Donald Trump may have pulled the world in a decidedly protectionist direction, but the European Union is not doing its part to lead by example and uphold the ideals of free trade – not even with Ukraine, where the strategic case for free and frictionless trade is overwhelming.
On 6 June, the EU is expected to end the existing tariff-free regime introduced after the Russian invasion, subjecting Ukrainian imports of agricultural commodities to very tight caps, as stipulated by the earlier Deep and Comprehensive Free Trade Agreement (DCFTA) between the EU and Ukraine. The DCFTA was supposed to be revised by the June deadline, ideally increasing the quotas for tariff-free imports of agricultural products, but the negotiations have stalled for political reasons, for fear that they would disturb Poland’s politics ahead of its presidential election.
Ukrainian agricultural exports to the EU – wheat, corn, and poultry, among others – skyrocketed after the invasion. The share of Ukrainian wheat exported to the EU, for example, went up from around 2 per cent before the war to over 50 per cent in 2023, in part because of the disruption of exports from Odesa to countries of the Middle East and Africa.
The Ukrainians estimate that the reversal will cost them around €3.5 billion in lost government revenue. But, given the EU’s broad budget support for Ukraine, it is more likely that the cost will be absorbed by Europeans themselves.
Trade, not aid, may be a naive slogan at times, but it should be obvious that in Ukraine’s case it is better for everyone to keep its sizeable agricultural sector afloat during the war, including by reducing trade barriers, than to have to spend billions rebuilding it once the conflict is over.
The political signal that the policy shift sends is unfortunate – and it extends far beyond just agriculture. Ukraine continues to aspire to become an EU member state, ideally by the end of this decade. Presumably, it will then continue to be a major agricultural exporter – before the war, agriculture accounted for 40 per cent of Ukraine’s exports, some 10 per cent of its GDP and 14 per cent of employment (compared to EU figures of 9 per cent, less than 1.5 per cent, and 4 per cent, respectively).
Yet, once Ukraine joins the EU, there cannot be any talk of restricting its agricultural exports to the rest of the single market. Moreover, under the current rules of Common Agricultural Policy, (CAP) Ukrainian farmers would also be entitled to a large share of its direct payments – not exactly an attractive political proposition for EU-27.
But while CAP can be reformed, trade is just trade. If even Ukraine’s closest neighbour and ally, Poland, finds competitive Ukrainian agriculture intolerable today, how will the EU come to accept Ukraine as part of its single market, with no quotas, tariffs or other restrictions?
In a Panglossian view, transitory periods for free trade in agricultural products could be introduced at the time of Ukraine’s accession. After the war, one may speculate, Ukraine could be able to reorient its agricultural trade back to its traditional export destinations outside the block. But there’s no guarantee that will happen, especially if Ukraine is a full-fledged member of the single market.
Instead of wishful thinking, what Europe needs is political leadership that can explain and make the case for some of the short-term sacrifice involved in helping to turn Ukraine into a success story. That applies as much to the need for European involvement in policing a future peace agreement – possibly without the backing of the United States – as well as to the economic disruption that is involved in integrating a large country such as Ukraine into the EU on an accelerated schedule.
Ukrainians have eyes and ears. They can see whether European leaders are willing to confront powerful interest groups – in this case, Polish farmers – in the interest of Ukraine’s European future or not. Being less than fully upfront about the challenge ahead risks turning Ukraine’s EU accession into a disappointing story, all too familiar from places such as the Western Balkans. And that would be a tragedy.
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