- Статьи
- World
- The doors are closing: what does the abolition of the "trade visa-free regime" with the European Union mean for Ukraine?
The doors are closing: what does the abolition of the "trade visa-free regime" with the European Union mean for Ukraine?
Ukraine is on the verge of a new economic upheaval. The fact is that the European Union will terminate the "trade visa-free regime" on June 5, and Ukrainian manufacturers will have to comply with quotas or pay duties to supply their products to the west. In Kiev, they say that losses will amount to 3.5 billion euros per year. Izvestia investigated the situation.
There will be no more mechanism
The European Union has been canceling the "trade visa-free" regime for Ukraine since June 5. Manufacturers will no longer be able to export their products freely, they will have to comply with quotas and pay duties if they exceed the established standards. The speaker of the European Commission, Balazs Uyvari, said in this regard that Kiev and Brussels are returning to the provisions stipulated in the Association Agreement between Ukraine and the EU. "Negotiations are underway to update and modernize it," he stressed.
In turn, Poland, which currently holds the presidency of the European Council, reported that they had made a lot of efforts to abolish visa-free travel. The head of the country's government, Donald Tusk, during a speech at the Sejm in late May, noted that Warsaw would no longer help its neighbors to its detriment. "We have achieved that starting from June 5, the current mechanism will no longer be in place. We are returning to the situation before the war, when regulation was carried out at the border," he said.
In Ukraine, the mood is pessimistic in this regard. For example, Prime Minister Denis Shmygal said that the government is trying to negotiate with the Europeans on a transition period. "We are trying to ensure that the visa-free regime remains in effect until the necessary amendments are made to the agreement on the creation of a free trade zone. We are working on this through the Ministry of Foreign Affairs, the Ministry of Economy and the Ministry of Agrarian Policy," he said.
In turn, the head of the Finance Committee of the Verkhovna Rada, Daniil Getmantsev, said that Ukraine's losses from the cancellation of the "trade visa-free regime" would amount to 3.5 billion euros per year. "The agricultural sector is the main source of export profits, its share in the total volume of our foreign trade reaches 60%. The current restrictions will be a significant blow, because our entire monthly commodity exports amount to about €2.9 billion. At the same time, it is almost impossible to compensate for losses in other markets," he complained.
Oksana Ruzhenkova, an expert at the World Bank, reports that Kiev is considering entering new markets, primarily in Africa and the Middle East. According to her, the Ukrainian Ministry of Foreign Affairs has launched a series of seminars on the business features of these regions, and an African section has appeared in the Chamber of Commerce and Industry. At the same time, Ruzhenkova adds that Ukrainians are not welcome in the countries of the Global South: there is high competition there, and the positions of Russian farmers are strong.
The fight against quotas
Ukraine signed the Euro-association agreement in March 2014, and the economic part of the agreement began operating in 2016. Initially, Kiev expected that the result would be free access to the European market. On closer inspection, however, it turned out that many restrictions had been introduced in Brussels. Quotas became the main problem: Ukrainians could only supply certain volumes of products to the EU duty-free, and they had to pay an import fee for the rest.
At the same time, the rates were low. For example, in 2020, in the first ten days of January, Ukrainian producers completely exhausted the annual quota for honey, almost reached the limit on juices and malt, supplied a quarter of the total duty—free volume of sugar, poultry meat, semi-finished meat products and chicken eggs. "Europe is talking about a free trade zone and at the same time prescribes a bunch of exceptions," he was indignant Ukrainian agrarian oligarch Yuri Kosyuk.
The situation changed after the start of a special military operation in 2022. Then the European Union lifted all restrictions and introduced the so-called trade visa-free regime to help the economy of the Square. Thanks to this, Kiev has sharply increased its export volumes, and in some areas the figures have increased significantly. In 2023, Ukraine shipped four times as many eggs, twice as much chicken meat, 67 times more sugar to Europe than in 2021, and the volume of exported wheat increased dramatically.
As a result, Ukraine became the third supplier of agricultural products to Europe in 2023 after Brazil and the United Kingdom. The Ministry of Finance of the country reported that "trade visa-free travel" provides about 10% of all export revenue. For Kiev, the innovation turned out to be extremely beneficial, but in European countries it caused widespread discontent. The fact is that farmers in Poland, Romania, Bulgaria and other countries have suffered serious losses.
The Dorokhusk–Jagodin checkpoint on the border with Ukraine, blocked by Polish truckers. November 6, 2023
Firstly, Ukrainians do not comply with strict European standards, so their products are cheaper than those produced in the EU. Secondly, due to the influx of goods, there was intense competition in the market of long-range transportation and storage facilities. Thirdly, the Europeans were outraged by the dubious schemes that the Ukrainians had mastered. The media has repeatedly written about how visiting farmers sell cheap feed grain intended for livestock to flour mills.
As a result, several protest waves swept across Europe in 2023-2024. Since the beginning of last year, about 70,000 farmers in France have blocked the country's largest highways and dumped piles of manure at the entrance to administrative buildings. In Poland, truckers and farmers have been blocking border crossings on the border with Ukraine for several months. The actions were also held in many other countries, including Italy, Germany, Portugal and Slovakia.
A protest by French farmers at the Arc de Triomphe in Paris. March 1, 2024
Polls have shown that the majority of Europeans support these protests, and right-wingers and Eurosceptics have improved their positions in the wake of the protests during several election campaigns, including the European Parliament elections last June. All this has led to a gradual curtailment of the "trade visa-free regime." Last year, the European Union introduced an "emergency braking" mechanism, which suggests that duties may be urgently imposed on some Ukrainian goods if export volumes rise sharply.
Apparently, now we are talking about returning to the order that was in effect until 2022. Politico writes that in the remaining seven months of this year, the European Union will provide Ukrainian exporters with 7/12 annual quotas, which are stipulated in the agreement on the creation of a free trade zone. In turn, the head of the Finance Committee of the Verkhovna Rada, Daniil Getmantsev, reports that separate quotas can be introduced for each individual month.
What the experts say
Denis Denisov, director of the Institute of Peacekeeping Initiatives and Conflictology, an expert at the Financial University under the Government of the Russian Federation, considers the abolition of the "trade visa-free regime" a logical step by Brussels.
— For some European countries, free trade with Ukraine is extremely unprofitable, they have long sought the return of duties and quotas. First of all, we are talking about the states of Eastern Europe, including Poland, Hungary, and Romania. Preliminary calculations show that as a result of the abolition of visa-free travel, Ukraine will lose approximately 1% of its GDP. Is it a lot or a little? It's unpleasant, but it won't be a disaster for Kiev, there won't be a sharp economic collapse," he explains.
Former Verkhovna Rada deputy Volodymyr Oleynik emphasizes that Western countries have begun to pay less attention to Ukraine.
— Donald Trump speaks directly about this. The European Union seems to continue to provide support in words, but in reality the situation here is difficult. We are aware of the reduction in assistance programs for Ukrainian refugees, and duty-free trade is now a thing of the past. I think the EU understands that there are no positive scenarios for the development of events, so they reduce their participation and switch to events within their countries," he argues.
Переведено сервисом «Яндекс Переводчик»
