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Ukraine-EU neighbours grain dispute update 3: Joint control system to replace import bans and new escalation

Svitlana Taran

Date: 06/10/2023
On 15 September, the European Commission decided not to extend its temporary import bans on Ukrainian wheat, maise, rapeseed, and sunflower seeds in five EU neighbouring countries – Poland, Romania, Hungary, Slovakia, and Bulgaria. The ban had been introduced on 2 May in response to these countries’ unilateral closing of their borders to Ukrainian agri-food products.

The decision is justified since the bans were intended to be temporary measures that would be replaced by a more permanent solution more appropriate to the situation in Ukraine. At the same time, it recognises the concerns of the neighbouring countries. It requests that Ukraine elaborate and implement effective export control measures within 30 days to prevent uncontrolled grain surges and market distortions.

However, three of the five countries (Poland, Hungary, and Slovakia) demanded an extension of the ban until the end of 2023 and defied the Commission’s approach. This trio immediately reintroduced unilateral import bans (Hungary and Poland even broadened the list of banned products) while maintaining free transit for Ukrainian products. In return, Ukraine immediately filed a complaint at the World Trade Organisation (WTO) requesting consultations with these countries. The ensuing public exchange between Ukraine and Poland went far beyond trade issues, undermining mutual trust and the effective collaboration needed to withstand Russia’s war against Ukraine.

Further escalation of this dispute contradicts the common interests of Ukraine, EU neighbours and the EU. As neighbours, these countries are interdependent in many areas, first of all, security and bilateral trade. Poland, one of Kyiv’s strongest allies to date, is also a key transit country for EU-Ukraine trade flows, as well as for Western weaponry deliveries to Ukraine. Yet, with elections slated for 15 October, the Polish government has found itself under pressure from rural voters to take a tougher stance on Ukraine or risk losing their support.

Reaching a compromise solution between Ukraine and EU countries is essential for resolving this dispute. Poland, Hungary, and Slovakia should follow the EU’s decision and EU trade rules and lift all unilateral import bans that violate EU legislation. For its part, Ukraine should establish an effective export license system to control the volumes of grain supplies in agreement and coordination with its neighbours. As such, no surge in grain imports to these countries from Ukraine should be expected.

Significant steps have already been taken. Ukraine has prepared proposals on the mechanism of joint verification and approval of grain supplies, and EU neighbours expressed their comments and readiness to discuss them. In return, Ukraine is also open to halting the complaint at the WTO, as was already agreed in the case of Slovakia. On the Slovak side, the follow-up on this issue will depend on the government forged by the newly elected members of parliament in which Robert Fico, a populist pro-Russian, has the first opportunity to form a government. Ukraine will try again to reach an agreement with Poland on import bans after the country’s parliamentary elections on 15 October.

The successful implementation of the joint control mechanism will require a high level of responsibility and cooperation between Ukraine and EU countries - bilaterally and within the coordination platform steered by the European Commission. In addition to the export control system, increasing transport capacities, speeding up the transit, and resuming exports via alternative sea corridors will also help to ease pressure on Ukrainian exporters and EU neighbours.

Trading during wartime and Russia’s seaport blockade bring major challenges for Ukraine and its neighbours. But, overcoming them is a matter of strategic importance for all parties considering what is at stake.

Svitlana Taran is a Ukrainian Research Fellow in the Europe in the World programme at the European Policy Centre.

The support the European Policy Centre receives for its ongoing operations, or specifically for its publications, does not constitute an endorsement of their contents, which reflect the views of the authors only. Supporters and partners cannot be held responsible for any use that may be made of the information contained therein.

This Flash Analysis is part of the Ukraine's European Future project.

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