Minister Serhiy Marchenko told the Financial Times.

Ukraine depends on exports to earn vital foreign currency to finance military efforts. According to the government, revenues from exports to the EU under the "Autonomous Trade Measures" (ATM) amounted to almost a tenth of the country's export revenue of $41 billion in 2024.

As the publication writes, these revenues may be threatened if the EU does not renew the measures in time. Ukrainian and European officials are concerned that the deadlines for negotiations are too tight before the expiration of the ATM. Despite the fact that Brussels and Kyiv agreed to expand mutual access to markets beyond the current scheme, no progress has been made yet, the publication indicates.

It will be "a very wrong signal" if we do not reach some kind of agreement with the EU," Marchenko said.

Some neighboring countries, as the publication writes, "are reluctant to expand market access for Ukraine, an agricultural giant, fearing that it will harm their farmers and stir up outrage." However, a significant part of the exports that Ukraine sends to its neighbors actually goes in transit to other buyers, the publication notes.

Cheap imports of Ukrainian agricultural products have become a political problem in Poland, where the government of Prime Minister Donald Tusk is seeking the support of farmers who have traditionally been the main electorate of the opposition party "Law and Justice" (PiS), the publication notes.

Two years ago, Poland, Hungary, Slovakia and Bulgaria introduced a unilateral ban on the import of Ukrainian grain and other food products, violating the EU's common trade policy.

The last time the EU's trade measures were renewed, countries including Poland, France and Hungary insisted on introducing an "emergency brake" mechanism that would impose tariffs on Ukrainian products, including eggs, sugar, oats and honey, if volumes exceeded certain levels, in order to preserve domestic prices and protect their farmers.

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On Friday, the Minister of Agriculture of Ukraine called on Poland to use its six-month presidency of the EU to push for the extension of the trade agreement. "Ukraine needs to clearly understand the further conditions of access to the EU market," said the head of the Ministry of Agrarian Policy, Vitaliy Koval. Poland, he added, "has every opportunity to become a leader in this process."

EU officials admit that Warsaw has little desire to expand trade liberalization with Ukraine ahead of the May elections in Poland, and that Russia-friendly countries such as Slovakia and Hungary are also likely to oppose such a move, the publication writes.

Negotiations under Article 29 of the EU, which provides for mutual trade liberalization with third countries, have not progressed, and "it is too late for this now," as it would require lengthy negotiations that "will not be easy," said an EU official.

A temporary renewal of the current agreement is the most likely fallback option and better than pre-invasion trade conditions for Ukraine, the official added.

A representative of the European Commission said that proposals for "promoting mutual customs liberalization" will be presented to Ukraine "soon".

"The message is very simple: our producers need predictability regarding exports, [the EU] cannot start negotiations a week before the current regulation expires," said a Ukrainian official.

The loss of trade revenue will hit the country at a time when uncertainty about future US military support will require additional budgetary efforts to compensate for this, the publication notes.

"Without the support of the United States, we would be in a very dramatic situation... because we cannot easily replace it," Marchenko said.